Many dental practices bring on associate dentists, hygienists, or other team members as “1099 contractors” to simplify payroll and reduce costs. The label a practice chooses doesn't control the answer — the law does, and getting it wrong can be expensive.

Two different tests, two different agencies

For tax purposes, the IRS applies a common-law control test built around three categories: behavioral control (does the practice direct how, when, and where the work is done), financial control (who invests in equipment, who bears the risk of profit or loss, how the worker is paid), and the relationship of the parties (written contracts, benefits, permanency). No single factor decides it — the IRS looks at the whole relationship.

For wage-and-hour purposes under the Fair Labor Standards Act, the U.S. Department of Labor uses a related but separate “economic reality” test — and this area has actually been in flux. A 2024 rule expanded the factors considered and leaned toward employee status, but the DOL stopped enforcing that rule in May 2025, and in February 2026 proposed replacing it with a version closer to a 2021 standard that weighs two factors most heavily: control over the work, and the worker's opportunity for profit or loss based on their own initiative. That 2026 proposal isn't finalized as of this writing, so practices should watch for the final rule rather than assume today's enforcement posture is permanent.

Why associate dentists so often look like employees

Regardless of which specific test applies, the practical reality for most associate dentists points the same direction. If the practice sets the associate's schedule, owns the equipment and the operatory, employs the hygienists and assistants who support the associate, controls which patients they see, sets fees, and the associate has no meaningful ability to build an independent business around the arrangement — that combination of facts tends to describe an employee, not a contractor, no matter what the agreement is titled.

What misclassification actually costs

If a practice misclassifies a worker, the exposure isn't limited to back taxes. On the tax side, the practice can owe back payroll taxes, penalties, and interest. On the wage-and-hour side, misclassification can mean unpaid overtime, minimum wage violations, and liquidated damages. Ohio's own workers' compensation and unemployment systems apply their own classification analysis as well, so an arrangement that survives one test can still fail another.

What this means for your associate agreements

None of this means every dental associate must be an employee. Some arrangements — a specialist who genuinely practices independently, sets their own hours, brings their own equipment, and serves other practices too — can hold up as real contractor relationships. But a written “independent contractor agreement” doesn't create that reality; it can only describe it accurately or inaccurately. The agreement should be checked against how the relationship actually functions day to day, not treated as a form you fill in once and forget.

Practical takeaway

If your practice currently classifies any dentist, hygienist, or team member as a 1099 contractor, it's worth a periodic gut check: does the day-to-day relationship still match that classification, especially as federal enforcement standards keep shifting? A misclassification claim rarely surfaces until a worker leaves unhappy or a state agency asks questions — by then, the cost of fixing it has already grown.

Sources and further reading

●       IRS — Independent Contractor (Self-Employed) or Employee?

●       U.S. DOL, Fact Sheet 13: Employee or Independent Contractor Classification Under the Fair Labor Standards Act (FLSA)



If you're not sure how your associate or team arrangements would hold up under either test, we can review your agreements and flag exposure before it becomes a problem. Call 216-644-3359 or schedule a consultation online.