Contract Employees & Owning a Veterinary Practice

Contract Employees

Is my relief veterinarian an employee or an independent contractor?

The foregoing question is probably not something that keeps most practice owners awake at night. Maybe it should be. Not properly handling a relief veterinarian relationship can lead to a finding by state and/or federal agencies that a relief veterinarian is an employee of the practice, and lead to the practice being liable for past income, FICA, unemployment insurance, and other taxes not withheld for other practice employees. In a worst-case scenario, such a relief veterinarian could be entitled to all the benefits of an employee, not only related to employment taxes, but also related to benefits and payments made by the practice to other employees, including paid time off, 401 (k) contributions, and the like.

To help ensure that relief veterinarians are considered independent contractors, practices should follow the following guidelines:

1. Have a written agreement reciting important attributes of the engagement demonstrating an independent contractor relationship, including those listed below.
2. Deal with a relief veterinarian who sells his or her services through a separate legal entity such as a limited liability company or corporation, and who legitimately deducts expenses related to the performance of services from its own income.
3. Spell out the nonexclusive nature of provision of the services.
4. Document business terms as you would with any other vendor, including the scope of services, fees, invoicing requirements, and payment terms. The less control exercised by the practice over the scope of services, the better.
5. Pay on a daily or other lump sum basis, not by the hour or task, and to the entity providing relief veterinarian services, not personally to the veterinarian.
6. Be sure to issue an IRS Form 1099 to the relief veterinarian for the services.
7. Do NOT use relief veterinarians as a substitute for an additional doctor, but only occasionally during vacations, medical leaves of absence, and the like.

Read the Full Explanation Provided by the AVMA of Relief Veterinarian, Employee vs. Independent Contractor Here

Who Can Own a Veterinary Practice?

Under Michigan law, a licensed veterinarian may engage in the practice of veterinary medicine and operate as a sole proprietor, or may form a business as a partnership, a corporation, a professional corporation, a limited liability company, or a professional limited liability company. The tax consequences of each type of business entity differ. The Michigan Public Health Code states "A person shall not engage in the practice of veterinary medicine unless licensed” as a veterinarian. The Public Health Code defines "person” to mean "an individual, partnership, cooperative, association, private corporation, personal representative, receiver, trustee, assignee, or other legal entity”. The applicable laws are ambiguous and the Michigan courts have not yet decided the question of whether a non-licensed veterinarian may own a business that engages in the practice of veterinary medicine.