The new marketplaces in the dental industry found both on Facebook and within emerging startup companies have a significant impact on this trend. All these marketplaces appear to promote or at best avoid the topic of independent contractors. PONTIC launched initially as a marketplace and didn’t address employment classification of the connections made through our site. The plan had always been to hire our employees but maintain the marketplace that promoted independence.
Now there’s a new phenomenon of dental professionals operating as independent contractors under a Limited Liability Company (LLC). To be completely honest, I too started my own LLC to temp under for the liability protections and tax structure. Although, I never had enough write-offs to truly amount to anything as significant as the increased taxes.
I find this new trend cavalier. I was cavalier. I didn’t consider what would happen if I were injured at work, or accidentally dropped an expensive piece of equipment. We’ve all tripped over an x-ray sensor cord a time or two! What about my malpractice insurance? Did I even have the correct one? Did you know there’s a special malpractice insurance for professionals that temp? Without it, any liability goes uncovered while temping.
And so many who hire an independent contractor are cavalier. I have never been asked for my license or a copy of my malpractice insurance. At best, I can assume that the office manager looked up my license on our state licensing board to ensure it was active prior to my arrival, but I do not think that was the standard. Not one office has ever performed a background check, checked a reference, or even asked about my practice beliefs.
And I get it…temping situations are chaotic. Successfully finding a temp to fill-in, feels like a win. Even if their fees are high. You may even be comforted to hear them say, “I am my own LLC, so I’m an independent contractor.” You may think you don’t have to worry about employee paperwork, taxes, and even though their fees are higher, you’ll financially break even.
Except that’s not exactly not how it works…
What does it mean to own your own LLC?
Simply put, it shields an individual’s assets from business debt and liability.
And how does an LLC affect employment classification?
It doesn’t. The LLC addresses only the potential liability of the member of the LLC and tax structure. The independent contractor status is determined based on how the employer exercises control. The LLC does not impact this.
So how does a temp hygienist operating under an LLC benefit the dental office?
It doesn’t. The LLC is there to benefit the dental professional. Providing a shield for any potential liability as a result of actions of the dental professional.
Who’s liable in a malpractice suit? The dental professional or the dental office?
Depends… That depends on the contract the dental office has with the dental professional. Depends on the malpractice insurance of both the dental office and professional. Dental professional temping should have specific malpractice insurance unless they are employed by an office or temporary staffing agency. Without it, they are not covered.
What if the dental temp wants to be an independent contractor?
That’s not up to an employee or employer. The Department of Labor (DOL) makes that decision on an individual basis.
What’s the risk of hiring an independent contractor?
An IRS audit that results in back-pay of taxes and potential fees for knowingly misclassifying employees.
What are the risks for a dental professional?
No workers compensations or unemployment taxes. Increased taxation at the end of the year that results in reduced wages.
The new LLC trend is enticing for dental offices and professionals alike, but it doesn’t make it legal. The next time you hear, “I have my own LLC, so I’m an independent contractor,” remember that an LLC has nothing to do with employment classification.