by Anne Guignon, RDH, MPH, CSP
December 5, 2024

Worker classification has generated extended debates on social media over the last decade. There is a lot of confusion about this topic among dental hygienists, as well as employers, staffing agencies, placement services, and temping platforms. Discussions revolve around whether clinical dental hygienists can be legally paid as 1099-NEC independent contractors or must be classified as W-2 employees. Misclassification of dental healthcare workers is not limited to dental hygienists, but can also extend to other team members such as dental assistants, members of the business team, and associate dentists who do not own a portion of the business.¹

Some contend that worker classification is a gray area. Others claim that dental hygienists have the right to choose how they are paid. These misleading statements create a huge amount of mayhem. There are stakeholders who insist that 1099-NEC wages are legal for temporary assignments or working interviews. Nothing could be further from the truth.

For decades, both the Internal Revenue Service (IRS), and the U.S. Department of Labor (DOL) have steadily refined their respective definitions of whether a worker can be considered an independent contractor or must be classified as an employee. Federal laws and guidelines determine a worker’s status for a variety of work engagements, including permanent positions, temporary assignments, and working interviews.

The IRS is a federal agency mandated to collect taxes. How taxes are collected is based on whether a worker is classified as an employee or an independent contractor. The IRS has specific guidelines on how workers are classified. Improper classification has enormous immediate and long-term financial consequences that include double FICA and Medicare taxes and less income reported to social security.²

Labor laws differ across worker classifications and U.S. states.

Worker classification determines how workers are treated in the workplace. The DOL and state labor boards are tasked with ensuring that employees receive fair wages, are properly compensated for all work, and work in a safe physical environment free from discrimination. Labor laws also provide employees protection in the form of worker compensation, overtime pay, and unemployment benefits. In addition, some employees may be eligible for family medical leave and lactation accommodations.³ Many states have additional statutes that cover specific situations like pay dates, lunch and rest breaks, and final paycheck rules.⁴ Independent contractors are not protected by the same labor laws as employees and assume much greater business risks.^5,6

The key to understanding correct classification begins with the language in a state’s dental practice act. If the practice act states that a dental hygienist must work under the supervision of a licensed dentist, then both the IRS and DOL classify the dental hygienist as an employee, not as an independent contractor.^2,6 The supervision language can include the terms like direct, remote, indirect, and general when outlining how a dental hygiene procedure can be performed. The bottom line is that supervision is the key word. To further complicate matters, the language in every state practice act is different.

Some clinicians set up a Limited Liability Company (LLC) in an attempt to skirt the supervision issue. But the federal DOL has made it clear that workers cannot voluntarily relinquish their employee status to satisfy an employer.⁵ Many state labor boards are taking an active role in addressing worker misclassification issues. Professional associations are also encouraging members to properly classify workers.

Over the last decade, a growing number of dental hygienists have chosen to file Form SS-8 with the IRS, to request a determination of their classification status. The IRS has repeatedly ruled that dental hygienists are, in fact, employees, even if for only a day. It all goes back to the language in the state practice act. If a dental hygienist must work under a dentist’s supervision, they are an employee.² While some states that have specialized provisions or permits allowing dental hygienist a more independent role, the vast majority of hygienists are still employees.

Even though 1099-NEC options do not comply with the dental practice acts, there is considerable pressure to accept clinical assignments where a hygienist is paid as a 1099-NEC independent contractor.

Here are seven strategies to avoid falling in to the 1099 misclassification trap.

1. Have a specific conversation in advance with the dentist, office manager, or employment service about worker classification. If necessary, provide documentation of the dental practice act language that discusses supervision.
2. Obtain a written confirmation from the doctor, office manager, or booking service that states that compensation will be made via the office payroll and properly classified as W-2 employee wages. If the answers are vague, the terms don’t make sense, or you are told “our office only pays temporary workers as 1099 independent contractors”, decline the opportunity. Also beware of the term “same day pay”, which typically indicates a 1099 assignment.
3. Secure a written agreement outlining all payment policies. Keep a copy of any published documents that outline employment relationships and payment terms and conditions. The information should include payment method (physical check or direct deposit), pay date, assignment hours, break times, hourly or daily rate, minimum shift rate, and cancellation policies.
4. Once the date is confirmed send the dental office copies of all required forms: completed IRS Form W-4 (2024)⁷, dental hygiene license, CPR card, I-9 form⁸, and direct deposit information. Keep a backup file handy with all the details.
5. Consider requesting additional federal taxes be withheld for any short-term assignment, such as a week or less. Federal income tax is withheld based on payroll charts covering two-week or bimonthly payroll periods. Asking that additional funds be withheld can prevent an unnecessary tax time surprises.⁷
6. Examine all payments immediately for accuracy. All paystubs should list your FICA and Medicare payments, as well as the amount of federal tax that is withheld for the pay period.⁹ Take a photo or screen shot of all paystubs. If there are any discrepancies, request that they be rectified immediately.
7. Create a unique work email and separate work file on your computer. Make copies of all agreements, daily schedules, payments, office policies, and miscellaneous notes about software, appointment times, doctor preferences, and team member names. Make sure all information is HIPAA compliant. Email all pertinent information to yourself and one another trusted source via an encrypted file.

The best way to avoid the 1099 workplace woes is to only work with dental practices, employment agencies or services, or staffing platforms that clearly support IRS W-2 employee classification status for temporary assignments or permanent work opportunities.

Working as a properly classified W-2 employee eliminates headaches, sleepless nights, and ensures compliance with tax, labor, and licensure laws.

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References:

¹Frequently asked questions – Form 1099 NEC & Independent Contractors. https://www.irs.gov/faqs/small-business-self-employed-other-business/form-1099-nec-independent-contractors/form-1099-nec-independent-contractors. Accessed November 27, 2024. Page Last Reviewed or Updated: 21-Oct-2024.
²Independent contractor (self-employed) or employee? https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee. Accessed November 27, 2024. Page Last Reviewed or Updated: 21-Oct-2024.
³Summary of the Major Laws of the Department of Labor. https://www.dol.gov/general/aboutdol/majorlaws. Accessed November 27, 2024.
⁴State labor offices. United States Department of Labor website. https://www.dol.gov/agencies/whd/state/contacts. Accessed November 27, 2024. Last updated March 2024.
⁵United States Department of Labor Wage and Hour Division. Get the facts on misclassification under the Fair Labor Standards Act. https://www.dol.gov/whd/workers/Misclassification/misclassification-facts.pdf. Accessed November 27, 2024.
⁶Fact Sheet 13: Employee or Independent Contractor Classification Under the Fair Labor Standards Act (FLSA). https://www.dol.gov/agencies/whd/fact-sheets/13-flsa-employment-relationship. Accessed November 27, 2024.
⁷Form W-4 (2024). Employee’s Withholding Certificate. https://www.irs.gov/pub/irs-pdf/fw4.pdf. Accessed November 27, 2024.
⁸USCIS form I-9. Employment Eligibility Verification. https://www.uscis.gov/sites/default/files/document/forms/i-9.pdf. Edition 08/01/23. Accessed November 27, 2024.
⁹Insight – Pay stub. https://www.adp.com/resources/articles-and-insights/articles/p/pay-stub.aspx. Accessed November 27, 2024.

Special thanks to Kara D. Kelley, SPHR, SHRM-SCP, CEO and Founder of Clinical HR LLC for reviewing this manuscript.

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Anne Nugent Guignon, RDH, MPH, CSP , is a visionary thinker. Anne’s WHY began back in 1971. She simply wanted to know what worked best for each patient. As her curiosity grew, so did her passion for sharing information. Anne’s global thinking resulted in numerous accolades for mentoring, research, and guiding her profession. Anne is a highly sought-after international speaker, prolific author, a recognized expert ergonomics, caries and erosion, dry mouth, pH challenges, dentinal hypersensitivity, remineralization, and employment law matters. Despite her accomplishments, Anne’s clinician heart is always focused on making clinical practice better, easier, and more rewarding. Anne can be reached at [email protected].