Independent Contractor vs Employee Dentists in Ontario: Legal Considerations for Clinics and Associates

Dental practices in Ontario often engage associate dentists as independent contractors rather than employees. This structure is commonly used across the industry and is generally understood to provide flexibility for both the clinic and the associate.

However, the distinction between an independent contractor and an employee is not determined solely by how the relationship is described in the agreement. Instead, it depends on how the relationship operates in practice.

Misclassification can have legal, financial, and tax implications for both the clinic and the associate. As a result, it is important to understand the factors that distinguish these two types of relationships and how they apply in the context of dental practices.

Why Classification Matters

The classification of a dentist as an independent contractor or an employee affects several aspects of the relationship, including:

• tax treatment and source deductions

• entitlement to employment standards protections

• eligibility for benefits and vacation pay

• liability and risk allocation

If a dentist is classified as an independent contractor but operates as an employee in practice, there may be exposure to claims or reassessment.

Key Factors Considered in Determining the Relationship

Courts and regulators assess the substance of the relationship rather than relying solely on the wording of the agreement.

Some of the key factors include:

Control Over Work

One of the most important considerations is the degree of control exercised by the clinic.

Relevant questions include:

• who determines the dentist’s schedule

• whether the dentist can accept or decline patients

• whether the clinic imposes detailed operational rules

A higher degree of control may indicate an employment relationship.

Ownership of Tools and Equipment

In many dental practices, the clinic owns the facilities, equipment, and support staff.

However, the analysis considers whether the dentist:

• provides their own tools or equipment

• bears responsibility for certain operational costs

• operates with a level of independence

Where the clinic provides all resources, this may weigh toward an employment characterization, although it is not determinative on its own.

Opportunity for Profit and Risk of Loss

Independent contractors typically have the ability to influence their income and bear some degree of financial risk.

This may include:

• earning based on production or collections

• absorbing certain expenses

• managing their own schedule to increase revenue

Where the dentist has limited control over income or bears little financial risk, the relationship may resemble employment.

Integration Into the Practice

Another consideration is the extent to which the dentist is integrated into the clinic’s operations.

Factors may include:

• whether the dentist works exclusively at one clinic

• how patients perceive the relationship

• whether the dentist operates under the clinic’s brand

A high level of integration may suggest an employment relationship.

Common Structure in Ontario Dental Practices

In Ontario, many dental practices structure associate relationships as independent contractor arrangements.

These arrangements often include:

• percentage-based compensation

• flexibility in scheduling

• responsibility for certain professional obligations

However, the structure must be supported by how the relationship operates in practice.

If the day-to-day reality of the relationship reflects a high degree of control and limited independence, the classification may be challenged.

Risks of Misclassification

Misclassification can create several risks for clinics and associates.

For clinics, this may include:

• liability for unpaid source deductions

• exposure to employment standards claims

• potential penalties or reassessments

For associates, this may include:

• uncertainty regarding benefits and entitlements

• tax implications

• limitations on certain legal protections

These risks highlight the importance of structuring the relationship correctly from the outset.

Aligning the Agreement With the Intended Relationship

A well-drafted agreement should reflect the intended nature of the relationship and support it in practice.

This may involve:

• clearly defining the independent contractor relationship

• outlining the degree of control and autonomy

• addressing compensation and financial structure

• ensuring consistency with how the practice operates day to day

Simply labeling the relationship as an independent contractor arrangement is not sufficient if the underlying structure does not support that classification.

Why Legal Review Matters

The distinction between independent contractor and employee status is nuanced and fact-specific.

Before entering into or revising a dental associate arrangement, clinics and dentists may wish to obtain legal advice to ensure that:

• the classification is appropriate

• the agreement reflects the intended structure

• potential risks are identified and addressed• the relationship is aligned with applicable legal principles

A proactive approach can help reduce the risk of disputes and regulatory issues.

Speak With a Lawyer Before Structuring a Dental Associate Relationship

Clinics and dentists should carefully consider how associate relationships are structured before entering into an agreement.

If you are structuring or reviewing a dental associate arrangement in Ontario, you can Book a Consultation to discuss your situation and next steps.