10 minute read
Labor Protections Recently Got Stronger. What Does This Mean For Dental Practices?
By Joe Fogg, Founder & CEO of onDiem
The Department of Labor (DOL) quietly kicked off 2024 with a significant rule, which will make it more difficult for employers to classify their workers as independent contractors. What does this mean for dental practices and organizations, which have historically relied on temp workers and a flexible gig economy? In light of this rule, how can dental leaders mitigate financial and legal risk?
Dentists often remind me that they “never signed up for this.”
By “this,” of course, they’re not talking about delivering essential and critical oral care. They’re referring to the complicated skills and tasks required to run a business smoothly and effectively: the human resources paperwork, the compliance research, the office management, the marketing and outreach, the financial planning, the payroll taxes, the vetting, the credentialing, and so much more.
“I wanted to focus on caring for an underserved community,” one of our clients told me. “I didn’t realize I would spend so much invaluable time fixing employee classification issues at my organization.” Another dentist said, “I signed up to become a dentist, not a compliance expert. I had no idea I had to become both.”
In an ideal world, dental practices and DSOs would be able to focus on patient care and new business growth instead of the tedium of compliance. But to mitigate expensive legal risks,
dentist-owners and practice managers must anticipate and stay updated on the complexities of labor and compliance laws, or rely on staffing services that are fully W-2 compliant. Doing so also allows our professional community—our dental hygienists, assistants, and front-office staff—to access vital W-2 benefits and protections.
As the founder of onDiem, the first nationally available dental staffing platform to be fully W-2 compliant, I’ve paid close attention to legislation and governance that affects compliance and employment in our community. Here’s what our dental leaders should know about the DOL’s “Employee or Independent Contractor Classification Under the Fair Labor Standards Act Final Rule,” which went into effect March 11th of this year.
A LANDMARK RULING
On January 9th, the Department of Labor (DOL) announced a final ruling that would make it significantly more difficult for companies to classify their employees as independent contractors. Among the significant things to know:
The “Employee or Independent Contractor Classification Under the Fair Labor Standards Act Final Rule” went into effect March 11, 2024. It overturns the 2021 Independent Contractor Rule in order to be more consistent with “longstanding judicial precedent,” reduce misclassification risks, and provide greater clarity and consistency for businesses that rely on contractors.
The goal of the Fair Labor Standards Act (FLSA) “Economic Reality” test remains the same: to determine whether the worker is “economically dependent on the employer for work or is in business for themself.” The factors in the test:
opportunity for profit or loss depending on managerial skill
investments by the worker and the potential employer
degree of permanence of the work relationship
nature and degree of control
extent to which the work performed is an integral part of the potential employer’s business
6. skill and initiative
Each of the factors will now be considered equally to determine worker status—making it much harder to satisfy the Economic Reality test. Employers will need to think of the test as a “totality-of-the-circumstances” test—where no factor is prioritized over the other. Employers must also now consider six factors (previously five), including investments by the worker and employer—and understand an updated analysis on how scheduling, supervision, price-setting, and ability to work for others affects the “nature of degree of control” factor.
For context, the previous 2021 rule placed greater weight on the two “core factors” of control and opportunity for profit or loss; limited the consideration of “worker investments and initiative,” and did not allow consideration of whether or not the work performed was central to the employer’s business.
While some opponents have already announced their intent to challenge the ruling, existing state dental practice acts, IRS criteria, and DOL regulations have long affirmed strict and indisputable guidelines for classification. “Under applicable IRS and Department of Labor regulations, it is improper to classify most hygienists who work at dental practices as 1099 contractors, even when they are only working part-time or as a temp,” affirms Brian A. Colao, DSO Industry Group Director at Dykema. “The regulations are very clear, and there can be significant consequences for misclassification of employees as independent contractors … In my experience, many practice owners across
the industry are needlessly exposing themselves and their staff to significant legal risk by misclassifying employees as independent contractors.”
When I meet with dental practice owners, DSO leaders, or state dental association leaders, I tend to ask, “Does your state dental practice act allow hygienists to have independent practices?” The answer is almost always “No”—because with very few exceptions, state dental practice acts state that hygienists must work under direction of control or direct supervision. That means hygienists cannot be independent contractors— and that any employer who hires them as independent contractors is doing so illegally.
We don’t need to look very far to find misclassification and W-2 (non)compliance horror stories in dentistry and beyond. For the professional, misclassification often means a lack of access to basic labor protections. For the dental practice or organization, misclassification can lead to (and has led to) costly and timely classification corrections at best—and multimillion dollar lawsuits and criminal penalties at worst.
What are the solutions here? What can a dentist, office manager, or DSO leader do to stay compliant and on the right side of the law—all while quickly and reliably filling dental chairs in the midst of an industry-wide labor shortage?
THE DOL RULING: AN OPPORTUNITY FOR REVENUE GROWTH
The simple answer: Using a W-2-compliant dental staffing service removes your legal and compliance risks, allowing you to focus on other aspects of patient care and business growth. The longer answer is perhaps a bit surprising to some; it starts by seeing the DOL ruling as less of a “restriction” and more of an opportunity to create a mutually beneficial and lucrative employer-employee relationship.
To understand this approach, we must first understand the context. Dentist-owners and managers come to my team at onDiem with a variety of concerns and asks, and they tend to fall into the following four themes:
I need dental staff now. “Can you provide dental hygienists, dental assistants, and front-office staff today?”
I want to connect with the most qualified talent. “I’m done hiring unreliable workers with questionable credentials. Can you give me access to professionals who are qualified, vetted, certified, and ready to work?”
I want my dental team to perform better. “Can you provide temps that seamlessly integrate with my existing team to enhance our performance?”
I want to grow revenue and production. “Can you keep my seats filled, so I can finally maximize production and think about growth?”
Traditional dental staffing solutions tend to focus on addressing urgent, temporary staffing needs—which isn’t necessarily wrong but can often be shortsighted and lead to costly hiring blunders. In light of the DOL’s new rule, it’s more important than ever for employers in our industry to choose a workforce management solution that’s capable of addressing all four concerns legally and safely.
As an example: Rather than provide a temporary band-aid to temporary staffing, onDiem’s dental staffing platform gives practices and DSOs a workforce management solution that not only fills empty seats but increases the value of their business through staffing. Rather than seeing W-2 compliance as a barrier to “quick” (and often illegal) hiring, we’ve chosen to see it as a way to deepen the practice-professional relationship, improve standards of patient care, and uncover new opportunities to grow production and revenue. Here’s how we do it, in a nutshell:
We provide dental staff now. We give employers access to the largest W-2-compliant dental professional community in the country—and market their open positions on their behalf. Because onDiem is a W-2 platform, we’re able to market our suite of W-2 benefits and protections as invaluable “perks” of the job.
We connect practices with the most qualified talent. We vet and qualify all dental professionals on our platform, saving invaluable time. We do all we can to make hiring simple by taking care of all the compliance and classification headaches.
We provide complementary staffing for dental teams. Instead of seeing our job seekers as just “temps,” we invest in them as potentially key and integral members of your dental team. Every single job seeker on our platform enjoys W-2 protections that keep them stable, happy, and ready to work. We can, therefore, work with you to complement your existing team with hygienists, assistants, and front-office staff who are among the most reliable in the industry.
We work with practices to identify new growth opportunities. We collaborate with dentists to transition to a “staffing for production” model, which allows practices and DSOs to open new columns, open on weekends, and take advantage of other methods to improve revenue and production.
All of this, from providing qualified staff to unlocking new business growth, is possible precisely because we see classification and compliance requirements as positives—not barriers—for our industry. Every single professional on our platform enjoys W-2 benefits and protections. And because they enjoy benefits like PTO, flexible scheduling, health insurance, wellness reimbursements, workers’ compensation insurance, association membership rebates, and more—our dental professionals are more dependable, reliable, eager to work, and able to flex to our practices’ needs. Our dental practices and DSOs, in turn, can hire for greater production and revenue, because we take care of all the hiring, payroll, benefits, and compliance “fine print” at a controlled cost.
Regardless of the solution a practice or organization may choose for staffing, viewing staffing as a mutually beneficial relationship that adds, not extracts, the most value for all parties, is the key strategy to navigating labor and compliance laws with ease. Protected workers are reliable workers, compliant practices and organizations are enticing workplaces, and establishments with dependable staffing are best positioned to grow their capacity for patient care. It’s a point of view that can unlock key growth for our industry, and help practices and organizations ride out the turbulent waves of a serious staffing shortage.
As rules shift and change, it will become even more crucial for our community to be educated on the ins and outs of classification and compliance to maintain a reliable workforce, meet revenue goals, and improve patient access to care. Dental practices and DSOs may be feeling the squeeze from the labor shortage and from stricter labor rules, and perhaps that feeling of “I didn’t sign up for this” is stronger than ever. Luckily, some of us did sign up for this—meaning no dental leader needs to navigate the tricky labyrinth of labor and compliance laws alone.
Joe Fogg is the CEO and Founder of onDiem, a W-2 dental staffing platform that boosts careers and maximizes practice value. onDiem connects dental practices and DSOs with qualified dental professionals—and empowers both the employee and employer with career and business solutions. Prior to onDiem, Joe led marketing, engineering, and product teams at Cerus Industrial to turn the company into a key market player.
