Dentists hiring staff as Independent Contractors or Employees
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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.),  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.),  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. In my third blog, I visited Witherell v. Canada, where the court found that a Newfoundland dentist had hired a dental hygienist as an independent contractor (and was therefore not required to pay employment insurance premiums on her behalf). So lets keep going with the caselaw, shall we?
TLS Health Services Inc. v. Canada
In TLS Health Services Inc. v. Canada (Minister of National Revenue – M.N.R.),  T.C.J. No. 631, the tax court had to once again deal with the issue of whether a dental hygienist was an employee of a corporation taxpayer; if so, that corporation would be required to pay employment insurance. The corporation was created by a dental surgeon in London, Ontario in order to provide hygienist services to his patients. Before that corporation was created, all of the hygienists were employees of the dental surgeon. After incorporation, the dental surgeon required them to become independent contractors providing services to the corporation.
Now, importantly, there were a number of factors that pointed to the fact that the dental hygienist was an independent contractor. First, the agreement the dental hygienist signed spoke about the relationship being one of independent contractor (and not employee). The dental hygienist was only paid $28 per hour for the services performed. The dental hygienist was also responsible for various expenses related to providing services – such as the cost of travel, insurance, licensing fees, accounting services, textbooks, etc.
But notwithstanding these indicia, the court ultimately ruled that that the dental hygienist was an EMPLOYEE and, as such, the corporation owed employment insurance premiums. How did the court get there? Well, first, the dental hygienist was providing services to the dentist’s patients, not her own; the dental surgeon owned all patient and client related information. Second, the major equipment used to carry on the practice of dentistry was owned by either the corporation or the dentist. The dental surgeon didn’t bring her own instruments. Third, even though the contract contemplated that the dental hygienist would be an independent contractor, the TRUE agreement (as evidenced by the parties’ conduct) between the parties said otherwise. Now, importantly, before rendering its verdict that the dental hygienist was an employee, the court reviewed the various cases which found the opposite. Here’s how the court distinguished those cases fromt eh case before it:
39 Appellant’s counsel submitted that the courts have consistently held that a dental hygienist is complementary to dental practice and is not necessary to the practice, and consequently is not considered integrated with the practice. He referred me to the following cases: Bradford v. Canada; and Witherell v. Canada.
40 In Bradford, the trial judge found the dental hygienist maintained her own working hours. The dental hygienist testified she selected the most profitable work and places to work. The trial judge was also satisfied that the intentions and objectives of the dentist and dental hygienist were present in their relationship. The contract was not flawed. This is not the situation at bar. In my view, after observing the three witnesses, I prefer the evidence of Ms. Fawcett that Ms. Loro played the significant role in determining Ms. Fawcett’s hours of work.
41 In Arthur, supra, Ms. Arthur was paid $75 per day in the dentist’s office plus 25 per cent of her billings. She was also responsible for 25 per cent of bad debts. The appellant in Arthur had the right to adjust downward the tariff. Ms. Arthur received referrals from other dentists. She also promoted herself by giving lectures and giving away toothpaste and dental floss, for example. She also printed her own professional cards for distribution. These facts are definitely not present in the appeal at bar; Ms. Fawcett did not have to seek out patients or promote her activity.
42 In Tsimerman, the dental hygienist had no set hours and had no minimum or maximum hours to be worked. She also saw patients who were not patients of the dentist, which is not the case at bar. The dental hygienist in Tsimerman appears to have had a greater freedom than Ms. Fawcett in choosing and treating patients.
43 Finally, in Witherell, the dentist retained 50 per cent of fees earned by the dental hygienist for the facilities and equipment provided to her; the other 50 per cent of billing fees were paid to her. She was also guaranteed sufficient client base to produce a given income. Ms. Fawcett’s income was not dependent on fees charged to patients nor did she contribute to the use of equipment and facilities.
Remember: if you are looking for an associate agreement (either independent contractor or employee), you can contact me at email@example.com.