Independent Contractors for Veterinary Practice Owners: The Essential Guide
What is an Independent Contractor?
Your veterinary practice will likely have moments where you need to bring on employees - on a temporary basis - to handle certain job responsibilities. Veterinary practices in particular have these issues, as there may be specialty doctors or technicians you need. At these moments, you may find it easier to hire an independent contractor.
An independent contractor in your veterinary practice is a person that is not considered an employee of the practice, they are typically self-employed, and the work they complete is agreed to through contract by both the individual doing the work and the manager. The individual is not under the control or direction of the business, and what matters is the completion of agreed upon projects/deliverables. Another important consideration is that the criteria for classifying workers as independent contractors may be different depending on the state your veterinary practice is located in.
There are key differences in terms of how you pay independent contractors vs. regular employees. Generally speaking, independent contractors get paid based on their completion of specific duties, and the practice does not get involved in the “how it’s completed.” In other words, they do not control any aspect of the process. As such, timekeeping software — like that offered by HR for Health to help track employee time — isn't as necessary. Furthermore, independent contractors are generally not eligible for any benefits except any that are imposed by state law. Independent contractors also do not need to be paid overtime.
That's not to say that you can categorize any employee as an independent contractor, however. Indeed, doing so is illegal and can result in veterinary practice owners having major legal problems, not to mention the potential financial losses due to penalties, back-pay on missed overtime payments, benefits etc.
Things to Know Before Hiring an Independent Contractor in Your Veterinary Practice
It is important to keep in mind that there are critical differences between a regular employee and an independent contractor. Misclassifying such a contractor can land you in serious hot water with state or federal authorities. As such, it is important to take a close look at the job duties and the level of control that your veterinary practice has, while also considering any state-specific guidelines that must be followed. This will help you properly determine if individuals qualify for the independent contractor classification.
Independent contractors in a veterinary office may take many forms, including doctors you bring in on a temporary basis, vet technicians that are needed for special diagnoses, or administrative professionals who work on a part-time basis.
Always use the appropriate assessment method for assessing if someone qualifies for the independent contractor classification. Different states use different assessment tests to make this determination.
RECOMMENDED READING: Independent Contractors: The Essential Guide
Independent Contractor vs. Employee
As noted above, there are major differences between an independent contractor and an employee. These differences are often thought about in terms of job responsibilities, but the differences are much broader than that.
The IRS has an independent contractor test that is often used to determine if someone is an independent contractor or employee. Questions related to this test are:
- Does the individual in question set their own work hours or dictate their own terms for how work gets done, as long as the work is completed? If the answer is yes, the individual may be an independent contractor.
- Is salary related to hourly work or per-project work? If it is hourly, the individual must be a regular employee.
- Does the work relate directly to a core function of the office, like the direct provision of regular veterinary care? If so, they are likely an employee. If their work is related to an ancillary function of the office, like accounting or human resources, then it is more likely that they may be an independent contractor.
While this is a general guideline you can follow, it’s critical that you check with your state’s rules to ensure you are following the correct guidelines. California, as an example, uses a strict test referred to as the “ABC test” and this is much more employee friendly than than the federal standard.
RECOMMENDED READING: Independent Contractor vs. Employee: What Is the Difference
Necessary Paperwork When Hiring an Independent Contractor in Your Veterinary Practice
Different paperwork is required for independent contractors, so the new hire documents should only be relevant to independent contractors, and they should not complete documents meant for employees. An example of independent contractor-specific paperwork is the W-9.
Part of the job of veterinary practice owners is to understand what paperwork they must maintain and how long that paperwork must be maintained. Other pieces of information include a resume from the individual in question. This is necessary in order to confirm that the individual in question is capable of fulfilling the qualifications necessary for the work that they have been hired to do, and it can help to settle any questions about the person's status as an independent contractor. Finally, you'll need a written contract. This contract should be able to explain the nature of the relationship, help justify why the person is an independent contractor, and specifically state what projects they will be working on,what work deliverables they will complete, etc.
You should also keep in mind that you will have different record retention requirements for independent contractors than for your regular employees. Different states and the federal government have different requirements, so you will need to work with HR experts — like those at HR for Health — to determine what your record retention requirements are.
Fortunately, HR for Health has cloud-based documentation that can securely maintain all of your documents in an easy-to-use, access, and sort format. We also have experts nearby who can ensure you know what your record retention requirements are.
RECOMMENDED READING: Exempt vs. Non-Exempt & Independent Contractors: The Complete Guide to Classifying Your Employees
What You Need to Know
You can't simply hire someone as an independent contractor to lower wages and avoid benefits, and veterinary practice owners must work with HR experts to ensure they are operating in line with necessary federal, state, and local laws. Furthermore, there are significant paperwork retention requirements, and all veterinary practice owners should confirm that they are sticking with any legal requirements when it comes to record retention.
How HR for Health Can Help
With HR for Health’s all-in-one software solution, clients can easily customize documents based on their classification, including those for regular employees or independent contractors. We can also house any additional documents with our easy-to-use document storage. You have the ability to store docs within employee personnel files, or you can store docs in a spot that is not visible to the employee.
Want more information? Contact HR for Health today to set up a free 15-minute consultation and learn more about how we can help your practice grow and thrive.