Congratulations—you're ready to hire your first employee for your dental practice. Whether it's a front desk receptionist, dental hygienist, or dental assistant, this milestone means your practice is growing. But here's what catches most new practice owners off guard: the moment you bring on that first employee, your insurance world changes completely. What worked when you were a solo practitioner suddenly leaves you exposed to risks you didn't have before.
The good news? You're not the first dentist to navigate this transition. The insurance requirements are straightforward once you understand them, and getting them right from day one protects both your practice and your new team member. Let's break down exactly what insurance coverage you need when you hire your first employee.
Workers' Compensation: The Non-Negotiable Requirement
Here's the reality: in most states, workers' compensation insurance isn't optional once you have even one employee. It's legally required. Texas is the notable exception where it's not mandatory, but even there, most dental practices carry it because going without creates significant liability exposure.
Workers' comp covers medical expenses and lost wages if your employee gets injured on the job. Think about it: your dental hygienist develops carpal tunnel syndrome from repetitive motion. Your receptionist trips over equipment and breaks her ankle. Your dental assistant gets a needlestick injury. Without workers' comp, you're personally liable for their medical bills, rehabilitation costs, and lost income. We're talking tens or even hundreds of thousands of dollars.
The penalties for not having workers' comp are severe. California, for instance, can fine you $10,000 per employee plus criminal prosecution. In New York, it's a misdemeanor for the first offense and a felony for subsequent violations. Even if you somehow avoid the legal penalties, one workplace injury could bankrupt your practice.
Cost-wise, expect to pay between $1,500 and $3,500 annually for your first employee, depending on their role. Classification codes matter enormously here. Code 8833 (clerical office employees) costs far less than Code 8832 (dental hygienists and assistants with patient contact). A front desk employee might run you $0.50 per $100 of payroll, while a hygienist could be $2.50 to $4.00 per $100 of payroll. Make sure your insurance agent classifies your employees correctly from the start.
Employment Practices Liability Insurance: Protection Against Employee Claims
This is the coverage most first-time employers don't think about until it's too late. Employment Practices Liability Insurance (EPLI) protects you against claims of wrongful termination, discrimination, sexual harassment, retaliation, and wage violations. Even if you're the fairest employer in the world, you can still get sued.
Consider this: the average employment lawsuit costs between $75,000 and $150,000 to defend, according to insurance industry data from 2025. And that's if you win. If you lose, settlements can easily exceed $200,000. Your standard business owner's policy (BOP) doesn't cover employment-related claims. Neither does your professional liability policy.
EPLI policies for small dental practices with one or two employees typically cost $800 to $1,500 annually for $1 million in coverage. That's cheap insurance against a claim that could shut down your practice. Many policies also include access to HR hotlines and employment practices resources, which are invaluable when you're navigating employment decisions for the first time.
One important note: EPLI policies often have employment practices exclusions until you've had the policy for 60-90 days, and they typically won't cover claims arising from actions taken before the policy started. Get this coverage before you hire, not after problems emerge.
Professional Liability: Extending Coverage to Your Team
You already have professional liability insurance (malpractice insurance) as a dentist. But here's what surprises many practice owners: your policy might not automatically cover your employees' professional work. If your dental hygienist makes an error during a cleaning or your dental assistant causes patient harm, you need to make sure they're covered.
Review your current professional liability policy immediately. Most policies will cover employees working under your supervision, but you need to notify the carrier about new hires and ensure they're listed. Some insurers charge a small additional premium per employee—typically $100 to $300 annually for hygienists and assistants.
If you're hiring a licensed dental hygienist, they may want their own individual professional liability policy. This is actually common and protects them if they move to another practice. Individual policies for hygienists run about $200 to $400 per year. Whether you pay for this as a benefit or require them to maintain their own coverage is up to you, but make sure there are no gaps.
Cyber Liability: The Hidden Risk of Employee Access
When you're the only person accessing patient records, you control your cybersecurity. But the moment you hire an employee who needs access to your practice management software, electronic health records, or billing systems, your risk profile changes dramatically.
According to recent healthcare data breach reports, 88% of data breaches are caused by employee error. An employee clicks a phishing email. Someone uses a weak password. A laptop with patient data gets stolen. You're now responsible for breach notification, credit monitoring for affected patients, regulatory fines, and potential lawsuits.
Under HIPAA, a single patient record breach can cost $100 to $50,000 per record in fines, depending on the level of negligence. For a dental practice with 2,000 patient records, even a small breach creates massive exposure. Cyber liability insurance covers breach response costs, legal fees, regulatory fines, and patient notification expenses.
For a small dental practice, cyber liability coverage with $1 million in limits typically costs $600 to $1,200 annually. Many insurers now include it as an add-on to your business owner's policy. Get it before you give employee access to any systems containing protected health information.
Payroll Reporting and Workers' Comp Audits: Avoiding Surprise Bills
Here's a costly mistake new employers make: inaccurate payroll reporting for workers' compensation. When you get your workers' comp policy, you estimate your annual payroll. At the end of the policy year, the insurance company audits your actual payroll. If you underestimated, you owe the difference—sometimes with interest.
Let's say you estimated $30,000 in annual payroll for your first employee but actually paid $45,000 when you factor in overtime, bonuses, and a raise. At a rate of $3.00 per $100 of payroll, you initially paid $900 in premium. The audit reveals you should have paid $1,350. You now owe $450 plus potential late fees.
What's worse: if you misclassified your employee. If you listed your hygienist as clerical staff (the lower-cost classification), the audit will reclassify them correctly and recalculate your premium at the higher rate. For a $40,000 annual payroll, the difference between clerical ($0.50 per $100) and dental clinical ($3.50 per $100) is $1,200. That's a bill you weren't expecting.
Keep detailed payroll records and work with your insurance agent to classify employees accurately from day one. If your employee's role changes during the year—say your receptionist starts assisting chairside—notify your insurer immediately to avoid audit surprises.
Getting Started: Your Insurance Checklist for Hiring
Before your first employee's start date, take these steps:
Contact your insurance agent at least 30 days before the hire date. You need time to get quotes, compare options, and bind coverage before day one. Call your workers' comp carrier to set up coverage and confirm the correct classification code for your new hire's role. Review your professional liability policy to ensure employees are covered under your existing policy or arrange additional coverage. Consider EPLI coverage—get quotes from at least two carriers and understand what's covered and excluded. Evaluate cyber liability insurance, especially if your employee will access patient records or billing systems.
Hiring your first employee is exciting, but don't let insurance fall through the cracks. The right coverage protects your growing practice, your employee, and your financial future. Set up a comprehensive insurance review with a commercial insurance agent who specializes in dental practices—they'll ensure you have everything you need without paying for coverage you don't.
