Paying Temporary Workers
As a dentist running your practice, managing employee compensation can be complex, especially when dealing with a mix of permanent employees, temporary hygienists, temporary assistants, and even workers who have incorporated themselves. Understanding how to navigate these different payment structures is essential to ensure compliance with Revenue Canada regulations and maintain the financial health of your practice. In this article, we'll break down the guidelines for paying temporary hygienists and assistants, and workers who have incorporated themselves.
Paying Temporary Hygienists and Assistants
Understanding the CRA Guidelines: Temps in Dental Practices Should Be Treated as Employees, not Contractors
Running a successful dental practice involves managing various aspects, including staffing, financial management, and compliance with tax regulations. When hiring temporary staff, there might be misconceptions about their employment status and how they should be paid. The Canada Revenue Agency (CRA) has clear guidelines that emphasize that temporary workers in dental practices should be treated as employees and paid accordingly, regardless of the worker's preference. In this article, we'll delve into the details of these guidelines and explain why adhering to them is crucial for your practice's financial health and compliance.
Understanding the CRA Guidelines
According to the CRA Guidlines, temporary workers in dental practices, including temporary hygienists and assistants, should be classified and paid as employees, even if the worker requests a different arrangement. This means that the same tax deductions, including income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums, that apply to permanent employees should also apply to temporary workers.
The CRA's position is based on the nature of the working relationship and the degree of control exerted by the dental practice over the work performed. If the dental practice has control over how, when, and where the work is done, the worker is likely considered an employee. It's important to note that the worker's preference or agreement to be paid as a contractor does not necessarily dictate their employment status.
Checklist for Dental Practice Owners: Assessing Employment Status of Temporary Workers
- Can you control the worker's tasks, schedule, and methods of performing the job?
- Do you direct, scrutinize, and effectively control many elements of how and when the work is carried out?
- Do you decide what jobs the worker will do?
- Does the worker receive training or direction from you on performing the work?
- Is the overall work environment between you and the worker one of subordination?
If you answer yes to these questions, the worker is likely an employee.
- Who owns the tools and equipment used for the job?
- Do you supply most of the tools and equipment the worker needs?
- Are you responsible for the repair, maintenance, and insurance costs of the tools and equipment?
- Do you retain the right of use over the tools and equipment provided to the worker?
If you own and provide most of the tools and equipment or retain control over them, the worker is likely an employee.
- Can the worker subcontract their work or hire their own assistants?
- Can the worker hire helpers or assistants?
- Does the worker have the ability to hire and send replacements, or must they personally do the work?
If the worker cannot subcontract or hire assistants and must personally do the work, they are likely an employee.
Importance of Compliance
Complying with the CRA guidelines by treating temporary workers as employees has several important implications for dental practices:
- Tax Deductions: By treating temps as employees, you must deduct and remit the appropriate income tax, CPP contributions, and EI premiums from their earnings. This ensures that you and your temporary workers fulfill your tax obligations.
- Legal Compliance: Misclassifying workers can lead to legal and financial consequences. Failing to properly classify and pay temporary workers as employees could result in penalties and back taxes.
- Workers' Rights: Treating temps as employees ensure they have access to the benefits and protections that employees are entitled to under employment standards legislation, such as CPP contributions and EI benefits.
Exceptions to the Rule
There are exceptions to treating temps as employees. If temporary workers are engaged through a legitimate temp agency, the agency is typically responsible for their employment status and tax deductions. Similarly, suppose a temporary worker operates their own incorporated business. In that case, payments are made to the corporation rather than the individual, and the rules for contractors apply.
As a dental practice owner, you must be aware of and adhere to the CRA guidelines when hiring and paying temporary workers. Regardless of the worker's preference, the nature of the working relationship and the level of control exerted determine their employment status. Treating temporary workers as employees, deducting the appropriate taxes, and ensuring compliance with the law protects your practice and maintains fairness and integrity in the workplace.
Before making any decisions related to your staffing and payroll, it's advisable to consult with a tax professional or legal advisor who is well-versed in employment and tax regulations to ensure that your practice remains compliant with the latest guidelines set by the CRA.