Hiring and paying a locum tenens dentist as an independent contractor (1099) requires a different approach than hiring a traditional employee (W-2). Here's a guide for dentists on how to navigate this process effectively:
A locum tenens dentist hired as an independent contractor is not an employee.1 This means:
No Tax Withholding: You, the hiring dentist or practice owner, do not withhold federal, state, or Social Security/Medicare taxes from the locum's pay. The locum tenens dentist is responsible for paying their own taxes, including self-employment taxes.2
No Employee Benefits: You are not required to provide the locum tenens dentist with employee benefits like health insurance, retirement plans, or paid time off.3
1099 Tax Form: You will be required to issue a Form 1099-NEC (Nonemployee Compensation) to the locum tenens dentist and file a copy with the IRS by the required deadline (typically January 31st of the following year).
There are two primary ways to find a locum tenens dentist:4
Through a Locum Tenens Agency: This is often the most straightforward method. The agency handles the recruitment, vetting, and credentialing process.5 They will typically provide you with a dentist who has already been checked for:
State licensure6
Professional liability (malpractice) insurance
DEA registration7
Background checks
References and documentation8
Hiring Directly: If you find a locum tenens dentist through your own network, you must handle all the administrative and legal aspects yourself. This includes verifying their credentials, ensuring they have adequate malpractice insurance, and drafting a comprehensive contract.
A well-drafted contract is crucial to protect both your practice and the locum tenens dentist.9 It should clearly define the independent contractor relationship and include:
Compensation: Specify the rate of pay, whether it's an hourly, daily, or production-based rate. Be clear about how and when the locum will be paid. Researching market rates for your location and the dentist's experience level is important.
Assignment Details: Outline the specific dates and hours of the assignment, as well as the scope of practice and the support staff that will be available.10
Malpractice Insurance: Clarify who is responsible for providing professional liability insurance. This is a critical point. The contract should state whether the locum has their own policy or if your practice's policy will cover them. If your policy covers them, specify the policy limits and any "tail coverage" requirements after the assignment ends.
Termination and Notice Period: Define the conditions under which either party can terminate the agreement and the required notice period.
Non-Compete/Non-Disclosure: Include clauses that protect your practice's confidential information and patient lists. A non-compete clause may be included, but it must be reasonable in its geographic area and duration to be legally enforceable.
Payment Schedule: Establish a clear payment schedule in the contract. Since they are an independent contractor, you might pay them weekly, bi-weekly, or at the end of the assignment.
No Withholding: Again, do not withhold any taxes from their pay. The locum tenens dentist is responsible for their own tax obligations, including making quarterly estimated tax payments to the IRS.11
Issue Form 1099-NEC: This is a non-negotiable step. By January 31st of the year following the assignment, you must issue a Form 1099-NEC to any locum tenens dentist to whom you paid $600 or more in the preceding calendar year. You must also file a copy with the IRS. It's recommended to consult with your accountant or a tax professional to ensure you are compliant with all federal and state tax laws.
Legal and Tax Advice: It is highly recommended to consult with a lawyer and an accountant who specialize in dental practice management. They can help you draft a compliant contract and ensure you are meeting all your tax obligations.
Documentation: Keep meticulous records of the locum's hours worked, payments made, and all related documentation (contract, licensing info, etc.). This will be essential for tax purposes and in case of any disputes.12
Billing and Insurance: Be sure to inform your in-network insurance providers that you will be using a locum tenens dentist. You may need to complete a temporary application to ensure the locum's services are covered.13 The locum's name and NPI number should be included on the billing claims as the "treating dentist," while your practice remains the "billing dentist."