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Can Hygienists be Independent Contractors?

(Disclaimer: This article is for general knowledge only and should not be considered as legal advice.  We are not lawyers and as such, cannot and do not provide legal advice.  If you feel that any of the following, or any matters related to the Employee/Independent Contractor relationship may apply to your situation, we encourage you to seek out proper legal counsel.)

According to many different sources, in order to be considered an independent contractor the classic “four-fold test” requires a positive answer to the following:

  1. Does the hygienist have control over the timing and manner of performance of the services that he/she is providing?
  2. Does the hygienist provide and own his/her tools, supplies and/or equipment used to provide his/her services?
  3. Does the hygienist have an opportunity to profit beyond the normal compensation from his/her services?
  4. Does the hygienist run the risk of loss beyond the normal compensation from his/her services?

The answers to the above questions are almost always going to be “no”.  The hiring dentist is in fact responsible for the performance of the services provided by any hygienist.  Hygienists typically do not provide their own supplies, tools or equipment needed to provide their services.  Hygienists do not generally have an opportunity to participate in the profitability, or lack thereof, of the services provided to the practice and their compensation is normally a function of their productivity, not their profitability.

These questions can be truncated into the single critical question, “Whose business is this?”  An employee is a person who is employed as part of the practice and their work is performed as an integral part of the services of the business, as opposed to an independent contractor whose work is done for the practice but is not integrated into it.  Given the information thus far, as a general rule, dentists should not be engaging hygienists as independent contractors.

In our process of appraising and selling practices it is not uncommon for us to encounter situations where one or more of a dentists’ hygienists are being treated as independent contractors.  In almost all cases, this arrangement will lead to major problems with CRA.  Where CRA determines that a hygienist engaged by a dentist as an independent contractor is actually an employee, they will require the dentist to remit any Income Tax, UIC and CPP which would have been remitted if the hygienist had been correctly treated as an employee in the first place.  In addition, the CRA will assess penalties and interest for the whole period that the hygienist was incorrectly engaged as an independent contractor.  To make matters worse, there is no specific compulsory mechanism for the dentist to recover these remittances from the hygienist.

Challenges with the CRA may not be the dentists’ only problem.  There will likely be liabilities under certain provisions of the Employment Standards Act such as the obligation for Vacation Pay.  Under normal circumstance, an independent contractor will not have a claim for wrongful dismissal, however, any protection that an employer may have had with respect to this would be lost where a hygienist is actually deemed to be an employee.  An employer is also vicariously liable to the acts of its employees so long as those acts are committed by the employee, in this case the hygienist, during the course of their employment.  Where these challenges may arise, other than through a CRA audit, is when a hygienist is terminated for any reason and, either on their own or with the help of a labour lawyer, realizes their leverage and power as a whistle blower.

A helpful tool in determining if a hygienist is an employee or an independent contractor is the CRA publication “Employee or Self-Employed” (RCA110€ Rev 15), which can be found at http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-e.html