04/09/2019

Compliance essentials: Hiring and paying temporary employees


Commonly, a dental practice will hire a temporary dental assistant, hygienist or front-office staff to fill in briefly for employee sick days, when the practice’s needs have increased or for an employee’s long-term leave of absence. CDA Practice Support finds that many employers are still puzzled about the requirements when hiring, classifying and properly paying these short-term employees.

“When practice owners hire to fill a short-term need, they mistakenly believe that the temporary workers are not employees simply because of their limited length of time in the practice,” says Michelle Corbo, employment practices analyst at CDA Practice Support. “Unfortunately, this leaves the employer at risk when they are out of compliance with new-hire documentation, classification and pay requirements,” she adds.

There is no provision in the law that excludes a worker from compliance with employment laws solely because they work fewer hours. Regardless of whether the employee works an hour, a day, a week or on a trial basis, they are typically considered employees.
Examples include:

  • Part-time seasonal help
  • Workers in training
  • Employees hired on a trial basis (working interviews)
  • Substitutes
  • Workers paid less than $600 a year

Complying with rules and regulations
As with hiring any employee, most labor laws — including workplace safety, harassment, discrimination, notice requirements, documentation, minimum wage, payday, paid sick leave and overtime requirements — apply to temporary employees.

Here are best practices to follow to help ensure compliance with labor laws and regulations:

  • Provide the employee with a written offer in advance outlining the terms of the employment relationship. (If nonexempt, use CDA Practice Support’s “Nonexempt Temporary Employee Offer Letter.” Login required.)
  • Complete all required new-employee forms, notices and acknowledgements. (Use CDA Practice Support’s resource “New Employee Orientation and Onboarding Checklist.” Login required.)
  • Complete required employee training. (Reference CDA Practice Support’s “Required Employee Training.” Login required.)
  • Ask for and retain a copy of current licenses for licensed staff.
  • Provide timely pay.

Payday requirements

If a dental practice employs an on-call employee for a single day, that employee must be paid at the end of the employee’s shift. Temporary employees expected to work one day or on an on-call, day-to-day basis must be paid daily. Failure to do so can result in civil and criminal penalties.

Labor Code section 201.3 provides that for employees employed for less than 90 days:

Wages are due and payable to an employee of a temporary service employer no less frequently than weekly, regardless of when the assignment ends. Wages for work performed during any calendar week shall be due and payable not later than the regular payday of the following calendar week…
If an employee of a temporary services employer is assigned to work for a client on a day-to-day basis, that employee’s wages are due and payable at the end of each day.

But, I thought I could provide a 1099?

The Form 1099-versus-W-2 topic can be confusing to employers. When determining whether the temporary worker is an employee or an independent contractor, the employer must use the ABC test. The duties performed by dental office managers, dental assistants, RDAs, RDHs and some associate dentists are largely directed or prescribed by the dentist-employer. Given this, the general rule is that an individual is an independent contractor if  A) the worker is free from control and direction over performance of the work, B) the work is outside the usual course of the business and C) the worker is customarily engaged in an independently established trade, occupation or business.

If the worker does not meet the three-part test above, then they most likely should be treated like an employee and should be issued a W-2 form. For independent contractors, the employer may issue a 1099. However, if the independent contractor wasn’t paid more than $600, the employer doesn’t have to issue a 1099 form; instead, it is the contractor’s obligation to report the income on their tax return. See the IRS FAQ “Form 1099 MISC & Independent Contractors” for more requirements.

Use of a temporary or referral agency

If using an agency to assist with hiring, employers should ask whether the agency is simply a referral agency or whether the workers are employed by the agency itself, as this is an important distinction when considering joint-employer liability risk.

CDA reminds dentists that regardless of the arrangement made with the agency, anytime the employer hires a temporary staff person from an agency, the agency becomes what the law refers to as a "joint employer." This means that the agency shares the responsibility for some issues, such as preventing harassment and discrimination.

Generally, employers who use the assistance of a referral-only agency are essentially employing the worker and should follow documentation requirements for a newly hired employee.
CDA Practice Support says dentists should ask the temporary agency the following questions before agreeing to accept an employee:

  • Is the dental staff prescreened for a valid license?
  • Does the agency perform a background check on dental staff?
  • Is the dental staff an employee of the agency?
  • Does the agency assume certain employment-related liabilities, i.e., workers’ compensation and Employment Development Department benefits?
  • Does the agency process payroll for the dental staffer, including all payroll taxes and the W-2 at the end of the year?
  • How is the office invoiced for hiring the dental staffer from the agency?
  • What is the rate the office pays for a temporary hire?
  • Does the agency have a website?
  • Is the agency associated with or endorsed by the local dental society?
  • Is there a contract between the agency and the office upon hiring a temporary dental staffer?

When using a temporary agency that employs temporary employees, follow these best practices:

  • The temporary employee should only be paid through the agency.
  • Hiring and firing should be handled by the agency.
  • The duration of employment should be set forth at the beginning of the relationship and extended in writing if needed. Temporary employees are typically hired for nine months or less.

Regardless of the length of employment, when the employment relationship ends, provide the employee with a notice on change in relationship (Use CDA Practice Support’s Employee “Change in Relationship Notice.” Login required.) unless the employee received a written offer at the onset of the employment relationship with a clear end date, in which case no official termination notice is necessary.

For CDA Practice Support resources cited in this article, visit cda.org/practicesupport.



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