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Hiring Associates, Staff, or Dental Hygienists as Independent Contractors vs. Employees (Part 3)

Dentists hiring staff as Independent Contractors or Employees

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only.  If you need legal advice, contact me (Michael Carabash) or David Mayzel.

This is the third of a series of blogs I’m writing for dentists about hiring staff (e.g. associates, dental hygienists, etc.).  In my first blog, I briefly examined the case of Bradford v. Canada (Minister of National Revenue – M.N.R.), [1988] T.C.J. No. 818, where the court found that a dental hygienist was an independent contractor and, as such, entitled to deduct certain business expenses.  In my second blog on this topic, I reviewed Carovar Ltd. v. Canada (Minister of National Revenue – M.N.R.), [1989] T.C.J. No. 405, where the court came to the opposite conclusion: the orthodontists and a dentist associates were actually employees for the purpose of the their employer paying employment insurance.  So lets keep going with the caselaw, shall we?

Witherell v. Canada

In Witherell v. Canada (Minister of National Revenue – M.N.R.) [2000] T.C.J. No. 782, the issue before the court was whether a Newfoundland dentist (Dr. Witherell) was required to pay employment insurance premiums on behalf of a dental hygienist.  The dentist claimed that the hygienist was an independent contractor and not an employee; hence, no employment insurance premiums were owed.  The court agreed: the dental hygienist was an independent contractor.

Here’s how the court came to that conclusion.  To begin, there was no written contract originally presented to the dental hygienist.  That said, the agreement between the dentist and the hygienist would such that the hygienist was her own boss.  Although she could be instructed on what to do, she was not instructed on how to do it.  The business was hers, was not integral to the success of the dentist’s practice, and only accessory to it.  Furthermore, there was nothing preventing her from working with another clinic while engaged with the dentist.

Now, even though these factors of control and integration pointed to the hygienist being an independent contractor, there were other factors that made it appear as though the hygienist was an employee.  These factors included: the hygienist did not bring a clientele to the dentist’s practice; the dentist owned the tools used by the hygienist to do the work in her duties; the hygienist was paid by the piece on the basis of 50% of the net billing fee; and the clients did not pay the hygienist directly for her services.

Notwithstanding these things, the court found that the hygienist was an independent contractor.  In addition to the reasons already discussed above, the court found that the hygienist actually LOST money because she was reluctant to challenge the dentist when promises were broken.  Furthermore, at some point (when another dental hygienist left), the dental hygienist was able to realize more income, be less obstructed in her work, and her client base was clearly established as hers.

Conclusion

So, to sum up, although the hygienist didn’t own her tools of production and didn’t bring a client base to the dentist, she was essentially her own boss, was able to earn more profit, risked losing money, her business was not integral to the dentist’s practice, and there was nothing preventing her from doing work for others.  On a balance of probabilities, the court found that she was an independent contractor and not an employee.

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