You’ve already built a hearing aid business, and now you want to expand by adding diagnostic audiology services. Hiring a licensed audiologist may seem like the obvious next step, but California has specific rules about what business entities can provide professional services. 

If your hearing aid practice operates as a general stock corporation, can you hire audiologists in California to provide diagnostic audiology services? This article explains why the entity structure matters, how diagnostic audiology differs from hearing-aid-related testing, and why a properly structured professional audiology corporation may be required. 

Is Hearing Aid Dispensing Different from Diagnostic Audiology? 

Yes, it is. Hearing aid dispensing and audiology are two different practices as defined in California law. Business and Professions Code section 2538.11(a) defines what licensed hearing dispensers can do, including: 

• Direct observation of the ear 
• Testing of hearing in connection with the fitting and selling of hearing aids 
• Taking of ear mold impressions 
• Fitting or sale of hearing aids 
• Any necessary postfitting counseling 

There’s also an explicit restriction on what a hearing aid dispenser cannot do. Cal. Bus. & Prof. Code section 2538.11(b) states: “A hearing aid dispenser shall not conduct diagnostic hearing tests when conducting tests in connection with the practice of fitting or selling hearing aids.” 

So before adding diagnostic audiology services, define clearly what services the practice plans to offer and determine whether they fit within the existing business and professional structure. However, the distinction between these practices is not the only complication if your hearing aid dispensing business is operating as a general stock corporation and wants to start offering diagnostic services. 

Can a General Corporation Hire Audiologists in California? 

Since a hearing aid dispenser cannot provide diagnostic services, it’s understandable to explore hiring a licensed professional to solve the problem. But, no, a general stock corporation with no audiologist owner cannot simply employ or contract with an audiologist to provide diagnostic audiology services. 

Why Does Corporate Structure Matter Before Offering Audiology Services? 

The issue is not only whether the audiologist you want to hire holds the required license. The first matter that needs to be resolved is whether your business has the proper business entity structure to render the professional services involved. 

California’s corporate practice policy mandates that ownership and control over professional services, especially decisions over patient care, must stay with licensed professionals. Business and Professions Code section 2400 provides that “[C]orporations and other artificial legal entities shall have no professional rights, privileges, or powers.” 

Although section 2400 appears in the chapter governing the Medical Board of California, courts have applied the underlying corporate practice principles in other licensed health professions as well. Cases such as Parker v. Board of Dental Examiners (1932), Steinsmith v. Medical Board of California (2000), and People ex rel. Allstate Ins. Co. v. Discovery Radiology Physicians, P.C. (2023) illustrate that simply separating professional and business functions does not necessarily resolve corporate-practice concerns. 

For a hearing aid dispenser and general corporation, this means hiring an audiologist won’t let your existing business entity offer diagnostic services. The license belongs to the audiologist, not your business.  

Your company can only provide professional audiology services if it’s owned by an appropriate licensed individual and it it’s formed with the right business entity that meets California’s professional corporation and licensing requirements. 

What Kind of Business Entity Can Provide Audiology Services? 

To offer diagnostic audiology services in California, you need to do so through a properly structured audiology corporation. Business and Professions Code section 2536 specifically recognizes audiology corporations and permits them to render professional services, subject to the Moscone-Knox Professional Corporation Act and other applicable laws and regulations. 

In other words, since you cannot just hire an audiologist to offer diagnostic services, the most straightforward compliant structure is a professional audiology corporation owned by the licensed audiologist and operating independently. 

Read here to learn how to set up a professional corporation in California. 

What Is a California Audiology Corporation? 

An audiology corporation is a professional corporation formed to provide audiology services in California in compliance with applicable laws and licensing requirements. Because it is a professional corporation, its ownership and governance must meet California’s professional-corporation requirements. For an audiology corporation, this means the practice must be owned and controlled by a licensed audiologist. 

Simply put, professional services provided as part of audiology practice – including diagnostic services – can be rendered through a properly formed California audiology corporation. 

Read here for more information on choosing the best business entity for an audiology private practice in California. 

Risks of Offering Audiology Services Through the Wrong Business Entity 

Providing diagnostic audiology services through a properly structured audiology corporation is essential in this scenario. Failing to comply with California’s corporate practice and licensing requirements could expose both the business owner and the audiologist to professional discipline, even if a licensed audiologist is the person actually providing the services. 

Potential Exposure for the Business Owner—You 

The first potential risk falls on you as the owner of the hearing aid dispensing business. As we’ve discussed, a general stock corporation is not authorized to render the professional services involved, especially when it’s not owned and controlled by licensed audiologists.  

By operating a corporation that provides audiology services through an employed audiologist, you may be found aiding or abetting in the unlicensed practice of audiology, as ruled in Khan v. Medical Board (1993). And this could lead to the suspension or revocation of your hearing aid dispenser license. 

Risk of Disciplinary Action for the Audiologist 

In Steinsmith v. Medical Board of California (2000), a physician was disciplined for co-owning a clinic with nonphysicians. Although the physician personally provided medical services, the court held that participating in an arrangement that gave nonphysicians control over the practice constituted aiding and abetting the unlicensed practice of medicine. 

By analogy, an audiologist who knowingly enters an employment relationship with an improperly structured or unlicensed corporation could similarly be found to have aided and abetted the unlicensed practice of audiology, potentially subjecting the audiologist to discipline. 

While this does not mean every audiologist working in a corporate setting violates California law, the key point is that an audiologist’s license does not eliminate the risks created by an improper corporate structure. 

Why ‘We Didn’t Know’ May Not Eliminate the Risks? 

The corporate practice doctrine does not require proof of knowledge or intent. In Davis v. Physician Assistant Board (2021) and Khan v. Medical Board (1993), California courts held that violations of the unlicensed practice statutes may be established without proof that the licensee knew the conduct was unlawful or intended to violate relevant laws. 

For a practice owner, that means arguing that “we did not know” or “we thought the audiologist’s license made it legal” may not eliminate the potential risks. 

Is There Another Option Besides Forming a Professional Audiology Corporation? 

Let’s recap: your hearing aid dispensing business operates as a general stock corporation or doesn’t have an audiologist owner. So if you want to add diagnostic testing to your service offerings, the compliant structure requires forming a professional audiology corporation owned by the audiologist. 

Theoretically, there is another option. A structure with a separate management services arrangement (MSA) between the audiology corporation and your hearing aid dispensing business may be possible under specific conditions. But these arrangements have been scrutinized in California courts before and must be carefully drafted to avoid legal risks. 

Read our guide to adding audiology services in California through a PC + MSA structure to learn how a properly structured audiology corporation and a separate management business may work together.

What Should You Do Before Adding Diagnostic Audiology? 

For hearing aid practice owners working with audiologists in California, these questions can help clarify the entity and service issues to address before expanding the practice. 

• Confirm your existing corporation and ownership structure. Determine whether the hearing practice operates as a general stock corporation and review who owns and controls the entity. 
• Define the services you plan to add. Be specific about whether the new services involve diagnostic audiology beyond hearing testing performed in connection with fitting or selling hearing aids. 
• Determine whether a professional audiology corporation is required. Review the entity and professional-corporation requirements that apply before offering the new services. 
• Consider the roles of the professionals involved. Review the professional roles involved. Consider the audiologist’s license together with the corporation’s legal structure. 
• Address the business structure before implementation. Do not wait until after the practice begins offering diagnostic audiology services to resolve the entity question. 

Resolve the entity and ownership questions before the practice begins offering diagnostic audiology services. 

Frequently Asked Questions About Audiologists in California and Corporate Structure 

Can a general stock corporation in California directly hire a licensed audiologist? 

No. A general stock corporation with no audiologist owner may not lawfully employ or contract with an audiologist to render audiology services. Professional services should instead be provided through a properly structured audiology corporation. 

Does an audiologist’s license allow a general corporation to provide audiology services? 

No. An audiologist’s individual license and a corporation’s ability to provide diagnostic services are separate matters. A licensed audiologist may be properly licensed to practice, but that doesn’t make the corporation eligible to provide professional services if it doesn’t have the legally compliant entity structure  

What is an audiology corporation in California? 

An audiology corporation is a business entity allowed to render professional audiology services under California’s applicable corporate and licensing laws. 

Can a hearing aid dispenser perform diagnostic audiology services? 

Under Business and Professions Code section 2538.11(b), a hearing aid dispenser shall not conduct diagnostic hearing tests when conducting tests in connection with the practice of fitting or selling hearing aids. This provision helps distinguish hearing tests performed in connection with hearing aid services from broader diagnostic audiology services. 

Can I Hire Audiologists in California as Independent Contractors? 

Changing the status from employee to independent contractor does not solve the underlying issue. The key question is whether the entity engaging with the audiologist is legally permitted to provide professional audiology services.

Start With the Right Business Entity Before Offering Audiology Services 

Before adding diagnostic audiology services, confirm that your existing business entity and ownership structure are appropriate for the professional services you plan to provide. A licensed audiologist’s individual credentials do not, by themselves, resolve the corporation’s authority to provide those services. 

If you are considering expanding a California hearing aid practice into diagnostic audiology, review the entity and professional requirements before implementation. 

Schedule a Kick-Off Call to discuss your California professional corporation structure before adding audiology services. 

Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. California law and regulatory requirements can change, and the application of these rules depends on the specific facts and structure of a business. Consult qualified legal counsel regarding your particular situation.