Home  Library  Ali Oromchian  What You Need to Know About HR Law

What You Need to Know About HR Law

By: Ali Oromchian

Human resources is one of the hottest topics for dentists today as the number of lawsuits by disgruntled employees continues to rise.* But surprisingly, many dental school graduates are not learning about HR law. In fact, they often enter practice ownership misunderstanding or unaware of the various personnel issues that can leave them vulnerable to an employee lawsuit.

Below is a summary of the most common HR legal issues today, any of which could impact your practice at some point in your career.

Wage & Hour Law

The most frequent type of lawsuit brought against dentists by employees is related to wage & hour disputes. The law encompasses many details, but disputes typically address the following three key issues:

  • Inappropriate or nonpayment of overtime. In most states, employers are required to pay overtime to any employee who works more than 40 hours a week. There are slight variations on this law in some states - for example, in California, employees who work over eight hours in a given day or over 40 hours in a week are entitled to overtime pay. The most common legal complaints filed for nonpayment of overtime in the dental industry are from hygienists who are paid a per diem rate, but are actually working far more than eight hours per day or 40 hours per week. Surprisingly, some doctors do not pay for overtime at all simply because they do not have an appropriate software or payroll system to track and pay for additional hours. This scenario inevitably leads to employee dissatisfaction and legal action, whether brought through the state board or plaintiff attorney. Note that avoiding payment of employee time in the short term can cost far greater in the long term should you have to defend yourself in a lawsuit.
  • Nonpayment or inadequate time for breaks. This area of HR law can be easy to mishandle as breaks are typically fluid within the practice depending on your schedule. If you have employees who are classified as non-exempt, check your state laws to understand how much time you are required to provide for breaks, including lunch, and whether break time is paid by the employer. Then use a break schedule to ensure these rules are being followed. Remember that working employees through a busy schedule without providing the opportunity for breaks can lead to unhappy workers and ultimately, a legal risk for your practice.
  • Improper handling of paycheck payments. Another area that can lead to employee disputes is improper handling of payments - particularly the final paycheck. Make sure your payroll company has the correct information for each employee, and all the information required by your state. If you have a do-it-yourself payroll system, check with your tax consultant to make sure all of the data on the system is complete. Note that incomplete data on paychecks can result in a employment law and tax violation. Also understand your state law on how to handle an employee's final paycheck. Should it be given at the time of termination, or a few days after? Can you provide it the next time you run payroll?

Independent contractors versus employees

A second important area of HR law has to do with the classification of independent contractors versus employees. The difference between an independent contractor and an employee typically is defined by the degree of control the worker has in their job, and the employer has over the worker. The less control, the more likely the individual can be classified as an independent contractor. If more influence and control are involved, the more likely your worker should be classified as an employee. Examples of control include:

  • Do you tell your worker when to come and leave?
  • Do you watch over their work?
  • Do you supervise the individual?
  • Do you buy products for them to use in the practice?

The IRS has a 21-point test to determine if an individual falls under the independent contractor rule. Based on these criteria, almost no worker in private practices - whether dental, optometric, veterinary or medical - would qualify as an independent contractor. Nevertheless, many practices are hiring employees under independent contractor status because of the significant tax benefits for both employer and employee. If you are one of these practices, your best bet is to either reclassify your workers as employees, or avoid getting audited by the IRS.

Age discrimination

Age discrimination lawsuits continue to be common, most typically with a younger doctor purchasing or joining a practice with an older staff. As a new owner or associate, shifting priorities, relocation, or poor performance can all be valid reasons for terminating an employee. Today's doctors may find it particularly challenging as they bring in newer technology that is difficult for more mature employees to master. Nevertheless, it's important to understand that termination of an older staff member can potentially lead to an age discrimination action. As this can be a difficult area of HR law to navigate, be sure to speak with your lawyer before making any changes in employee status or responsibilities.

One of the best ways to understand and follow current business HR law is to purchase the HR for Health web-based software that provides an online tool to become compliant with these complex HR laws and instructions on managing employee issues in your practice. I also recommend attending lectures on human resource issues at dental society meetings, and consult as needed with your dental lawyer and practice management team.

With professional guidance and reliable resources to work with, you will have the help you need to triage any tricky situation and protect your practice from legal risk.

*Claims Journal, November 17, 2015, http://www.claimsjournal.com/news/national/2015/11/17/266953.htm

About the Author

Mr. Ali Oromchian is one of the nation’s leading legal authorities on topics relevant to dentists. Since its creation, the Dental and Medical Counsel PC law firm has been regarded as one of the preeminent health care law firms devoted exclusively to healthcare professionals. His clients seek his advice on practice acquisitions and sales, creation of corporations and partnerships, associate contracts, estate planning, employment law matters, office leasing and state board defense. Additionally, he is a frequent speaker on topics such as employment law, negotiations strategies, contract and estate planning throughout North America. He is frequently quoted and has written articles for the California Dental Association, Progressive Dentist, Progressive Orthodontists, and The New Dentist magazines. His website: www.dentalcounsel.com

View all articles by Ali Oromchian

Want more strategies for practice success?

The best way for us to help you meet your needs is to hear about them directly from you. If there's a business, financial or practice-related topic you're interested in, let us know. We'll do our research and get back to you.

The articles and materials on the Wells Fargo Practice Finance website are provided for general information only and do not constitute, nor are they intended as, a substitute for consultation with accounting, tax, legal or other professional advisors. Wells Fargo makes no representation regarding the articles available in the Strategies for Success Library or the completeness or accuracy of the information contained therein. The articles and the information contained therein may be incomplete, may contain errors or may have become out of date. Wells Fargo makes no commitment, and disclaims any duty, to update any of the articles or materials in the Strategies for Success Library.

The views expressed in the articles are those of the authors alone. They may or may not reflect the views or opinions of Wells Fargo.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.