RELATED: Independent Contractor vs. Employee Status
Let’s first understand that the business of dentistry is changing and it’s changing quickly. While I don’t think a hygienist being a private contractor on a full-time basis is a good idea, I do see value in it if the hygienist is doing temp work. I remember temping many years ago and having dentists give me cash at the end of the day. Technically, this wasn’t permissible — as long as there has been civilized society, there have been taxes and employers have had to pay them. But it was generally the dentist’s way of expressing his gratitude that he didn’t have to cancel his patients for the day. That practice dissipated quickly, as my memory recalls, and it became commonplace to receive your salary in the mail, after the dentist had the opportunity to consult with his accountant and/or office manager with taxes deducted accordingly. The hygienist still had to fill out a W-2 and be an employee of the office, even though she worked there only temporarily. An employer must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. In contrast, an employer generally does not have to withhold or pay any taxes on payments to independent contractors. Self-employed individuals (private contractors) generally must pay self-employment tax as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.
According to the IRS: “The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.” If this statement confuses you, you’re not the only one. The IRS lists many professions as those which one can practice as a private contractor and recognizes the many intricacies in each. Therefore, they further state “whether these people are independent contractors or employees depends on the facts in each case.”
RELATED: The temping dilemma
Let’s use the dental hygiene practice of New York state as an example. Here is the actual language of the legislation governing the practice of dental hygiene:
The practice of dental hygiene may be conducted in the office of any licensed dentist or in any appropriately equipped school or public institution but must be done under the supervision of a licensed dentist.
And here is the information provided by the New York State Department of Labor regarding independent contractors:
The real distinction between the employer-employee relationship and the independent contractor relationship depends primarily on the level of supervision, direction and control exercised by the person engaging the services.
To further complicate matters, New York classifies dental hygiene as one of the professions for which a person can create a professional limited liability company (PLLC). “One or more professionals may form, or cause to be formed, a professional service limited liability company (PLLC) for pecuniary profit for the purpose of rendering the professional service or services that the professionals are authorized to practice.” This means that a dental hygienist in New York can open her own dental hygiene business.
Dental hygiene legislation varies greatly from state to state. As we see more and more states adopt collaborative practice agreements and similar models that increase a hygienist’s autonomy, the manner in which hygienists can be paid should evolve proportionately. The newest edition (Fourth Edition) of Dental Hygiene Theory and Practice states:
“An independent contractor of dental hygiene care may own equipment and lease space in a dental office or clinic under a contractual agreement, usually made with a dentist. Rather than being paid a salary and having the overhead costs paid by the dentist or other business owner, the dental hygienist is self-employed.”
A dentist who trusts a hygienist to provide services, as permitted by the state practice act, without delegating and/or directing the manner in which she provides those services is a very wise dentist indeed. How could any hygienist take issue with that? It has long been the time for dental hygienists to exercise greater control over the business aspect of this profession.
As with all issues relating to your profession, I encourage you to research the tax laws in your state before you make any decisions regarding your compensation. My purpose here is not to encourage anyone, dentist or dental hygienist, to violate the law, but to use the law to create mutually beneficial financial agreements. The law allows for some leeway in private contracting relationships. It may not possible in the state where you work, but in others it may be. It may take some time and research in properly constructing the arrangement, but I think it’s time very well spent.
Additional source: Dental Hygiene Theory and Practice, Fourth Edition, by Michele Leonardi Darbi and Margaret M. Walsh
More by Macri:
Keep going: How you can make it through dental hygiene school when the odds are against you
Why what you do (and what you did years ago) online matters to your career
Six tips on how to be a successful dental hygienist
