In many dental practices there may be staff members who have various employment classifications, and as a result, there may also be both employee agreements and independent contractor agreements that exist to cover those individuals. This article will cover how to determine whether a dentist or associate is an employee or independent contractor and what types of thing should be covered in agreements with those individuals.
Dental Contractors or Employees
A preliminary question is determining whether dentists or dental associates are serving your business as an employee versus as an independent contractor dentist, associate, or other types of dental contractors. If you were to be subject to an IRS audit of your dental practice, a central issue may be whether you have properly classified a worker as an individual contractor or employee. In those situations, the IRS is primarily concerned with and looking for dental workers classified incorrectly as independent contractors. If you have improperly classified an employee independent contractor, the IRS will come after you for fees, interest, penalties, and back taxes that should have been collected from the employee’s pay.
To avoid the risk, you should ensure that you clearly understand how to classify each employee or contractor properly. Some people mistakenly assume that any worker covered by a dentist independent contractor agreement or another type of independent contractor agreement is an independent contract, while a worker covered by a dentist employment agreement or any type of dental employment contract is an employee. In truth, there are a number of factors that go into determining whether a worker is an independent contractor or an employee. You should consult with an experienced employment attorney or dental practice attorney to ensure that each of your workers is properly classified to avoid a potentially costly mistake of misclassification.
Once you have correctly classified your workers, in many circumstances it makes sense to put a contract in place to protect your business and to clarify the relationship with your workers. Whether you are dealing with a dentist or dental associate contract, the essential terms for an employment contract or independent contractor agreement are similar. While there will be some obvious differences between independent contractors and employee dental associate contracts, both will need to address how, how much, and how often the worker is paid, the service the worker will provide, and how and when the relationship will be terminated. These and other issues are discussed below.
Description of the Job
Both employees and contractors should have terms in their agreements that clear set for the responsibilities of the job they will complete. For dentists, it will likely be necessary to clarify the number of hours required weekly, any evening or weekend coverage that might be required, and what on-call hours will be expected, along with clarifying any administrative duties that might be required.
The agreements should also cover the compensation for the worker, including setting forth any incentives or bonuses that might be available to the worker based on their performance or other metrics. As an example, some dentists may receive a percentage of any revenue the dentist generates in excess of a set amount. For other options of potential compensations structures, you should speak with an experienced dental practice attorney.
In order to ensure there is no confusion about what expenses can properly be submitted to and reimbursed by the company, the agreement for your workers should clearly set forth the guidelines to be followed for expenses. You should make clear what expenses will be eligible for reimbursement and what the process for review, approval, and reimbursement of those expenses will be. Typically, a dental practice will be more likely to reimburse more expenses for an employee than for an independent contractor. Typical expenses that can be reimbursed for a dentist include professional association and society dues, insurance for malpractice, required continuing education classes and associated expenses, licensing fees, and board certification.
It is important to ensure that your employees and independent contractors have a full understanding of patient privacy and confidentiality. Because dental work in a dental practice is covered by HIPAA, it is important to make sure all workers understand that confidentiality of patient information must be upheld. You may wish to also include a confidentiality provision that covers certain business practices as well.
Ending the Employment
Many attorney’s advice businesses to, where legally allowable, establish at-will agreements with a notice period for both contractors and employees. Those types of agreements allow the worker or the practice to terminate the relationship at any time for any reason, so long as there is proper notice. While some practices ask questions like can an independent contractor quit and want to find ways to lock them in, it’s often times best to allow a working relationship to end rather than forcing a relationship where one or both sides are unhappy with the arrangement.
If you do determine to lock in an employee or contract for a term of years, it is essential that the agreement also outlines how that agreement can be terminated for cause. For example, if a dentist or assistant loses a license, violates the agreement or state regulations, or becomes unfit to practice, you want to be sure that you can terminate the agreement under those circumstances.
Some dentists and the practices they contract with may wish to include buy-in clauses in the dentist’s employment agreement. These agreements are may be vague and non-binding, but if buying into the business is a material aspect of the agreement between the parties, you will want to fully spell out several issues, including: (i) what percentage of ownership the dentist will be eligible to obtain; (ii) the price that to be paid for the ownership share; (iii) when the purchase price is payable; (iv) the level of control and participation the dentist will enjoy once the dentist obtains the ownership interest; (v) the rights of the parties if the dentist or other owner wants to leave the business after the dentist acquires an ownership interest.
Most of these issues should be addressed in any employment or independent contractor agreement, but depending on your specific practice’s needs, there may be other important information to include in such agreements. You should talk with an experienced dental practice attorney to discuss specific ways to protect the employment and contractor relationships at your firm.