In an economic climate where the consumer's disposable income is flat or declining, many health professionals are looking for ways to control their largest single expense: payroll.

Consequently, many veterinary practices are hiring outside veterinary professional help, rather than take on full-time associate doctors.

These outside practitioners, who for lack of a better term I will refer to as "relief" vets, often work at clinics outside the traditional employer-employee relationship. There can be advantages for both the practice and the practitioner in many instances.

For practice owners, relief veterinarians can offer more than just relief from what seems an endless parade of stressful workdays. They can provide a bridge during periods of temporary short staffing (vacations, maternity leaves, etc.), and can make it possible for a clinic to get professional help without the financial commitment of adding another 40-hour-per-week veterinarian. Relief doctors generally do not receive many of the bene-fits of full-time employment, and the practice does not have to worry about keeping a full-time doctor busy during slow periods.

But there are a number of legal (particularly tax and insurance) issues which should be carefully evaluated prior to entering into a client relationship with a relief vet. That goes both for the doctor and the clinic. As many practice owners know and many newly-minted relief veterinarians discover to their dismay, business mistakes can be quite costly. But DVM Newsmagazine readers don't have to worry: They just need to consider these easy-to-follow guidelines:

Ignorance of the law no excuse

Labor law and tax law violations are not "intent" crimes. You don't get a pass when you inadvertently underpay, underwithhold, underinsure, etc., simply because you didn't mean to or didn't understand the rules. Again, that goes both for the relief doctor and the veterinary hospital.

The best way for both to avoid falling into a legal trap is to have a pre-employment "summit," at which the details of federal, state and local law compliance are discussed. Both the hospital and the doctor providing relief services need to understand the terms of their relationship (which go far beyond dollars per hour). This need not be a contentious discussion. It is merely a chance for the parties to share a meeting of minds. Both need to be sure they are in compliance with the laws governing their business relationship. The following issues should be discussed and agreed to in writing:

Worker compensation insurance

Both sides need to understand thoroughly the concept of worker compensation coverage. My office has handled matters for independent-contractor veterinarians for decades, and this issue has emerged as the gold standard in terms of state labor-law compliance and federal tax-case interpretation.

As I have discussed in prior articles, worker compensation insurance is a legal compromise developed by states to serve two purposes — making sure there is money to compensate employees injured on the job and insulating employers from huge negligence lawsuits.

Please note that I said that the law compensates employees. It does not — and never was intended to — cover non-employees. Thus the $64,000 question: Who is an employee and who is not?

Veterinary clinics used to think they could avoid paying costly worker compensation insurance premiums on part-time vets simply by using an IRS 1099 form. For example, the relief doctor would work 20 hours at an agreed rate of $50 per hour, and the clinic would simply pay him or her $1,000, making no withholding. They would follow that up by mailing the doctor a 1099 the following January. The form would have "non-employee income" checked off and that would be that. No employer Social Security contribution, no unemployment insurance, no Medicare withholding, no worries.

Wrong.