Avoid These Wage and Hour Mistakes in Your Dental Practice
Dental practices are not immune to wage and hour laws, which are in place to protect employees from unfair labor practices. Wage and hour laws are complex, and dental practices often make mistakes that can lead to penalties, lawsuits, and damage to their reputation. This article will explore some of the notables and how to avoid them later.
1. Misclassifying Employees
One of the most common wage and hour mistakes dental practices make is misclassifying employees. Misclassification occurs when an employee is classified as exempt from overtime pay when they are actually non-exempt. Exempt employees are not entitled to additional pay for working overtime, whereas non-exempt employees are entitled to extra pay for any hours worked over 40 a week.
To avoid misclassification, dental practices must correctly classify employees based on job duties and responsibilities. The Department of Labor (DOL) has specific criteria for determining exempt status, including the employee’s salary level and job duties.
2. Failing to Pay for All Hours Worked
Dental practices typically make the error of not compensating their employees for the total number of hours worked. This may take place if employee employees are asked to work off the clock, when they are not paid for meal breaks, or when they are not paid for the amount of time spent traveling between different dental offices.
As a preventive measure, dental practices need to have clear policies in place regarding work hours and break times. Employees are instructed to accurately record all hours worked, and any overtime should be paid promptly. Additionally, dental practices should ensure employees are paid for all hours rendered, including meal breaks and travel time.
3. Not Providing Overtime Pay
Oftentimes, dental offices do not give their employees overtime pay when it is required. Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid one and a half times that of their normal wage for any hours worked more than 40 in a week.
Dental practices must accurately record their employees’ working hours and pay them accordingly. This means they should pay overtime for work outside regular business hours, like evenings or weekends.
4. Misusing Independent Contractors
Dental practices may classify workers as independent contractors rather than employees to avoid paying taxes and benefits. However, misclassifying employees as independent contractors is illegal and can result in fines and penalties.
The IRS has strict guidelines for classifying workers as independent contractors, including the level of control the employer has over the worker’s schedule and job duties. If a worker is treated as an employee, they should be classified as such and receive all the benefits and protections included with the status.
To avoid misusing independent contractors, ensure they correctly classify their workers based on the IRS’s criteria. This includes factors such as the employer’s degree of control over the worker’s work and financial independence.
5. Not Keeping Accurate Records
The law requires dental practices to keep accurate records of their financial transactions, including income, expenses, and payroll. Employers are required to maintain accurate records of all hours worked, including start and end times, meal breaks, and overtime.
Accurate record-keeping is necessary for monitoring the practice’s financial health, making informed business decisions, and preparing tax returns. Practices should maintain detailed records of all financial transactions, including receipts, invoices, and bank statements.
Establish clear record-keeping procedures and train staff on documenting financial transactions to ensure accurate record-keeping. This includes maintaining records for at least three years, as required by the FLSA.
In Summary
Dental practices must comply with wage and hour laws to avoid penalties and lawsuits. Avoiding mistakes, such as misclassifying employees, not paying for all hours worked, not giving overtime pay, misusing independent contractors, and not keeping accurate records, can ensure that they follow the law and treat their employees fairly. Hiring an employment law attorney or HR professional can ensure compliance with state and federal laws.
Ash Dental CPA provides specialized accounting and tax services for dental practices, including assistance with payroll and compliance with wage and hour laws. Our dental accountants can help ensure that your practice follows all relevant laws and regulations and offer guidance on the best approaches for record-keeping and financial management.
Call (508) 458-6789 or email us at [email protected] to book an appointment.
