Can You Hire an Associate Dentist as a 1099 Contractor?

The idea is tempting for practical reasons.

Paying an associate a percentage of production without running them through payroll looks simpler, the benefits line item shrinks, and an associate may ask for it themselves, wanting to run their own business inside your practice.

A 1099 also feels natural when the dentist only works two days a week or covers a single specialty block.

Part of the appeal is mechanical.

Under the FLSA, employees receive the Act’s protections and independent contractors — who are in business for themselves — are not covered by it.

If the associate is not your employee, the reasoning goes, payroll tax, overtime and benefits questions all go away.

They do not go away because the paperwork says so.

A signed 1099 or an independent contractor agreement does not by itself make an associate dentist a contractor: the IRS looks at control, the DOL looks at the parties’ actual practices, and the state tests look at the real working relationship.

The label is the first thing an auditor sets aside, not the last.

One distinction up front: this page is about a recurring associate — a dentist who works in your practice week after week.

Short-term locum coverage is a different arrangement, and the 1099 discussion in our guide to hiring a locum dentist is specific to that setting.

Federal agencies ask overlapping but different questions, and a practice has to clear both.

The IRS test.

For federal employment taxes, the IRS applies common-law rules: anyone who performs services for you is your employee if the business can control what will be done and how it will be done.

The IRS sorts the evidence into three categories — behavioral control, financial control and the type of relationship — and behavioral control asks whether the company controls or has the right to control what the worker does and how.

If you want an official answer, you can request a worker-status determination on Form SS-8, though the IRS notes it may take at least six months to receive a determination.

The DOL test.

The Department of Labor asks the question under the FLSA, where the answer decides whether the Act’s wage protections apply to the associate at all.

Its regulation on the books, 29 CFR part 795, was published January 10, 2024 and took effect March 11, 2024, and it weighs the economic-reality factors of the working relationship as a totality of the circumstances — no single factor or subset of factors is necessarily decisive.

Where the rulemaking stands.

Pin the dates down, because this area has been moving.

Since DOL Field Assistance Bulletin 2025-1 (May 1, 2025), DOL investigators no longer apply the 2024 rule, but DOL has said the 2024 rule remains in effect for private lawsuits until further action.

On February 27, 2026, DOL proposed rescinding the 2024 rule and readopting its January 7, 2021 rule with modifications — a version that treats two factors as “core”: the nature and degree of control over the work, and the worker’s opportunity for profit or loss.

As of October 7, 2026, the Federal Register shows only that proposal and no final rule replacing the 2024 rule.

Whichever version of the analysis applies, it turns on the same real-world facts the next two sections take up.

States add their own tests, and this is where the dentist-specific detail lives.

The ABC test starts from a presumption the IRS question does not make: the worker is presumed to be an employee unless the hiring business can prove otherwise.

California’s version, Labor Code 2775, presumes a worker is an employee unless the hiring entity shows — among other things — that the work is outside the usual course of its business.

Seeing patients is the usual course of a dental practice’s business, so that prong is where a straightforward associate arrangement runs aground.

California’s dentist exemption is not permission.

Labor Code 2783 exempts licensed dentists — along with physicians and surgeons, podiatrists, psychologists and veterinarians — performing professional services for a health care entity from the ABC test.

Read it carefully: the exemption routes dentists to the older Borello multifactor test instead of deciding that they are contractors.

It removes the ABC test, not the classification question — an associate whose work you control can still be an employee under Borello.

Massachusetts has no such carve-out.

Its three-part ABC test treats a worker as an employee unless the hiring business shows all three: freedom from control, in the contract and in fact; service outside the usual course of the employer’s business; and a customarily independent business of the same nature (M.G.L. c.149 s.148B).

Unlike California’s Labor Code 2783, the statute’s text contains no exemption for dentists or other licensed health professionals.

New Jersey’s version lives in its unemployment law.

The ABC test there, in section 43:21-19(i)(6)(B) of the New Jersey Statutes, lets the middle prong be satisfied two ways: the service is either outside the usual course of the business or performed outside all of the places of business of the enterprise.

An associate who treats patients in your operatories is inside both.

These three states do not exhaust the question — which test your state uses, and whether its statute exempts dentists, is one to confirm with employment counsel or your state labor agency.

Strip away the acronyms and the same handful of facts decide these cases.

Under the 2024 DOL rule, facts relevant to control include whether the potential employer sets the worker’s schedule, supervises the performance of the work, or explicitly limits the worker’s ability to work for others — each points toward employee status.

The same rule treats work that is critical, necessary or central to the employer’s principal business as pointing toward employee status, and treating patients is central to a dental practice’s principal business.

Mapped onto a dental schedule book, the facts that sink a 1099 associate look like this:

• You set the days and hours. The associate works when your practice is open, on a schedule you can change.
• You assign the patients. Your front desk fills the associate’s chairs, and your protocols and staff frame how the care gets done.
• Your agreement limits outside work. Exclusivity clauses and restrictions on working at other practices fall squarely under what the DOL names as a control fact — explicitly limiting the worker’s ability to work for others.
• The work is your core revenue. The associate produces the dentistry that is the practice’s principal business.
• There is no upside or downside in the business itself. Under the 2021 rule DOL proposed to readopt, the nature and degree of control over the work and the worker’s opportunity for profit or loss are the two factors it treats as “core” — and an associate who can only ever earn a share of your collections, and cannot gain or lose from how their own business is run, has no such opportunity for that core factor to find.

The IRS behavioral-control category asks the same thing in different words: whether the practice controls — or has the right to control — what the dentist does and how they do it.

A dental license and good clinical judgment do not settle the issue; the question is about the working arrangement around the dentistry, not the dentistry itself.

And notice what is not on the list: the label on the invoice.

DOL’s analysis looks at actual practice over contract wording — a “skillfully devised” contract may suggest a contractor while the parties’ actual practices establish an employment relationship.

If the agreement says contractor and the schedule book says employee, the schedule book is the evidence an auditor reads.

If the tests say employee and you paid the associate as a contractor, the exposure arrives from several directions at once — and rarely through the door owners expect first.

Federal employment taxes.

Under IRC section 3509, an employer that misclassified workers without intentional disregard computes federal income tax withholding liability at 1.5% of wages and the employee share of FICA at 20%.

If the employer also failed to file required information returns such as Forms 1099, those rates rise to 3% and 40%.

State penalties.

California’s are written into its Labor Code: willful misclassification carries civil penalties of $5,000 to $15,000 per violation, rising to $10,000 to $25,000 per violation when the conduct is part of a pattern or practice.

FLSA damages.

An employer that violates FLSA minimum wage or overtime rules owes the unpaid wages plus an equal additional amount as liquidated damages.

Dentistry has one wrinkle in the owner’s favor here: under the FLSA regulations, a licensed dentist who is actually practicing is an exempt “practice of medicine” professional, so for an associate who qualifies as exempt anyway the FLSA wage exposure is limited — which is why the tax, benefits and state-law exposure above is usually the larger risk.

There is also an off-ramp.

The IRS runs a Voluntary Classification Settlement Program for practices that reclassify contractors as employees going forward — see the last question below for what it costs.

Suppose the analysis genuinely supports contractor status: the dentist works a defined block of days, books their own patients rather than being scheduled by your front desk, offers comparable services through other practices, and shares in the economics of their own work instead of only your collections.

Even then, two pieces of housekeeping decide whether the arrangement survives a review.

The agreement has to describe reality.

Write down the economics the way a vendor relationship would read: which services, at which location, paid on what formula, settled when.

Keep the document consistent with how the weeks actually run, because DOL looks at actual practice over contract wording — a skillfully drafted agreement that promises independence your schedule book contradicts is evidence for the other side, not protection.

Confirm the coverage before the first patient.

A non-employee dentist is not on your payroll, so ask your malpractice carrier in writing how your policy treats a dentist working in your operatories who is not your employee, and have employment counsel in your state confirm the tax, insurance and benefit obligations that follow the classification you choose.

An hour of counsel time here is cheap against the penalty ranges above.

And if the analysis points the other way, take the employee result and build the deal properly: pay the associate through payroll with the production formula, guarantee and other terms set out in a written associate agreement.

The dentist’s side of those clauses — and the ones worth negotiating hard on — is covered in our guide to associate contract terms.

For everything else involved in the hire, the dental hiring hub collects the employer guides by stage.