Proper employee classification is vital for legal compliance, workforce planning, and operational efficiency in veterinary practices. Missteps in this area can lead to significant financial penalties, legal liability, and reputational harm. But beyond compliance, getting classification right ensures that your team structure supports long-term growth and smart talent utilization.
Employee vs. Independent Contractor: What’s the Difference?
The IRS and Department of Labor (DOL) provide clear guidance on determining whether a worker is an employee or a contractor. Key considerations include behavioral control, financial control, and relationship type.
Behavioral control:
In an employee/employer setting, the clinic directs how, when, and where work is done.
With an independent contractor, the contractor controls the schedule, methods, and tools used.
Financial control
In an employee/employer setting, the practice pays hourly or salary, practice provides tools.
With an independent contractor, the contractor invoices for services and uses their own tools.
Relationship type
In an employee/employer setting, the employee is long-term and eligible for benefits.
With an independent contractor, the contractor his a short-term, project-based, and has no benefits.
Veterinary Example:
A relief veterinarian hired through a temp agency for one weekend per month, who sets their own availability and uses their own medical equipment = is likely a contractor.
A surgical specialist who works weekly, uses clinic equipment, and follows hospital SOPs = likely an employee, even if they work part-time.
Misclassifying roles can impact scheduling, training, and accountability, ultimately affecting efficiency. When roles are properly classified:
Relief vets can help cover doctor shortages without overburdening full-time DVMs.
Project-based contractors (e.g., HR consultants, IT support, social media managers) can reduce the strain on core staff.
Employees can be coached, cross-trained, and evaluated, helping you grow from within and reduce turnover.
However, incorrect classification creates gray zones in accountability, training obligations, and legal protections, disrupting smooth operations.
Best Practices for Practice Managers
Use IRS Form SS-8 if in doubt: This form helps you (or your accountant) assess a worker’s correct status.
Document Everything: Written contracts for contractors should outline the scope of work, duration, pay structure, and lack of benefits.
Educate Hiring Leaders: Provide quick-reference guides to DVMs and PMs so they don’t unknowingly misclassify relief staff or interns.
Perform Classification Audits Annually: Especially as roles evolve or part-time team members take on new duties.
Watch for "1099 Creep": If a contractor begins acting like an employee, reevaluate—misclassification often creeps in as responsibilities expand.
