Can an Employer Make a Dentist Pay Back a Signing Bonus? | Signing Bonuses

One question we frequently get from employers is, can they make a dentist payback signing bonus? And the short answer is yes. Typically, you can do that in one of the three ways. The first way is when you’re drafting the agreement. You would include a payback provision stating that if the dentist were to terminate the employment agreement within 12 to 24 months, they would pay back the entire signing bonus. The second way to do that is, if a physician were to terminate the agreement within 12 to 24 months, they would pay back the signing bonus on a prorated share. For how long they’ve been, you would take that into account. So, they wouldn’t be paying you back the full bonus.

And then lastly, it’s a little rare. Still, sometimes, we can include provisions that state that if the dentist does not give proper notice upon termination of the agreement, typically, it’s 60 to 90 days. They would have to pay back the entire signing bonus.

Other Blogs of Interest

• Red Flags in a Dentist Employment Contract: Dental Employment Agreement Concerns
• How is a Dentist Given a Draw in a Contract?: Dental Contracts with a Draw
• Does a Dentist Have to Repay a Bonus if they Terminate the Contract?

How a Dentist Should Negotiate a Contract: Dental Agreement Negotiation

How should you negotiate a dental associate contract? I will give some tips and tricks to get a better dental associate employment contract. First, there is a difference between contract negotiations. That is between somebody coming out of training versus someone prominent in a community for a while. You have more leverage if you are in any community and either a corporate practice. Or another group is bringing out your practice and wants you to join them, and you have an established patient base. Let’s first talk about those coming out of training. What do you need to do to put yourself in the best position to negotiate a contract? Well, you need to know what’s important.

Negotiating an Employment Contract for a Dentist

For most dentists, the most important things are compensation. Is it a base salary? Is it a daily rate? Or is it a net collection? How do you terminate the contract? Can you get out of it with a certain amount of notice or the benefits? Do they pay for your license, DEA registration, credentialing, and continuing education, and are they signing bonuses and relocation assistance? Do you have to pay them back if you leave within a certain time? And then probably the two highest priorities are who pays for malpractice insurance. And who must pay for tail insurance after the contract terminates if it’s a claims-made policy? Also, the non-compete. 

This is some people’s absolute, most important thing in the contract. Suppose they’re close to a community, kids in school, family, they absolutely can’t leave. In that case, you need a reasonable non-compete that won’t make you move completely out of the area.

Alright, those are the most important things to dental associates. Now, you’re coming to training. You have a job offer. They’re giving you a certain amount. How do you know what’s reasonable and what’s not? Well, talking to your classmates is the best way to find that information. What are the offers they’re getting? How much are they getting? How are they structured? Where are the job offers to come from? That’s the best and most, I would say, accurate means of finding out what the going rate is at that time. The compensation is going to vary wildly. As I said before, is it a base salary? It is at a daily rate. Is there some net collection involved? Is it a hybrid? Could it be half base, half net-collections?

Employees Looking Beyond Compensation

Many times, compensation for a job may look great. Still, the benefits are bad, they’re not paying for your tail insurance, or the non-compete is terrible. So, you can’t just take compensation as the number one factor in determining a good opportunity, but it is certainly important. Knowing whether a non-compete is fair or not is something you probably must talk to a professional about. For the most part, anywhere between one to two years and then maybe 5 to 15 miles from your primary practice location would be reasonable. If you’re in a non-compete, that’s more than two years, or it knocks out like multiple counties. Or maybe they’ve attached the non-compete radius to corporate practice in a big city with 10 locations.

Non-Compete Law for Dentists

And they’re saying, well, you can’t work within 10 miles of every location we own. That’s not a reasonable non-compete. The actual negotiation will depend on two things. One, do they give you an offer letter, or do they give you the employment agreement? If they give you an offer letter, they expect that those terms will be negotiated in advance and then incorporated into the employment agreement. And then, they’re going to give you the employment agreement. I find it difficult to come to terms with the main parts of an offer letter without seeing the full employment agreement. If I had a perfect scenario, there would be no offer letter. They would give the employment agreement. Then you’d fully understand what the job entails and the expectations for both parties.

You could agree to a salary, you could agree to the length of the term. That there is a non-compete, the things they’ll pay for. But when you see the specific language in the contract, it could greatly change how you look at the value of the contract. Signing an offer letter doesn’t mean you can’t renegotiate those terms, even if you provide proper context to the employer. Alright, I was okay with making $110,000 a year and base salary, not knowing that the non-compete effectively knocks me out of the entire state. If you want me to sign this contract with that non-compete, I need 130,000. There are many ways of going back and forth. 

Sign of an Adamant Employers

Some employers will simply say, this is a take-it or leave-it. I would be wary of signing a contract with an organization unwilling to make any changes in the contract.

It usually means they’re difficult to work with down the road or in a very rigid and unprofessional environment. So, if you find that someone says, take it or leave it, I would leave it and move on and try to find a better opportunity. I’m just telling you, if they take the mindset that they’re not going to change anything in the contract, like nothing at all. No change in signing bonus, relocation assistance, benefits, or anything like that. It is a bad sign moving forward. And then without-cause termination should be top of mind when you’re signing a contract or negotiating the terms of an agreement. Either party should be able to terminate the agreement at any time with a certain amount of notice to the other party.

What Should I Look for in a Dental Contract? | Dentist Agreements

There are many things to talk about here. Still, one identifies whether you will be given an employment or an independent contractor agreement. Both contracts are different, and some things should be included in one, not the other. Today, I’m just going to talk about employment agreements because that’s, by far, the most common type of contract between a dental associate and a practice. Within an employment agreement, it will go through all the essential terms of the employment relationship. Things to look for would include the contract’s length, term, and how to terminate an agreement.

Dentist Employment Agreement Red Flag 

And I’m going to spend a little time talking about this. I see this a lot in dental associate contracts. I’m not sure why it’s just in this profession, but every contract you sign needs to have without-cause termination. There will be a clause that states each party can terminate the agreement for any reason, with a certain amount of notice to the other party. If without-cause termination is missing, it’s an enormous red flag! And the reason why it needs to be in there is the employer makes almost every job sound terrific. 

Volume is excellent, with good people, proper staffing, and a good work environment. And then, the associate gets into the actual job, which is not what they expected. In that situation, if you had a two-year contract and there was no way of terminating the contract without-cause, you’re stuck there for two years unless they breach the contract.

You Want to Be Able to Get Out of Contracts 

You always want the opportunity to get out of the contract with a certain amount of notice. Usually, the notice period would be between 30 to 90 days in most dental associate contracts. The reason it’s a huge red flag beyond just not having the flexibility of leaving when you want is that if a practice does not include the without-cause termination in the contract. It usually means they’ve had difficulty holding on to dental associates.

Most people would leave without-cause termination, so they’ve removed that option to lock in the dentist. You do not want that to happen. If you see an employment contract without a without-cause termination, do not sign that contract. Other things that are undoubtedly important to be in the dental agreement would be compensation. Are you paid a base salary? Are you paid a daily rate, which is common? Or are you paid just on collections? I would recommend not signing a contract that’s based purely on net-collections. If you haven’t been with that practice, you may be offered a new contract. 

You understand what the volume at that practice will be. Still, suppose you’re paid purely on net-collections, whatever the course collects from your specific services. In that case, you are at the mercy of the volume and the mercy of the scheduling. And the employer may prioritize moving the clients to them versus the dental associate simply because it’s more profitable for them to see the patients than the dental associate. So, identify what type of compensation it is and ensure it’s fair. Talk to colleagues, go to the association websites, and try to see the average amount and identify that.

Look for the Bonuses and Restrictive Covenants in Your Dentistry Contract

Are there any signing bonuses or relocation assistance? Do you have to pay it back if you leave early? That should be in the contract. Restrictive covenants are a considerable part of every dental contract as well. The non-solicitation and non-compete agreements are included, which is very important. You need to look at the terms of the non-compete. Any non-compete will state that the dentist can’t work within a geographic radius of the practice for a period. 

Usually, one to two years is standard. And then anywhere between 5 to 20 miles, depending upon the state, is also considered reasonable. What you don’t want there to be, especially all these big dental conglomerates continue to gobble up all the smaller, dentist-owned practices. Many of these non-competes state that you can’t compete within 5 to 10 miles of every location. Even the places where you don’t work. And you don’t want that, because there are five or six office locations in a city. It’s 10 miles around six different areas. It could effectively knock you out of the town.

You want to make sure that the non-compete is fair. And then benefits. Usually, those won’t be listed explicitly in a contract. Sometimes, they are. But they’ll usually be like an associated benefit summary. You should obtain a copy. And then lastly, what are the things they will cover? So, dental, license, DEA registration, professional associations, and continuing education. Those should be listed in contracts, and the employer should pay for those. Let’s briefly explain what you should look for in a rental agreement. There are many other things you can look at as well. Those are usually the most important things to most dentists.

Can an Employee Terminate a Contract at Any Time | Contract Termination

The short answer is probably. However, it’s going to depend upon the language in the contract. There are ways that an employee can terminate an agreement: one, if there’s a fixed term, meaning a one-year, two-year, or three-year contract, and there’s no language that states the employment contract automatically renews, then at the end of that fixed term, if neither party is going to go or decided to sign another arrangement, the contract terminates, both parties can move on. That’s it. That’s one way on the agreement that can end a contract. Two, through mutual understanding. Maybe it’s not working out, and both parties are like, you know what? Let’s move on. You can mutually agree to terminate the agreement. Three, for the cause. A section called termination must be present in any employment contract. In that section, it’s going to state how both parties can terminate the agreement.

Employee Contract Termination Without Cause

Without-cause termination is going to be. If one party breaches the contract somehow, how can the other party terminate the contract for the breach? And in most of the for-cause termination clauses, it’s going to state if one party believes the other party is in breach, they must give them written notice. And then that party usually has a period to fix the breach. We called that a cure period. Usually, it would be somewhere between 15 to 30 days. Maybe the employee wasn’t getting paid a bonus that the employer said they would. The employee lets the employer know: you’re in breach of the employment contract, you have 15 days to pay me my bonus, or I can terminate the agreement immediately.

The employer can no longer terminate for-cause if the employer does pay the bonus. And then they could go to the last way of ending the contract without-cause.

Termination Notice Period

In every employment contract, this is very important. There should be a without-cause termination. It means either party can legally terminate the agreement at any point, for any reason, with a certain amount of notice to the other party. Usually, that notice period will be between 30 to 90 days. Why is this important? Suppose an employee takes a job and maybe they were lied to by the employer. In that case, if they’re on a production-based compensation from collections, commission, percentage, encounters, and healthcare RVUs, it doesn’t matter. But suppose an employee agreed to the contract and the employer gives no guaranteed base, daily rate, or guarantees. In that case, the volume is not nearly what they expected it to be or what the employer said it would be. They don’t have a way to get out of a contract without-cause. 

The workers won’t have an exit in that job for whatever the length of the term is. That’s not something you want. You always want the ability to get out of the employment contract with a certain amount of notice in the scenario where the job isn’t what you expected. Maybe your boss is a terrible manager, or they’re placing you in a territory or location you don’t want to be assigned. I mean, hopefully, the employee could check on those in advance of signing the employment agreement. Sometimes, they’re not. Sometimes the employer just straight-up lies to the employee and says, oh yes, all these things are going to be there, and they’re not. Without the Without-cause, employees can insulate themselves from being stuck in a terrible situation for a long time without recourse.

Safety When You Need to Terminate an Employment Contract

So, can an employee terminate a contract at any time? If they have without-cause termination, remember that they must work the entire notice period. Like I said before, if it’s 30 days, give notice, work 30 days, and leave. Suppose you were to go before the end of the notice period. In that case, the employer could theoretically have damages and sue you for lost profits, recruiting, or replacement. So, if you have a notice requirement in your employment contract, you want to ensure that you give the proper amount of notice, work it out, and then move on and find a new job.