Independent Contractor or Employee?
Updated: Oct 4, 2019
WHAT HAPPENED? (SOME OF THIS INFO WAS CHANGED AS OF SEPTEMBER 2019 - CONSULT YOUR ATTORNEY)
An important legal case came down about a year ago. It is a case that affects many of you California dentists, and I want you to know about it since some dentists are paying a lot of money for not complying.
Of course, I’m not your attorney – nor am I playing one here on the internet - this is just my opinion on a blog– you should definitely consult your attorney if any of this applies to you.
One of the biggest questions that comes up these days is whether it is OK for an employer to pay associate dentists as independent contractors.
Obviously, it preferable for employers to pay associate dentists as independent contractors. That way, they save money on employment taxes and avoid the ever-lengthening list of federal and state laws governing employees.
Just about a year ago now, on April 30, 2018, the California Supreme Court handed down what’s considered to be a landmark employment lawdecision in what’s known as the Dynamex decision. Specifically, Dynamex Operations West, Inc. v. Superior Court of Los Angeles.
Dynamex is an on-demand, same day delivery service, mostly for businesses like Home Depot and Office Depot. At one point, the drivers were considered employees and then Dynamex management decided they would save a lot of money by classifying these drivers as independent contractors. And they went to great lengths to comply. For example, drivers did not have to accept deliveries, they were able to work whatever days they wanted, they drove their own cars, etc.
But Mr. Charles Lee, the plaintiff in this case, felt he was an employee and sued after only 15 days of work. Later on, another plaintiff added to the case and then the case was certified as a class action – not an easy feat.
The facts in this case are really not at all similar to the operation of a dental practice, however this case essentially changed and clarified the law as to independent contractors in California, and it is applicable to all the wage orders – and dentists are covered under one of these wage orders.
This case progressed up the legal system – finally to the California Supreme Court – and the Court rejected the current testas to whether a person may be property classified as an independent contractor and handed down a new legal test for determining whether someone is an employee or independent contractor.
The Court starts this very long written decision by stating that the misclassification of independent contractors is harmful and unfairtoworkers and the public as a whole.
We all know that California is extremely liberal and extremely employee- friendly and this case really drives that point home.
The new test is called the ABC test.
Under the this test, as set forth in Dynamex, and now law in California - a worker is presumed to be an employee unless he/she meets ALL THREE of these tests:
1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work.
This has always been a test in determining whether someone is an independent contractor or employee, but previously somewhat easy to get around when standing on its own.
2. The worker performs work that is outside the usual courseof the hiring entity’s business.
This is a VERY significant change - and in my opinion dentists can never satisfy this second prong of the test when employing associate dentists.
3. THE worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
LET ME REPEAT – all 3 of these prongs of this test must be met to rebut the presumption that someone is an employee, rather than an independent contractor.
An example of someone who would be considered an independent contractor is a plumber providing services to a dental office. The court uses this example frequently. If you hire a plumber to fix your toilet - you don’t care who shows up, you don’t care what tools the plumber uses, and you don’t care how the plumber gets the job done – as long as your toilet works when the plumber is done.
WHAT DOES THIS MEAN TO YOU?
To me – in my opinion, and only my opinion – consult your own attorney - it means:
1. No! You cannot property hire associate dentists or dental specialists as independent contractors.
It does not matter if they are incorporated.
It does not matter if they work other places.
It does not matter if they want to be paid that way.
2. No! You cannot properly hire dental hygienists as independent contractors.
3. No! You cannot properly hire front desk or a dental assistant as an independent contractor.
I’m just telling you, because some dentists are already paying lots of money because of this new law.
I would not take it lightly. I would not think it won’t happen to you.
I’m no goodie two shoes – but this is something you need to pay attention to, in my opinion. Just looking out for you!
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