Dental practice owners and dental service organizations face a legal compliance question that carries significant financial and regulatory risk: whether the dentists working in their practices are properly classified as employees or independent contractors. The answer matters enormously. Misclassification — treating someone who legally qualifies as an employee as though they are an independent contractor — can expose dental practices to tax liability, employment law claims, regulatory sanctions, and civil litigation. Getting this right requires understanding the legal standards that apply and how they map onto the specific facts of a dental practice relationship.
Mandelbaum Barrett PC attorneys William Barrett and Jonathan Rhone broke down the risks of misclassifying dentists for dental practices and dental service organizations. Barrett and Rhone practice in the firm’s dental law and labor and employment law practices, advising dental clients on the full range of legal issues affecting dental practices, including employment classification, associate agreements, and practice compliance. Their analysis reflects the firm’s comprehensive understanding of how employment law principles intersect with the specific realities of dental practice operations.
Why Misclassification Is a Serious Risk in Dental Practices
Dental practices frequently structure relationships with associate dentists, specialists, or part-time practitioners as independent contractor arrangements rather than employment. The appeal is understandable — independent contractor arrangements can simplify scheduling, reduce payroll tax obligations, and avoid the benefits and labor law obligations that apply to employees. But classifying someone as an independent contractor when the legal analysis would characterize them as an employee creates significant exposure. The applicable tests are more demanding than many practices realize.
The financial consequences of misclassification can be severe. The IRS can assess back employment taxes, penalties, and interest on amounts that should have been withheld from employee wages. State tax authorities impose parallel obligations. Workers who were misclassified may bring claims for unpaid benefits, overtime, workers’ compensation coverage they were denied, and other employment-related protections. Dental service organizations or multi-location practices face these risks at scale — a single classification decision applied across dozens of practitioners can create substantial aggregate liability.
How Classification Determinations Are Made
There is no single universal test for independent contractor versus employee status — different tests apply depending on whether the analysis is done for tax purposes, under state wage and hour law, for employment discrimination coverage, or for workers’ compensation purposes. Most tests share a common focus on the degree of control the hiring party exercises over the worker: the more control over how, when, and where work is performed, the more likely a court or agency is to find employee status regardless of what the contract says.
For dental practices, the facts of a typical associate arrangement — working at the practice’s location, using the practice’s equipment, serving the practice’s patients, and following the practice’s scheduling and treatment protocols — can look more like an employment relationship than an independent contractor relationship under these tests. Contract language calling someone a contractor does not determine legal status; the actual working relationship does.
According to the Internal Revenue Service, the degree of behavioral control, financial control, and the type of relationship are all relevant to determining whether a worker is an employee or independent contractor — and the IRS has the authority to reclassify workers and assess back taxes when it determines that classification was incorrect. Dental practices should review existing associate arrangements with qualified legal counsel to assess classification risk.
Contact Mandelbaum Barrett PC for Dental Law Guidance
If you have questions about dentist classification, associate agreements, employment compliance for dental practices, or other dental law matters in New Jersey, the dental law team at Mandelbaum Barrett PC can help.
Reach out through our contact page to speak with our team. We are here to help dental practices and dental service organizations navigate the legal risks of worker classification and employment compliance.