Compliance
What it actually costs when the paperwork is wrong
Every obligation we take on has a penalty attached to it when nobody does. Here’s what each one exposes a practice to, with the authority that sets it, so you can see what you’re handing off rather than taking our word for it.
One missed obligation doesn’t stay one number
The tax or premium you didn’t pay is the smallest part of what gets assessed. A penalty attaches to the failure itself, interest runs from the original due date rather than from the day anyone noticed, and in both countries the final layer reaches past the practice entity to the people who ran it.
That last layer is the one practices tend not to expect. Incorporating protects a lot of things. It doesn’t protect money that was withheld from someone’s pay and never remitted.
The amount itself
The deduction, the premium, or the tax that didn't get paid when it was due.
A penalty on the failure
Charged for missing the obligation, separately from and on top of the amount still owed.
Interest
Running from the original due date, not from the day the shortfall was found.
Personal liability
For money withheld from someone's pay and never remitted, both regimes can reach the responsible people directly.
Employment classification
You bring someone in for a day and pay them on a 1099 or against an invoice. If the working relationship looks like employment, and it usually does when you set the hours, direct the work, and supply the operatory and the instruments, the reviewing agency can reclassify that person as your employee after the fact.
- Under IRC section 3509 the practice becomes liable for the income tax it should have withheld plus a share of the employee's FICA. Where the required Forms 1099-NEC were filed, that's 1.5 percent of wages plus 20 percent of the employee's FICA share.
- Where those forms weren't filed, both figures double, to 3 percent and 40 percent.
- The employer's own full share of FICA is owed on top in either case. There's no reduction available on it.
- Those reduced rates disappear entirely where the IRS finds intentional disregard of the requirement to withhold, and the practice is liable for the full amount.
- The CRA can assess the practice for the source deductions that should have been withheld.
- The employer is liable for both the employer and the employee share of CPP and EI, and stays liable for the employee share even where it can no longer be recovered from the worker.
- Interest and penalties run on top of the assessed amount.
- Directors can be held personally liable for unremitted source deductions under section 227.1 of the Income Tax Act.
IRC section 3509; IRS IRM 4.23.8; Income Tax Act (Canada) s. 227.1
Payroll and taxes
Once someone is your employee, deposits and remittances run on a fixed schedule. Missing one is a penalty in its own right, charged on top of the tax you still owe.
- The failure to deposit penalty under IRC section 6656 is set by lateness: 2 percent at one to five days, 5 percent at six to fifteen days, and 10 percent past fifteen days.
- It reaches 15 percent once the deposit is more than ten days past the IRS's first notice.
- The tiers don't stack. The higher rate replaces the lower one rather than adding to it.
- Separately, the Trust Fund Recovery Penalty under IRC section 6672 reaches the people responsible for the money personally, for 100 percent of the withheld income tax and the employee's FICA share. It follows the individual, not the practice entity, so incorporating doesn't stop it.
- Late remittance draws 3 percent at one to three days, 5 percent at four to seven, 7 percent at eight to fourteen, and 10 percent at fifteen days or more.
- A second assessment in the same calendar year carries 20 percent where the failure was made knowingly or through gross negligence.
- Failing to deduct at all draws 10 percent of what should have been withheld, or 20 percent on a repeat.
- The penalty normally applies only to the amount above $500, but it applies to the entire amount where the failure was knowing or grossly negligent.
IRC sections 6656 and 6672; Canada Revenue Agency payroll penalties
Liability insurance
A temp treats patients for a day, and a claim over that day's treatment arrives months later. The question is then whether the person who did the work was inside the policy that's being asked to respond.
- Professional liability policies are written around defined insureds and a defined scope of practice. Someone who isn't your employee and isn't named or captured by the policy's definitions may sit outside it.
- Whether a given policy answers a given claim is decided on the policy wording and by the insurer, which is the actual problem here: it gets settled after the claim exists, not before the shift.
- A denial doesn't end the claim. It leaves the practice answering it directly.
- The same structure applies. Coverage turns on the policy's own definitions of who is insured and what work is covered.
- A locum working under an arrangement the policy doesn't contemplate is a gap that surfaces at claim time.
Policy wording governs. Confirm insured status with your broker.
Workers' compensation
Someone is injured on your premises during a shift. Workers' compensation is compulsory for employers, and whether you registered is a separate question from whether the worker gets paid.
- Coverage is administered state by state. In Washington, operating without an account exposes the practice to a penalty set at a statutory minimum or twice the premiums that should have been paid, whichever is greater, plus interest on the delinquency.
- The injured worker still receives benefits. Non-compliance doesn't deny the claim, it moves the cost of it onto the employer, who can be pursued for it directly.
- Minimum penalty amounts are adjusted for inflation on a set cycle, so check the current figure with the state agency.
- Registration with WorkSafeBC is required by law for employers in British Columbia.
- WorkSafeBC states that where an employer isn't covered and a worker is injured or contracts an occupational disease, that employer can be responsible for both the worker's claim costs and the unpaid premiums.
- On accounts that already exist, overdue balances draw a 1 percent monthly penalty, with a $50 minimum.
Washington State Department of Labor and Industries; WorkSafeBC registration requirements
Credential verification
Someone works a shift on a credential that has lapsed, carries a restriction, or doesn't extend to what they were asked to do that day. The exposure lands on the practice, not only on the individual.
- Scope of practice and supervision requirements are set state by state by the dental board.
- Where an unlicensed or out-of-scope person performs a restricted procedure, board sanction typically runs against the supervising dentist who permitted it as well as the person who performed it.
- A credential that was valid at hire isn't evidence it was valid on the day of the shift.
- In British Columbia, scaling, subgingival debridement and root planing are restricted activities under the Health Professions Act, and only a registrant may perform them.
- A practice that allows an unregistered person to perform a restricted activity is operating outside the regulation.
- Registration status changes. It's a point-in-time check, not a permanent one.
Health Professions Act (BC) s. 14; British Columbia College of Oral Health Professionals; state dental boards
Local labor law
Overtime thresholds, break entitlements, minimum reporting pay, and the deadline for final pay all differ by state and province. They apply to a one-day placement on exactly the same terms as to a permanent hire.
- Under the FLSA an employee who was underpaid can recover the unpaid wages plus an equal amount again as liquidated damages.
- The lookback is two years, and three where the violation was willful.
- Repeated or willful minimum wage or overtime violations also carry a civil money penalty per violation, set by the Department of Labor and adjusted for inflation.
- Willful violations can be prosecuted criminally.
- British Columbia's Employment Standards Act sets escalating administrative penalties: $500 for a first contravention, $2,500 for the same requirement at the same location within three years, and $10,000 within three years of that second one.
- The penalty doesn't increase with the number of employees affected, so one rule missed across a whole roster is penalized once.
- Each separate requirement contravened is its own penalty, and they run concurrently.
Fair Labor Standards Act 29 U.S.C. 216; Employment Standards Regulation (BC) Part 6, s. 29
Which of these we carry, and which stay yours
The line runs between temporary and permanent work, and it isn’t a soft one.
Temp and locum
Every risk above is ours
On a temporary or locum placement the professional is our employee. We run the payroll and remit the deductions, we carry the liability and workers’ compensation coverage, we confirm registration before the shift, and the labor standards obligations sit with us as the employer. If any of it is wrong, the assessment comes to us.
Permanent placement
Every risk above is yours
On a permanent hire we introduce the candidate and the practice employs them directly. That makes you the employer from day one, so classification, payroll, insurance, workers’ compensation, credential checks and labor standards are all yours to run. We don’t verify credentials on a permanent placement, and you shouldn’t rely on us to.
This page describes penalties published by the authorities named alongside each section and is not legal or tax advice. Rates and administrative penalty amounts change, several of them on an inflation cycle, and requirements differ by jurisdiction. Confirm anything you plan to act on with your own advisor and with the agency that administers it.
Hand the whole list off
Booking a temp through us moves every obligation on this page onto our side of the line for the length of the placement.
Looking for the shorter version? Start on the compliance overview.