Here’s a story of a Dentist in Ontario that just faced $60,000 in taxes, fines, a world of regulatory headaches, and some serious business friction. Here’s the scary part: you’re probably making the exact same mistake. Every year, dentists across Canada and the US face significant fines related to misclassifying workers. Here’s a recent dentist’s horror story you may learn from.
The nuances of full-time employees and independent contractors can be complex. Making mistakes can be costly, potentially impacting a dentist’s office for years to come.
That’s not just a hypothetical statement. In fact, a recent example shows just how significant the consequences can be when a dental office misclassified its workers, with negative impacts still felt by all parties involved.
The Curious Case of the Ontario Dentist
The following is a real case, not a hypothetical example. Names and some details have been omitted or altered to preserve the privacy of the parties involved.
It all seemed so simple. An Ontario dentist needed help with a dental hygienist on a temporary basis. Because it was a temporary solution, the dentist paid the hygienist as a contractor for the duration of the on-again, off-again employment.
Over the course of six months, the dentist neither deducted their taxes nor made his employer contributions to the Canada Pension Plan (CPP) or the Employment Insurance (EI). But of course, neither did the worker; after all, they rightfully believed they were an independent contractor and not an employee.
After six months, the temporary hygienist moved out of the country. She didn’t file her taxes, so the Canada Revenue Agency began to look for her. When looking through her financial records, they found the regular deposits by the dental office and followed up.
A quick but undoubtedly contentious knock on the door confirmed: the dentist had misclassified the temporary worker as a contractor when in reality, she should have been an employee on the office payroll. The resulting consequences were both swift and painful.
Because the Canada Revenue Agency couldn’t collect income tax from the hygienist who had left the country, agents ordered the dentist to pay the income tax that should have been deducted in the first place. The office was also ordered to pay all relevant employer contributions for a regular employee, along with a fine for violating labor laws.
In total, the bill to be paid to the CRA came out to more than $60,000, a hefty sum for any small business.
And that was not the only cost, either. The office also had to pay an accountant to go through three years’ worth of records to ensure no further violations of any labor or tax laws. A costly endeavor for a simple miscalculation. The office is also lucky that nothing happened to the worker or their patients during this time as the worker did not have workers comp coverage and had very limited liability coverage!
Working Through an External Partner for Temporary Employment Help
The above true story is curious in that it doesn’t have a true hero or villain. Both the dental office and the temporary hygienist made mistakes, but chances are that neither of them acted in bad faith. Instead, they simply followed what they thought was right; and, as a result, took part in actions with significant negative consequences.
At the same time, the story is far from unique. Dental professionals, on both sides of the issue, have a particular area of expertise, and labor laws don’t fall within it. That doesn’t abdicate them of their responsibility to classify even temporary workers correctly. But it does highlight the potential need for an external partner when looking for help in either hiring or pursuing temporary employment.
That’s where a reliable staffing agency comes in. When working through a partner like WORKFORCE, dental offices in Ontario, other parts of Canada, and the United States can hire help when their office needs it without worrying about how to classify that help. Meanwhile, dental professionals looking for temporary work can streamline how they both look for and manage their work.
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