Human Resources Questions for Dentists: Should employees receive pay when treating family members (for free)?

The human resources landscape is constantly changing. Dentists have ongoing questions about how to handle staff issues. Take this month's questions, for instance. Should hygienists be paid when treating their family members for free, which is one of their benefits? Also, do practices have to pay taxes on temp workers who earn less than $600 per year?

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QUESTION:As a dentist, I offer a very generous dental treatment benefit to all employees and their immediate family members. Treatment is covered at 100% courtesy. Hygienists, who can do work on family members themselves, are not paid for providing treatment. This is because it’s their family, and I’m not receiving payment for services rendered. Employees don’t mind this, but I’m concerned about whether or not it is legal. If they’re paid for providing treatment to everyone else, regardless of payment obligations by a patient, is it legal to not pay them if the patient is a family member?

ANSWER: It’s great that you’re concerned about this and raising the question. This is because it is not legal. You have a choice to provide the benefit or not and to charge whatever amount you want for the services rendered, but that has no bearing on whether or not employees are to be paid for their time spent working. Employees must be paid anytime they are working, regardless of who they’re treating. The law is very clear that employees cannot volunteer their time to “for profit” businesses.

I recommend you cease this policy and pay all employees going forward, even when the patient is a family member. If this does not work for you, you can always change your benefit plan. You could establish a benefit program where family members receive a discount on services rather than receive them for free. This may help offset the cost.

If you continue with nonpayment of wages, an audit or a claim filed against you will be costly as there is no way to win when employees work and are not paid. This is not a grey area of law, and following it should be a must.

QUESTION: We have some temp workers who do not earn more than $600 in a year. According to my colleague, we do not have to pay taxes on them or submit a W-2 as a result. Is this true?

ANSWER: No, this is not true. Unfortunately, some employers hear about the $600 threshold and look no further in order to learn what it really means. This threshold applies only to independent contractors and the need to provide a Form 1099. It never applies to employees. If employers pay less than $600 annually to non-employee independent contractors, then sending those individuals a 1099 at the end of the year for reporting purposes is not required.

Before you get excited and decide to make all the temp workers independent contractors, there are rules to follow regarding who can be classified as such. Since the IRS actually wants businesses to pay taxes, you can imagine that it is not easy to classify people as independent contractors.

While I don’t know your exact situation, it is unlikely that a temp worker will qualify. For example, if the temp is a hygienist providing support for one day while the regular hygienist is out, the temp is an employee, not an independent contractor. There is no difference between one hygienist and the other except duration of employment. The person performing the job should, at a minimum, be doing something other than the services provided by you. You should carefully review the criteria for independent contractor status before proceeding in this direction. Misclassification can result in serious liability. Here is link to more information about independent contractor criteria.

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Human Resources Questions for Dentists is provided by Rebecca Boartfield and Tim Twigg of Bent Ericksen & Associates. Tim Twigg is president and Rebecca Boartfield is a human resources compliance consultant with Bent Ericksen & Associates. For 30 years, the company has been a leading authority in human resource and personnel issues, helping dentists deal successfully with the ever-changing and complex labor laws. To receive a complimentary copy of the company’s quarterly newsletter or to learn more about its services, call (800) 679-2760 or visit bentericksen.com.

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