Your first Dental Associate Contract is a major milestone in your new Dental career, but it can also be a complex and intimidating process for those without specific training in contractual law. In this article you'll find 8 key factors to consider when dealing with your first Dental Associate Contract. Of course the best way to insure all 8 of these important issues is addressed is to hire an experienced Dental Law attorney to guide you through this sometimes complicated process.
8 Things to Know about Your Dental Associate Contract
by Joseph L. McGregor*
Your first dental associate contract can set your career on a positive trajectory. It can also result in disappointment, disadvantage, and in some circumstances, a lawsuit. This article is intended to outline a few common issues in dental associate contracts that may not be apparent to first-time dentists.
Contracts ARE negotiable!
Nearly all dental employment contracts are negotiable. Most likely, the contract presented to you is a stock contract that may or may not have been prepared with you in mind. Accordingly, there will be provisions that are neither relevant nor appropriate. Your employer understands this, and nearly every employer will entertain reasonable revisions. An employer unwilling to at least listen to your concerns should be seen as a red flag.
Are you an employee, or an independent contractor?
Whether you are an employee or independent contractor is not nearly as important as understanding the difference between the two. Both formats have their place, and each have their benefits. Very generally, employment relationships are typically more protected under state laws, while independent contractors have the potential to realize better tax efficiency. Legally, though, what’s most important is that you have an employment agreement for an employment relationship, and an independent contractor’s agreement for a contract relationship. Mixing the two can lead to expensive misunderstandings.
How are you compensated?
It’s common—and understandable—for job-seekers to fixate on the percentage of the pay. It must be understood that not all percentages are created equal. Is your percentage based on gross production, or is it based on gross collections? Are you penalized for write-offs, or discounts awarded by the practice? Are you compensated for hygiene or x-rays? Are supplies or lab fees deducted? Will you be given an accounting of the practice’s collections or deductions?
How are you scheduled?
Most dental contracts do not promise any certain level of scheduling, which can significantly impact pay.
This can render high percentages illusory if the practice fails to generate patient traffic, or suffers a dip in business. This is especially true in startup practices, but can also be relevant to practices where the owner operates a satellite office close enough for patients to travel back to the owner, and in cases where another associate works in the office alongside you. Few practices are willing to assume the risk of promising patients to you, so read the contract in the context of worst-case scenario.
Where are you working?
Many practices are trending towards satellite offices. It’s important to understand if you are contracted with one office, or all offices administered by the practice. This is particularly important when considering the contract’s restrictive covenant; you do not want to be potentially elbowed out of a community because you worked a few days a year in a satellite office.
How can you be fired?
One of the most overlooked provisions of a dental associate contract is the termination provision. Most contracts provide for termination for serious issues, which are to be expected; if an assistant finds you comatose in the bathroom with a needle of heroin in your arm, you probably deserve to be fired. But most contracts also feature grounds for termination based on extremely vague and legally undefinable phrasing like “moral turpitude” or “injurious to the reputation of the practice.” There are only a handful of lawyers in this country who cannot fit anything you do into phrases like that, which essentially renders your contract terminable at will.
Is your restrictive covenant reasonable?
There is no hard-fast rule for measuring whether a restrictive covenant is reasonable. A restrictive covenant’s enforceability depends on duration of employment, how many offices the practice has, how spread out those practices are, the office’s branding, how dense the population is, and innumerable other facts that vary in importance state to state, community to community. What’s most important is that mileage is typically more important than time, and that often dentists are more interested in being able to take along staff rather than patients to their new job. The worst approach to an unreasonable restrictive covenant, however, is not to ignore it on the promise that it will not be enforceable; many banks will not lend to you for your new venture if a potential lawsuit is looming. Instead, it’s best to negotiate the best terms possible, and then abide by them.
What are your termination obligations?
One day your employment will end. It’s important to understand what obligations are expected for that time. Many contracts have a fixed term, meaning that you cannot voluntarily quit before the first year without penalties or other expensive consequences. Additionally, if you fail to give timely notice of your voluntary exit, will you have to pay any penalty fees? It’s becoming increasingly common that once you turn in your notice, the practice will no longer be obligated to pay you for your accrued but unpaid collections. This can be financially devastating for those who work in practices that receive payments several months after billing. Finally, many contracts obligate you to finish any outstanding treatments, which can be impracticable for those moving away, for those whose new employers will not grant the time off, or for those not getting paid to complete that work.
This list is not all-inclusive. Each dental associate contract presents its own unique issues, and therefore each contract must be read in its own context. All relevant factors must be considered, including the practice’s plans for you, your plans for the practice, the owner’s reputation, standards in the local dental employment marketplace, and any other additional issues identified by your experienced attorney.
* Joseph L. McGregor specializes in dental law, with particular focus in practice acquisitions, practice startups, and dental employment agreements. His Dallas-based firm writes or reviews over 300 dental associate agreements each year. Joseph is a 2007 graduate of the J. Rueben Clark Law School at Brigham Young University.