Employee vs Independent Contractor
Understanding Your Options
TWO WAYS TO WORK AS A DENTAL HYGIENIST
EMPLOYEE or INDEPENDENT CONTRACTOR
W-2 Employee Model
Fixed schedule
Employer control
Taxes withheld
Structured role
1099 Independent Model
Flexible schedule
Greater independence
Self-managed taxes
Business ownership mindset
W-2 Employee
-
Classified as an employee under IRS guidelines
-
Employer controls schedule, duties, and workflow (behavioral control)
-
Paid wages with taxes withheld (income tax, Social Security, Medicare)
-
Works within the practice’s systems, policies, and clinical protocols
-
Receives a W-2 form at year-end
*In clinical settings like dental offices, tools and equipment are typically provided by the practice. However, classification is determined by control and the overall working relationship—not tools alone.
1099-INDEPENDENT CONTRACTOR
-
Classified as a self-employed independent contractor under IRS guidelines
-
Maintains control over how, when, and where work is performed
-
Paid per contract or service, with no taxes withheld
-
Responsible for self-employment taxes and business-related expenses
-
Typically works under a defined agreement or contract
-
Receives a Form 1099-NEC for nonemployee compensation
Understanding Misclassification and
Why Proper Structure Matters
Worker misclassification occurs when a dental hygienist is treated as an independent contractor (1099) but functions under the level of control typical of an employee (W-2). According to the Internal Revenue Service, classification is determined by the entire working relationship, not by title, preference, or how payment is issued. Misclassification is a common issue across industries and is often the result of misunderstanding—not intent.
When misclassification occurs, there can be serious financial and legal consequences for the hiring entity, including liability for unpaid payroll taxes, penalties, and interest. Workers may also be impacted through incorrect tax filings or loss of protections tied to employee status. If a hygienist did not intentionally choose to operate as an independent contractor and does not meet IRS criteria for independence, the arrangement may not be considered compliant.
This is why proper structuring is essential for everyone involved. A correctly structured 1099 relationship reflects true independence—clear agreements, control over how work is performed, and alignment with IRS guidelines. When done properly, it protects both the dental professional and the practice while allowing flexibility and opportunity within a compliant framework
IRS Guidelines: The 20-Factor Test
The IRS developed a set of factors—commonly referred to as the 20-Factor Test—to help evaluate worker classification. These factors examine elements such as control, financial independence, and the nature of the relationship. While not used as a strict checklist today, these principles still form the foundation of how the IRS assesses whether a worker is an employee or independent contractor.
To review these factors in more detail, refer to official IRS guidance on worker classification:
View IRS Worker Classification Guideline
https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined
Become A Dental Hygiene Boss
The Right Way
Understanding worker classification is more than compliance—it’s about making informed decisions that support your long-term goals. Whether you are transitioning to independent work or want to ensure your current structure aligns with IRS guidelines, having the right foundation is key to operating with confidence.
If you’re ready to properly structure your business, gain clarity, and step into a more strategic way of working, we’re here to help. Schedule a consultation to receive personalized guidance tailored to your situation.
For additional insight, explore The Dental Hygiene Boss book and the accompanying free tax guide, designed to help dental professionals better understand income, structure, and how to operate with intention in today’s evolving industry.
