What is tail insurance for dental malpractice insurance? This is one thing they usually don’t teach you in dental school. But if you are a dentist, you will need malpractice insurance. You need to be aware of different types of malpractice insurance. And potentially, you may have to pay for. First, the employer should pay for your annual premium. The annual premium is the amount needed to insure you each year. And that’s how it works. You pay a premium every year, and then you’re insured for that year. There are two common types of malpractice insurance coverage for a dentist.

Two Common Types of Dental Malpractice Insurance for Dentists

There are two common types of malpractice insurance for a dentist. One is occurrence-based coverage, and the other is claims-made. In an occurrence-based policy, tail insurance is not necessary. It just means a policy must be in effect when the malpractice occurs. The other coverage is called claims-made. Here, ail insurance is necessary because it states that a policy must be in effect when the claim is made. It’s possible if you leave an employer, someone could sue you one or two years later. And if you didn’t have a tail insurance policy, you wouldn’t be covered even though it happened two and a half years ago. 

What is Tail Coverage?

Tail coverage, also referred to as an extended reporting period (ERP), is a vital component of claims-made insurance policies. It provides protection for professionals and businesses against claims filed after the termination or expiration of their insurance policy, as long as the incident occurred during the active policy period. Tail coverage is particularly important in industries where claims can arise long after services have been rendered, such as medical, legal, or financial professions. By securing tail coverage, professionals can maintain peace of mind and safeguard against potential financial losses resulting from claims reported after their policy has ended.

Adding Tail to Claims-Made Insurance Policy

Let’s kind of dive into the cost of these types of things. If you have a claims-made policy, which the vast majority of dental associates will have. After the contract ends, for whatever reason, it’s terminated, or it just ends. It’s not renewed, or maybe someone is in breach of contract. But for whatever reason, once the contract terminates, you’ll have to get a policy that covers the gap in between your last patient you saw and the last date that they can sue you. 

For most states, it’s two years. There are some exceptions for people who are no longer minors. And it’s usually from the date you either knew or should have known of the malpractice event. It’s certainly possible that someone may not even know that malpractice occurred for a year or two. And in that scenario, that’s how they can sue the dentist after the fact. So, you’d have to purchase a tail coverage, it’s also called gap insurance or extended reporting, but it’s mostly known as tail insurance in the industry. You’d have to purchase that before the end of your current contract, which would be for a set amount of time.

So, you can get a one-year tail, two-year, five-year, or unlimited. Obviously, the longer the tail, the more expensive it is. But most policies will cover somewhere between three to five years because people figure that’s far off enough to cover any claim that people could make.

Other Blogs of Interest

• How Much Paid Time Off Should a Dentist Get?
• What is Occurrence-Based Insurance for a Dentist?
  

How Much is Tail Insurance Coverage?

Regarding cost, tail insurance is generally about twice your annual premium. If your annual premium is 3000 a year, then your tail cost would be around 6,000. The shorter you’re with the employer may be down to 1.5 times your annual premium. Whereas if you’ve been there a very long time and want an unlimited tail. It could go up to 3 times your annual premium. A good rule of thumb is it’s about twice.

If it were $6,000, you’d have to pay it upfront before the contract terminates so that a policy is in place. It’s a one-time charge. You don’t have to pay it annually. You pay the six grand; that’ll cover you for as long as the tail coverage lasts. Now, who pays for that? It depends on what it says in the employment contract. Many employers will make the dental professional pay for their own tail. It’s just a matter of negotiation between you and the employer. One strategy if the employer isn’t willing to pay for it. You could ask them to make a forgiveness per year. For instance, if you had a three-year initial term. Maybe you would say that the employer would chip in 33% of the tail costs every year that you’re there.

If you leave between year two and three, they’ll pay for two-thirds of the tail. And then you’d pay for thirds long. They will pay for everything if you’re there for three years. It’s not prohibitively expensive for a dentist. Indeed, when you get into more specialized surgical specialties and that type of thing. It will be slightly more than if you’re just doing general dentistry. But it’s still something you need to think about, which most dentists have no idea about.

Which Malpractice Coverage Should a Dentist Choose?

Should a dentist choose occurrence-based or claims-made coverage? First, the two most common types of malpractice insurance for dentists are occurrence and claims-made. And if you are an employed dentist with the practice, the practice will likely use claims-made. Let’s go through the differences between the two and which one would benefit you. If you are thinking of signing an employment contract, there’s going to be a section there discussing malpractice insurance. The employer absolutely should pay for your underlying premium if you’re an employee. An underlying premium is just how much it costs to insure you yearly.

They should pay for that. Now, if it’s a claims-made policy, it means a policy has to be in effect when someone makes a claim. Say you leave an employer. There’s going to be a statute of limitation. It’s a period that someone can sue you. In most states, it’s two years, but there are exceptions. A few states have a little longer than that. But let’s use two years as an example. If you had a claims-made policy, you would need tail insurance, which covers the gap between when you leave, and the last day somebody can sue you. A claims-made policy versus an occurrence policy is kind of the differentiator’s price. With an occurrence-based policy, you don’t need tail insurance. But it’s about a third more expensive than a claims-made policy.

Add Tail Coverage in Your Insurance 

A claims-made policy would be a third cheaper than an occurrence-based policy. However, you would be responsible for paying for tail insurance. And a good rule of thumb is tail insurance costs about twice your annual premium. Let’s say an annual premium of $4,000. Then if you’re responsible for paying for tail insurance, it would be around $8,000. Now, that’s a one-time cost, it’s not yearly. And you would pay that prior to the contract’s expiration, or if it’s terminated on your last day of work. And you’d have to pay the entire amount upfront, but then you would be covered for however long.

The tail costs can vary a little bit based upon two things. One, how long you’ve been with an employer, and then two, the length of the tail. So, it can be anywhere from 1.5 times your annual premium, all the way up to three times. Based upon those factors. 

You would rarely have an employer say to you, we can offer you both policies, we can do occurrence-based or claims-made. Well, if it’s up to you, you should get an occurrence-based policy so as not to worry about tail insurance. It’s a no-brainer. If they say to you, we’ll pay for whatever underlying annual premium it is, and it’s up to you. Then get an occurrence-based policy. Maybe you’re an independent contractor and whoever your employer will be stated, you’re responsible to pay for the annual premium. And if you get claims-made tail, that would be a scenario where you would have to decide.

When To Use Occurrence-Based Policy

Think of it this way. If you’re working for someone as an independent contractor, and let’s just say you’re only going to work for one year. And you can choose between either coverage. In that scenario, it would make sense to get an occurrence-based policy. Let’s just say you have a, as I said before, $4,000 annual premium. At the claims-made level, it’s a third more, so you’d be paying roughly $5,300 yearly with an occurrence-based policy. Wherein if you had a $4,000 claims-made policy. The contract ends, and it’s twice as much, then you have to pay 4,000 for the annual premium. Plus 8,000 for the tail, maybe a little bit less than that. So, you have a $12,000 total cost if you went with claims-made and if you’re only staying with an employer for one year. And then if you had an occurrence-based policy, you’re only paying 5,300.

Occurrence-Based Insurance Policy for a New Dentist

So, you’re saving roughly $6,700 just by utilizing an occurrence-based policy. That scenario, once again, makes complete sense. Now, if you’re staying with an employer for a long period, or as an independent contractor. Let’s say it’s 10 years. You’d have to do the math. If I’m paying a third more per year over 10 years, is that going to be more expensive than having a policy that’s a third cheaper and then tacking on $8,000 at the end?

The longer the time you’re with an employer, the more it makes sense to go with a claims-made coverage. If you had the choice. In my opinion, expecting to work an extended period like 5 or 10 years with one practice is foolhardy. With the proliferation of all these corporate dental practices swooping in and buying up all these dentist-owned practices. Places that were great to work with before are now maybe not so great to work at. So I would not go into any relationship expecting it to last more than 5 to 10 years. It’s just improbable in this environment that that would happen. So, that’s a breakdown of occurrence versus claims-made. And then maybe which one you should choose if you’re looking for a new position.

How Much Does Tail Coverage Cost for a Dentist?

How much does tail insurance cost for a dentist? First, let’s talk about when you would need tail insurance, and then we’ll talk about how much it costs. There are two common medical malpractice policies for dentists, and that’s either occurrence-based or claims-made. An occurrence-based policy requires a policy in place when the incident occurs. Tail insurance is not necessary. Under a claims-made policy, a policy has to be in effect when someone makes a claim. You may terminate a contract and leave an employer, but there will still be a statute of limitation. The period that somebody could sue you for malpractice in most states, it’s two years.

There are exceptions, but I’ll say for these purposes, it’s two years. Tail insurance coverage covers the gap between when you leave an employer and the last day somebody can sue you. Most places require tail  coverage to be at least two years at most. In the employment contract, it’s going to state who is responsible for tail insurance if you have a claims-made policy. If it doesn’t say that, you must figure it out and ensure that language is there before signing the agreement. In the agreement, it will have a section that states that the employer will provide the underlying annual premium. It’s how much it costs to insure you yearly. And then usually, it will state what type of policy they utilize. And if it is a claims-made policy, who’s responsible for paying for tail insurance.

Why Employers Prefer Claims-Made

Often, the dental practices will put the burden to pay the tail insurance on the dentist leaving the practice. They would use one policy over another because an occurrence-based policy is generally about a third more expensive than claims-made. Suppose the employer uses a claims-made policy. Which is a third cheaper and puts the onus on the dentist to pay the tail insurance costs. In that case, they’re saving a decent amount throughout an employment relationship between them and a dentist. 

So, how much does it cost if you are responsible for paying for tail insurance? Well, a good rule of thumb is it’s about twice what your annual premium is. As I said before, the annual premium is how much it costs to insure you yearly. And you multiply that times two, which will be how much you must pay for tail.

Tail Coverage Cost

It’s a one-time charge, so you don’t have to pay tail insurance yearly. It’ll be covering you for however long a policy you choose. I would suggest if they had, and will have, an unlimited tail coverage, which will cover you indefinitely. That’s the way to go. As I said before, there are some exceptions and then some longer statute limitations based upon your state. And so, it would be a bad idea to get a policy that didn’t cover the entire amount. If you get sued, and there is no insurance to cover you. You may be personally reliable for those damages if it gets to that point. Then you’ll have to pay for your attorney and go through that. And then the settlement will come out of your funds. 

So, it just makes sense to pay by the indefinite tail. That way, you’re covered. How much it costs kind of varies based upon specialty. If you’re doing general dentistry, it’s going to be a little bit less. And if you’re maybe an endodontist or doing some more surgical procedures, it would be more expensive. But I’d consider a reasonable amount for insurance is somewhere between 2,000 to 4,000 for an annual premium. Which would not be uncommon for a general dentist. And so, your tail costs would be somewhere between 48,000 in that scenario. Not a prohibitive amount of money, but still an amount you’re most likely going to pay for. Essentially a budget that you’re going to pay for that amount.

Lastly, it has to be paid before the termination of the contract. So, before the contract terminates, you must purchase that policy. The employer would then require you to prove that you had purchased that policy. That’s how much tail insurance costs.

What is Dental Malpractice Insurance and How Does Coverage Work?

Dentists encounter unique risks and challenges in their careers. The increased exposure to dental malpractice affects many dentists, with about 242 dental malpractice cases recorded yearly. This leaves many dental professionals financially and emotionally drained since they must pay for the damages incurred by patients during dental care. This usually amounts to huge fines, penalties, and even a bad reputation that may affect the dental practice and dentist’s careers in the long run. 

As a dentist, it is imperative to protect yourself against liabilities that may arise from dental negligence by acquiring dental malpractice insurance. This coverage plays a crucial role in meeting your financial needs and protecting your practice, assets, reputation, and employees when a patient files a dental malpractice case against you. Below is essential information about dental malpractice insurance. 

What Is Dental Malpractice Insurance Coverage?    

Dental malpractice insurance is professional insurance coverage that protects healthcare providers from incurring financial losses on injury claims filed against them due to medical negligence from the practice. It helps dental professionals avoid covering the liabilities from their pockets. This coverage is usually necessary because injury claims can be huge and can affect the practice operations due to financial losses in the long run. 

What are the Common Dental Malpractice Claims?

There are different dental malpractice claims that a patient can sue you for negligence when you deviate from the required ethical standards in the healthcare sector. 

Knowing the dental malpractice claims is imperative to help you make informed decisions when a patient sues you for negligence. Below are the most common dental malpractice claims. 

• A dentist using too much force on a young patient 
• Removing teeth that don’t need to be removed 
• A broken dentist instrument inside a patient’s tooth
• Misdiagnosis, infections, delayed treatment
• Not using the suitable anesthetic
• Dental issues resulting from a broken jaw, broken tooth, and extractions
• Improperly sterilized or non-sterilized dental tools 

It is worth noting that some malpractice claims occur more frequently than others. This can lead to negligence claims when you least expect it. Having malpractice insurance can save you a lot of headaches and financial losses. It may also be suitable to hire an experienced Dental Contract Lawyer to provide you with a dental contract review for your practice. 

Who Needs Dental Malpractice Insurance?

Dental malpractice coverage is essential for dentists, dental hygienists, dental or dental hygiene students, and dental entities. So it is basically for anyone directly interacting with patients to provide dental care because they are susceptible to dental malpractice claims. Whether full-time, part-time, a volunteer, or a beginner in dental practice, you may need dental malpractice coverage. 

What Does Dental Malpractice Insurance Cover?

Dental malpractice policy covers different claims based on various factors such as the type of insurance company, damages incurred by the patient, and the severity of the matter. If a patient sues you for malpractice, you may need to pay them for the damages incurred whether the claim bears any truth or not. Below are the types of damages you may need to pay the patient. 

• Compensatory and punitive damages
• Arbitration costs 
• Attorney and court fees
• Settlement costs
• HIPAA violation fines 

It is best to do due diligence when looking for an insurance provider for your dental practice and choosing the right policy that suits your needs. Some providers impose high claims, so you should inquire and research before selecting an insurer. You should also check the policy limits and what it covers and doesn’t cover (like non-compete violations).

If you are experiencing any doubts about dental malpractice, it is best to consult an experienced dental attorney such as Chelle Law for dental associate employment contract review services. 

How Much Is Dental Malpractice Coverage? 

The cost of dental malpractice insurance depends on various factors listed below.

• Whether the patient suffered physical pain
• Whether the dentist can work on the injury and correct it
• The dentist’s professional background
• The seriousness of the damage caused

Whether the injury affects the patient’s future activities such as speaking and chewing. 

It also depends on the policy type, how old your practice is, your location, and the purchase policy amount. For instance, a newly established dentist may pay lower rates within the first five years of operations. 

It is best to analyze your practice needs and choose the right dental malpractice coverage. You can also work closely with an insurance agent to take you through their policies, thus, making informed decisions before signing up for the policy. 

The insurance company will use various parameters such as your personal claims history and state requirements to determine your yearly premiums and tailor the right coverage for your practice while also spreading risks for the entire coverage period.

What Should You Look for in a Carrier for Your Dental Malpractice Coverage?

You need to factor in so many things when looking for an insurance provider for your dental practice. With multiple dental malpractice carriers around you, it is imperative to take your time and search for an insurance company that can meet all your needs and expectations. 

Look for the best provider that offers quality services and good customer care. The provider should have in-depth experience in the field and should be willing to show you how dental malpractice coverage works. Check the company’s claim procedures, premiums, and risk management programs for supporting dental practices. 

You can check the carrier’s website and social media pages to know about them before committing to their services. It is also best to ask other professional dentists for referrals from other dental professionals for reputable insurance carriers who can give discounts and offer emotional support to defendants. 

If you’d like to know more about dental malpractice insurance, we can help. Chelle Law has experienced attorneys who can take you through the process and offer you legal advice.

Get a Professional Dental Contract Review from an Experienced Arizona Lawyer 

If you are looking for dental contract review services for your practice, it is imperative to hire an experienced dental lawyer to guide you through. Chelle Law has experienced lawyers who can help you with contract review for your dental practice. Contact us for effective contract review services for your dental practice. 

Claims Made Insurance for a Dental Associate Explained

What is claims-made insurance for a dentist? Every dental professional needs a malpractice policy while they’re practicing. And there are two common types of malpractice insurance: claims-made and occurrence-based. Claims-made insurance policy means a policy must be in effect when someone makes a claim. Say you’re an employee and leave an employer. There’ll be a gap between the last patient you see for that employer and the last day they can sue you. That’s the statute of limitations. And generally, it’s two years in most states. It varies from state to state. And there are also exceptions for minors becoming adults and that type of thing.

But let’s use two years as an example. Someone has two years to sue you. If you had a claims-made policy, you need an additional insurance policy that covers that gap, called tail insurance. If you have a claims-made policy, you need tail insurance. An occurrence-based policy means a policy must be in effect when the incident occurs. No tail insurance is necessary for an occurrence-based policy. 

Now, the main difference between the two is cost. An occurrence-based insurance policy is about a third more expensive per year than a claims-made policy. And then, after a claims-made policy ends, you must purchase tail insurance. Tail insurance is about twice your annual premium. So, if you had a $3,000 annual premium and had to pay for tail insurance under a claims-made policy. It would be a $6,000 payment, depending upon who’s responsible for it, that they should pay. That’s a one-time charge and doesn’t go on year to year. You just pay it all upfront.

How to Get Tail Malpractice Coverage 

Normally, the employer would require a secured tail coverage before the end of the employment relationship between the two parties. If the employer says, it’s your choice what insurance policy you want to use, it will depend on who’s paying. If the employer says, I don’t care if it’s an occurrence or claims-made, we will pay the premiums. Then obviously, you want an occurrence-based policy because you won’t have to pay for tail. Most of the time, you don’t get a choice. Often, it is claims-made. And mostly, the employer will require the dental professional to pay for tail insurance.

A couple of ways to handle that. One, you can negotiate in advance to get the employer to cover the cost of tail insurance. If they’re unwilling to cover all the costs, one thing we’ve been successful with is forgiving an amount of it. Depending on how long you’ve been there. Suppose you have a three-year initial term. Then we’d say, alright, for every year that the dentist stays employed, one-third of that tail cost is then forgiven.

That way, if you’ve been there for three years, you wouldn’t have to pay for the tail after you left. That’s been an effective way of getting them to cover some tail insurance costs. Another one would be if you were in a state, used an insurance company, and switched jobs. Then the new job uses the same insurance company as the old job. Most of the time, they’ll just roll over your old policy into your new one.

Claims Made Coverage Needs Tail

In that way, you wouldn’t have to pay for a tail. And then the third way of getting out of having to pay for tail is if your new employer pays for your old tail. And that’s called nose coverage. It’s not prohibitively expensive for most general dentists. If you get into some subspecialties into surgical specialties, that type of thing can be more expensive. But it’s not a break-the-bank type cost. If you have claims-made coverage, you do not want to go on without tail coverage. I have had a few people who said, you know what, I don’t want to pay the tail costs. I’m willing to accept the risk.

And it just seems like a foolish risk to take $6,000 to cover your tail. Whereas a dental malpractice insurance claim could be many multiples of that potentially. Plus, I would hate to have that hanging over anyone’s head. Anyway, that’s a little primer for claims to make coverage for a dentist.

How much time off should a dentist get? Simple, let’s say you’re a dental associate, you’re looking at a new contract. Then they’re offering you a certain amount of time off. Is it fair how much vacation or time off they’re offering you? First, let’s talk about what goes into paid time off. PTOs, known as paid time off, usually include four things. It’ll have vacation days, sick days, holidays, and continuing education. If you add all of those up, that’s the number that matters. If you have ten days of vacation, seven federal holidays, five days for CE, and five sick days. Adding all of those up could be a reasonable amount.

Vacation and Paid Time Off for Dentist Employee

You must ensure that the contract states how much time you get. And what part of that total number corresponds to the vacation, sick days, holidays, and CE. Some places use a pure PTO system, meaning everything comes from the same bucket. So, if you’ve gone from the office for whatever reason, it’s a holiday. You’re continuing education. You’re sick, or you’re on vacation, it doesn’t matter. Everything comes out of that bucket.

But others specify, and this is the most common way, exactly how many days you get for each thing. Let’s break down those four elements. Regarding vacation, most dental associates will get somewhere between 10 to 15 days of vacation. If they offer you five days of vacation, that is not enough. So, somewhere between 10 to 15 days paid vacation.

How Many Sick Days Can Dentists Take?

Sick days can vary by state. Some states have an actual law that states that if you’re a full-time employee, you get this many sick days. There are other states where it’s ambiguous. Normally, most places offer somewhere between 3 to 5 sick days, or they might lump it into the vacation. But that’s a reasonable amount. Regarding federal holidays, in most places, 6 or 7 federal holidays per year. That’s easy to understand. And then continuing education, once again, somewhere between 3 to 5 days. time

How Much Paid Time Off Should You Aim For?

A dental associate should aim for somewhere between 20 to 30 total days of time off. When you add up those four things, it should be somewhere between 20 to 30 days. If you’re not within that range, I mean if you’re beyond that range, great, good for you. If you’re not getting the 20 days adding all that up, you’re not getting enough time off. Or at least you’re not getting enough time off compared to your peers, so you need to ask for more.

For a Dentist Employee on a Daily Rate 

Now, a couple of considerations if you are on a pure production compensation agreement. That means, maybe you get a daily rate with no paid time off. When I’m talking about this, usually, it would pertain to people on salary. Sometimes, if it’s a production/salary hybrid. But if they pay you a daily rate, they may still pay you for those days you’re off. But many employers will simply state you get paid if you work and don’t get paid if you don’t. However you can take as much time off as you want. Suppose you are on a pure net collections-based agreement. You would get a percentage of whatever the dental practice collects based upon your personally performed services.

In that scenario, obviously, the less you work, the less you will collect. And so have to determine how much time off you can take. Versus how much you’re going to make by taking that much time off. And then decide how much is the right amount for you.

If you’re on a pure base salary, say you make 110,000 per year, the more time off, the better. Because your compensation isn’t going to be affected whether you’re there or not or what your productivity is. So, try to advocate for more if you’re on a pure base salary. Whereas if you’re on hybrid or pure productivity, it might change the equation somehow. In summary, you should aim for somewhere between 20 to 30 days of total time off. Anything above 30 would be rare, to be honest. But somewhere in that range would be considered fair, in my opinion.

Other Blogs of Interests

• Dentist Independent Contractor vs Employee
• What is a 1099 Dentist?
• Red Flags in a Dentist Employment Contract

How to Negotiate a Dental Associate Contract

How should you negotiate an associate contract? I’ll give some tips and tricks to get a better contract. There’s a difference between negotiating a contract with somebody just out of training versus someone already established in a community. You have more leverage if either a corporate practice or another group is bringing out your practice. Or wants you to join them. And you have an established patient base. Suppose you’re coming out of training. What do you need to do to put yourself in the best position to negotiate a contract? 

For many dentists, the most important things are salary. Is it a base salary? A daily rate? 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? Are they paying for your license, DEA registration, credentialing, or continuing education, and are there signing bonuses and relocation assistance? Will you be paying them back if you leave within a certain time? Probably the two highest priorities are: who’s paying malpractice insurance. And who must be paying 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. If they’re tied to a community, kids in school, or family, they absolutely can’t leave. Then you need a reasonable non-compete that’s not going to make you move entirely out of the area.

Know The Average Pay in Practice

Those are the most important things to dental associates. Now, you’re coming on training, you have a position offer, they’re giving you a certain financial amount. How do you know what’s reasonable? Talking to your classmates is the best way to find that information. What offers are they getting? How much are they getting and how are they structured? Where do offers come from? That’s the best and most accurate means of finding out what the going rate is at that time. The compensation is going to vary wildly. Is it a base salary? Is it a daily rate? Or is there some net collection involved? Or is it a hybrid? And could it be half base, half net-collections. 

Other Things to Consider Beyond Compensation

Often, dental compensation for a job may look great, but the benefits are inadequate. They’re not paying for your tail insurance, or the non-compete is terrible. So, you can’t just take a salary as the number one factor in determining a good opportunity. But it is undoubtedly vital. Knowing whether a non-compete is fair or not is something you probably must talk to a professional about.

Mostly, anywhere between one to two years and 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 10 locations. Say, it’s a corporate practice in a big city having 10 locations. And they’re saying, well, you can’t work within 10 miles of every site 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 those terms will be negotiated in advance. Then incorporated into the employment agreement. And then, they’re going to give you the employment agreement. Sometimes it’s challenging coming 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 completely understand what the work entails and the expectations for both parties. You could agree to a salary, the length of term, that there’s a non-compete, that’s the things they’ll pay for. But when you see the specific language in the contract, it could significantly change the way you look at its value.

You Can Negotiate The Contract Even After Signing the Offer Letter

Just because you’ve signed an offer letter doesn’t mean you can’t renegotiate if you provide proper context to the employer. Alright, I was okay with making $110,000 a year and a base salary. Not knowing the non-compete effectively knocks me out of this state. If you want me to sign this dental contract with that non-compete, I need 130,000. There are many ways of going back and forth. Some employers will just 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 agreement.

It usually means they’re difficult to work with down the road or have 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 at signing bonus, relocation assistance, benefits, anything like that. It is a bad sign moving forward. 

Top Tip: Check the Without Cause Termination

One more thing to keep in mind when signing a dental contract or negotiating the terms of an agreement. Every employment contract should have what’s called without-cause termination. Either party should be able to terminate the agreement at any time with a certain amount of notice to the other. Usually, somewhere between 30 to 90 days.

If your contract doesn’t have without-cause termination. It means you must fulfill the entire initial term of the agreement somewhere between one to three years. Normally, it is an enormous red flag. You absolutely should not sign that contract for this reason. Suppose they have excluded without-cause termination, which is standard across all healthcare professions. In that case, it usually means they’ve had a ton of turnover or very dissatisfied dentists who wanted to leave. So, they’ve removed that ability and made sure they must stay there for three years, two years, etc. 

Usually, it’s not in the contract because they’ve had a ton of turnover and it’s normally due to bad management. Either it’s a toxic work environment. Or the compensation is not worth the amount of period or effort you’ve, you’ve had to put into it. It makes sense that there’s always without-cause termination in the employment agreement. 

Talk to Dental Associate Contract Lawyers

Don’t feel bad about asking for things. If you’re negotiating the terms of employment, most smart employers expect there will be some back and forth. Ask for a little more salary, a little more bonus, and a little less non-compete radius. Incremental things you can get changed in the agreement can make a big change in the value of an opportunity. So, don’t feel bad.

Now, if they’re offering a hundred and you ask for 300 or some crazy amount. They’ll think you have no idea what’s going on. They’ll probably move on. When you ask for something, it needs to be reasonable. How do you find out what’s reasonable or not? Once again, talk to your classmates, any mentors, or attorneys who understand what they’re doing. Those dealing with these contracts every day. That’s where you need to get in. But if you ask for these ridiculous changes to an agreement, most places will pull the offer and say no. So, that’s how you negotiate an associate contract.

No Paid Time Off is a Red Flag

Workers, such as Dentists, need support in getting PTO, and companies must provide paid time off to their employees. In negotiating contracts, remember that negotiating about money alone is shortsighted. Usually, during the hiring process, management is willing to negotiate with employees other things, such as how many vacation days an employee will receive. If paid time off is not in your contract, this is considered a red flag and you need to negotiate with the company.

How to Negotiate a Dental Associate Salary?

How should you negotiate an associate salary? I will provide tips and tricks as far on how to get the best dental practice compensation. The first thing to discuss is how often employers pay dental associates via salary versus another compensation model. There are usually four common types of compensation structure. 

Common Types of Compensation Model

The first would be a base salary. You just get paid a set a month, you work whatever the agreed-upon hours are. And that’s it. The second would be a hybrid-based salary with the net-collections model. Net collection would be any money that the practice brings in based upon your personally performed services. And so, the associate would get a smaller monthly salary. Then they get a percentage of net-collections, whatever the practice brings in monthly or quarterly. The third way is pure net-collections. This means the associate only gets paid based on what they bring in. That’s risky. And then the last is a daily rate. Many dental associates will get a daily rate, and then they work either half-day, full-day, or whatever. And that’s how much they earn. 

Tips for Negotiating Better Compensation

Essentials of negotiating a dental salary. I won’t focus entirely on salary since there are other avenues the dentist needs to think about. Let’s discuss salary. First, you need to know what your worth is. You need to know the going rate in the area you’re looking in. The experience you provide, if you’re in a specialty. And what kind of normal computation for that.

There’s no great resource aggregating all the data for dental salaries across the country that I find accurate. So, talk to colleagues, mentors, and people you were training with. It’s usually the most precise way of determining the going rate. And occasionally, some dental associations can provide some data, but I wouldn’t entirely rely upon it. When you get an initial offer, let’s say it’s for 120,000. Most employers expect at least some kind of back and forth as far as settlement is concerned. So, don’t feel bad asking for more. 

Now, how much more depends, but you need to be reasonable. If 120 is the average for a, let’s say, you’re right out of training, you have no experience building up a practice. And you say, you know what, I don’t want 120, I want 240. Well, the employer will likely laugh it off.

And it will put you, or at least start you on the wrong foot. If you’re going to ask for a bigger amount, it needs to be reasonable. It needs to be as informed as you can be. One good way of doing it is if you’ve identified an area you want to practice. Reach out to multiple practices and try to get an average of what they offer you. And then, that way, you can determine if one place is kind of low-balling you or not. 

Ancillary Benefits, Proper Staffing, And More

Beyond salary, you also need to consider all the ancillary benefits like health, vision, dental, life, disability, and retirement. But then are there potential bonuses? Are they paying for your malpractice insurance and tail insurance? What are the restrictive covenants? When people base employment on the baseline number for salary and not anything else, I think that’s shortsighted. One work paying $20,000 less could be much better considering all the different bonuses and benefits. And maybe a lesser restrictive covenant. The non-compete, for instance, versus another one paying 20,000 more but doesn’t offer all those other good things. 

Another tip: when searching for your first work out of training, go into an environment you can learn from. There should be other experienced dentists around you in a professional environment. You need to interview and go out and look at the practice and see how they operate. Is there proper staffing? Are you going to be efficient? If they’re paying you for productivity, will they do everything necessary to make you as efficient as possible? Because if they don’t, your production will be less, and you’ll make less. 

Dentist Employee Compensation Models

Now, as far as the other compensation models, a daily rate is pretty simple. I mean, it’s the same analysis of determining how much they will offer you if you have a base salary. Usually, it’s somewhere between eight hundred to a thousand per day, a thousand on the high side. If it’s a compensation structure involving a base salary and net-collections, they’d depend upon how much base salary you’re getting.

But typically, if it’s a hybrid, meaning base salary and collections, your collections will be somewhere between 15 to 25%. And then the last one would be pure net-collections. That’s usually somewhere between 35 to 45%. I think closer to 35 would be most likely as far as that goes. 

So, that’s a little breakdown of how to negotiate an associate salary. It’s tough when you have no experience, you’re not bringing any patients into a practice. You need to think of the best learning environment or build up your skills. And then utilize that down the road to leverage the salary.

What is claims-made insurance for a dentist?  Every dentist needs a malpractice policy while they’re practicing. And there are two common types of malpractice insurance: claims-made and occurrence-based.

Two Common Types of Malpractice Insurance

Claims-made policy means a policy must be in effect when a claim is made. If you’re an employee and leave an employer, there is a gap between the last patient you see for that employer and the last day they sue you. That’s the statute of limitations. And generally, it’s two years in most states; it varies from state to state. And there are also exceptions for minors becoming adults and that type of thing. But let’s use two years as an example. If someone has two years to sue you, then if you had a claims-made policy, you need an additional policy that covers that gap, called tail insurance. If you have a claims-made policy, you need tail insurance. An occurrence-based policy means a policy must be in effect when the incident occurs. No tail insurance is necessary for an occurrence-based policy. 

Occurrence-Based vs. Claims-Made Policy and Tail Insurance

Now, the main difference between the two is cost. An occurrence-based policy is about a third more expensive per year than a claims-made policy. And then, after a claims-made policy ends and you must purchase tail insurance, tail insurance is about twice your annual premium. So, if you had a $3,000 annual premium and you had to pay for tail insurance under a claims-made policy, it would be a $6,000 payment, depending upon who’s responsible for it, that would have to be paid. That’s a one-time payment. It doesn’t go on year to year. You just pay it all upfront. 

Who Pays for Tail Insurance?

Usually, the employer would require that the tail insurance policy be secured before the end of the employment relationship between the two parties. If the employer says it’s your choice regarding what policy you want to use. It will depend on who’s paying for it. If the employer says, I don’t care if it’s an occurrence or claims-made, we will pay the premiums. Then obviously, you want an occurrence-based policy because you won’t have to pay for tail insurance. Most of the time, you don’t get a choice. And most of the time, it is claims made. And most of the time, the employer will require the dentist to pay for tail insurance.

Some Practical Tips in Handling Insurance Costs

A couple of ways to handle that. One, you can negotiate in advance to get the employer to cover the cost of tail insurance. If they’re unwilling to cover all the costs, one thing that we’ve been successful with is forgiving an amount of it, depending on how long you’ve been there. Let’s say you have a three-year initial term. Then we would say, alright, for every year the dentist stays employed, one-third of that tail insurance cost is forgiven. That way, if you’ve been there for three years, you wouldn’t have to pay for any of the tail insurance after you left. That’s been an effective way of getting them to cover some tail insurance costs.

Another would be if you were in a state, used an insurance company, switched jobs, and the new job uses the same insurance company as the old one. Most of the time, they’ll roll over your old policy into your new one. In that way, you wouldn’t have to pay for tail insurance. 

And then the third way of getting out of having to pay for tail insurance is if your new employer pays for your old tail insurance, and that’s called nose coverage.

Important Reminder if You Have a Claims Made Insurance Policy

It’s not prohibitively expensive for most general dentists. If you get into some subspecialties into surgical specialties, that type of thing can be more expensive. But it’s not a break-the-bank type cost. If you have claims-made coverage, you do not want to go on without a tail insurance policy. I have had a few people who just said; you know what, I don’t want to pay the tail insurance costs. I’m willing to accept the risk. And it just seems like a foolish risk to take $6,000 to cover your tail insurance.

In comparison, a malpractice claim could be many multiples of that potentially. Plus, I would hate to have that hanging over anyone’s head. Anyway, that’s a little primer for claims to make coverage for a dentist.

Other Blogs of Interest

• What is Occurrence-Based Insurance for a Dentist?
• What is Dental Malpractice Insurance, and How Does Coverage Work?

Should a Dentist Choose Claims Made or Occurrence Insurance?

Should a dentist choose occurrence-based or claims-made coverage? First, the two most common types of malpractice insurance for dentists are occurrence and claims-made. And if you are an employed dentist with the practice, the practice will likely use claims-made. Let’s go through the differences between the two and then maybe which one would benefit you. If you are thinking of signing an employment contract, there’s going to be a section in the contract that discusses malpractice insurance. The employer absolutely should pay for your underlying premium if you’re an employee. An underlying premium is just how much it costs to insure you yearly. They should pay for that. 

Insurance Considerations for Dentists that are Employed

Now, if it’s a claims-made policy, it means a policy has to be in effect when the claim is actually made. It’s possible you could leave an employer, and then there will be a statute of limitation. It’s a period that someone can sue you. In most states, it’s two years, but there are exceptions. A few states are a little longer than that, but let’s use two years as an example. 

Difference Between Claims-Made Policy and Occurrence-Based

If you had a claims-made policy, you would need tail insurance, which covers the gap between when you leave, and the last day somebody can sue you. A claims-made policy versus an occurrence policy is a differentiator on price. You don’t need tail insurance with an occurrence-based policy, but it’s about a third more expensive than a claims-made policy. A claims-made policy would be a third cheaper than an occurrence-based policy. 

Tail Insurance

However, you would be responsible for paying for tail insurance. And a good rule of thumb is tail insurance costs about twice your annual premium. Let’s say an annual premium of $4,000. Then if you’re responsible for paying for tail insurance, it would be around $8,000. Now, that’s a one-time cost. It’s not yearly. And you would pay that before the contract’s expiration, or if it’s been terminated on your last day of work. And you’d have to pay the entire amount upfront, but then you would be covered for however long. The tail insurance costs can vary a little bit based upon two things: one, how long you’ve been with an employer, and then two, the length of the tail insurance.

So, it can be anywhere from 1.5 times your annual premium, all the way up to three times based upon those factors. You would rarely have an employer say to you; we can offer you both policies. We can do occurrence-based or claims-made. It’s up to you. Well, if it’s up to you, you should get an occurrence-based policy to not worry about tail insurance. It’s a no-brainer. If they say to you, we’ll pay for whatever underlying annual premium it is, and it’s up to you, then get an occurrence-based policy. 

Occurrence Coverage for a New Dentist

Now, maybe you’re an independent contractor, and whoever you’re going to work with states, you’re responsible for paying for the annual premium. If you get claims-made tail insurance, that would be a scenario where you would have to decide. Think of it this way: if you are working for someone as an independent contractor, and let’s say you’re only going to work for one year, and you can choose between either policy. In that scenario, it would make sense to get an occurrence-based policy. 

Let’s Compute Which One Is Better

As I said before, let’s say you have a $4,000 annual premium. Well, at the claims-made level, it’s a third more, so you’d be paying roughly $5,300 per year with an occurrence-based policy, whereas if you had a $4,000 claim-made policy, the contract ends. It’s twice as much. Then you have to pay 4,000 for the annual premium, plus 8,000 for the tail insurance, maybe a little less. So, you have a $12,000 total cost if you went with claims-made and if you’re only staying with an employer for one year. And then, if you had an occurrence-based policy, you’re only paying 5,300. So, you’re saving roughly $6,700 just by utilizing an occurrence-based policy. That scenario, once again, makes complete sense. 

Claims-Made Policy Makes Sense if You Intend to Stay for a Long Time With an Employer

Now, if you’re staying with an employer for an extended period or as an independent contractor, working for someone for an extended period, let’s say it’s ten years. Well, in that scenario, you would have to do the math of, alright, if I’m paying a third more per year for ten years, is that going to be more expensive than having a policy that’s a third cheaper and then tacking on $8,000 at the end?

The longer the time frame you’re with an employer, the more it probably makes sense to go with a claims-made policy if you had the choice. In my opinion, expecting to work an extended period like 5 or 10 years with one practice is foolhardy. With the proliferation of all these corporate dental practices swooping in and buying up all these dentist-owned practices, places that were great to work with before are now maybe not so great to work at or with. So I would not go into any relationship expecting it to last more than 5 to 10 years.

It’s just very unlikely in this environment that that would happen. So, that’s a breakdown of occurrence versus claims-made, and then maybe which one you should choose if you’re looking for a new position.

Claims-Made Coverage and Tail Insurance Cost

How much does tail insurance cost for a dentist? First, let’s talk about when you would need tail insurance, and then we’ll talk about how much it costs. There are two common medical malpractice policies for dentists, and that’s either occurrence-based or claims-made. An occurrence-based policy requires a policy in place when the incident occurs. Tail insurance is not necessary. 

Under a claims-made policy, a policy has to be in effect when the claim is actually made. You may terminate a contract and leave an employer, but there will still be a statute of limitation. A period that somebody could sue you for malpractice, and in most states, it’s two years. There are exceptions, but I’ll say it’s two years for these purposes. Tail insurance would be a policy that covers the gap between when you leave an employer and then the last day that somebody can sue you. Most places require a tail insurance policy to be at least two years. 

The Contract States Who Pays for Tail Insurance?

In the employment contract, it’s going to state who is responsible for tail insurance if you have a claims-made policy. If it doesn’t say that, you need to figure it out and ensure that language is inserted before signing the agreement. The agreement will have a section stating that the employer will provide the underlying annual premium. It’s how much it costs to insure you yearly. And then usually, it will state what type of policy they utilize and, if it is a claims-made policy, who’s responsible for paying for tail insurance. 

Most of the time, the dental practices will put the burden to pay the tail insurance on the dentist leaving the practice. They would use one policy over another because the occurrence-based policy is generally about a third more expensive than claims-made. And suppose the employer uses a claims-made policy, which is a third cheaper and puts the onus on the dentist to pay the tail insurance costs. In that case, they’re saving a decent amount throughout an employment relationship between them and a dentist. 

How Much is Tail Insurance?

So, how much does it cost if you are responsible for paying for tail insurance? Well, a good rule of thumb is it’s about twice what your annual premium is. As I said before, the annual premium is how much it costs to insure you yearly. And you multiply that times two, and that will be how much you must pay for tail insurance. It’s a one-time payment, so you don’t have to pay tail insurance yearly. It’s a one-time payment, and you’re covered for however long a policy you decide to go with. 

I would suggest if they had, and will have, an unlimited tail insurance policy, which will cover you indefinitely. That’s the way to go. As I said, there are some exceptions, and then there are some longer statute limitations based on your state. And so, it would be a bad idea to get a policy that didn’t cover the entire amount. If you get sued, and there is no insurance to cover you, you may be personally reliable for those damages if it gets to that point, and then you’ll have to pay for your attorney and go through that. And then the settlement will come out of your funds. So, it just makes sense to pony up by the indefinite tail insurance; that way, you’re covered. 

Cost is Specialty Based

How much it costs kind of varies based upon specialty. If you’re doing general dentistry, it’s going to be a little bit less, and if you’re maybe an endodontist or doing some more surgical procedures, it would be more expensive. But I guess a reasonable amount for insurance is somewhere between 2,000 to 4,000 for an annual premium, which would not be uncommon for a general dentist. And so, your tail insurance costs would be somewhere between 48,000 in that scenario. Not a prohibitive amount of money, but still an amount you’re most likely going to pay for and essentially a budget that you’re going to pay for that amount.

And then, it has to be paid before the termination of the contract. So, before the agreement is terminated, you must purchase that policy. And then, the employer would require you to prove that you had purchased that policy. That’s how much tail insurance costs. 

Which Policy is Right for a Dentist?

One is occurrence-based coverage, and the other is claims-made. In an occurrence-based policy, tail insurance is not necessary. It just means a policy must be in effect when the malpractice occurs. The other coverage is called claims-made, and, in that scenario, tail insurance is necessary because it states that a policy must be in effect when the claim is made. If you leave an employer, someone could sue you one or two years later, and if you didn’t have a tail insurance policy, you would not be covered even though it happened two and a half years ago. 

Let’s kind of dive into the cost of these types of things. If you have a claims-made policy, the vast majority of dental associates will have, after the contract ends, for whatever reason, it’s terminated or just ended. It’s not renewed, or maybe someone is in breach of contract, but for whatever reason, once the contract terminates, you’ll have to get a policy that covers the gap between the last patient you see and the last date that you can be sued.

How to Decide?

For most states, it’s two years. There are some exceptions for people who are no longer minors. And it’s usually from the date you either knew or should have known of the malpractice event. It’s certainly possible that someone may not even know that malpractice occurred for a year or two. And in that scenario, that’s how the dentist can be sued after the fact. So, you’d have to purchase a tail insurance policy, it’s also called gap insurance or extended reporting, but it’s mostly known as tail insurance in the industry. You’d have to purchase that before the end of your current contract, which would be for a set amount of time.

So, you can get one-year tail insurance, two-year, five-year, or unlimited. Obviously, the longer the tail insurance, the more expensive it is, but most policies will cover somewhere between three to five years because people figure that’s far off enough to cover any claim that could be made. As far as cost goes, tail insurance is generally about twice your annual premium. If your yearly premium is, let’s say, 3000 a year, then your tail insurance cost would be around 6,000. The shorter you’re with the employer may be down to 1.5 times your annual premium. Whereas if you’ve been there for a long time and want unlimited tail insurance, it could go up to 3 times your annual premium. But a good rule of thumb is it’s about twice.

How can you get out of a contract as a dental associate? Let’s say you’ve signed an agreement, and for whatever reason you decide, this is not working out. I want to move on. How do you get out of the contract? I guess there are two ways of thinking about this. One is to get out of a contract. It’s easy. Every contract is going to have language about how to terminate the agreement. And in my mind, terminating the agreement is the same as getting out of a contract. I’m going to walk through the standard way to end an agreement. And then, I’ll also talk about what happens if you sign an agreement and don’t want to go through with it.

Four Ways of Ending a Dental Employment Contract

I think that might be what people are thinking about when they say, can I get out of a contract even if I haven’t started yet, but I’ve signed. What are the issues that can come about from that? Let’s just briefly describe how to terminate a contract, and then I’ll get into the second part last. Any employment agreement will state the term of the agreement, meaning how long it is, and then the termination part. And there are generally four ways to terminate a contract. 

Fixed Term

One, if it’s just a fixed term. Let’s say it’s a two-year contract, and no language states that it automatically renews. At the end of the two years, if neither party has renegotiated anything, then it just ends, and the contract terminates. 

Mutual Agreement

That’s it. You could also mutually agree to terminate the agreement. Maybe it’s just not working out. It’s not a good personality fit. Both parties can say, you know what, let’s move on. 

With Cause Termination

The third way would be with-cause termination. Every contract will state how the employer can eliminate the employee and the reasons. Most of them don’t, but some will have a brief section about how an employee, the dental associate, can terminate the employer for what reason. But in any contract, it’s going to state if either party thinks the other is in breach of contract. Let’s say the dental associate has productivity compensation. They’ve earned the bonuses, but they’re not being paid on time or at all. 

They will send written notice to the employer stating you’re in breach of contract. And then usually, there’s a 15 to 30-day window. It’s called a cure period for the breaching party to fix the breach, to cure it. And then, if it is set, the party can no longer terminate the contract for-cause termination. That goes both ways. If maybe the dental associate isn’t taking calls like they said they would, or something like that, the employer can state, you’re in breach of contract. It would be best if you fixed this breach. The third way is termination for-cause. 

Without Cause Termination

The last and the most common way is without-cause termination. Every contract will have a section that states the agreement can be terminated at any time, for any reason, with a certain amount of notice to the other party. Usually, it’s somewhere between 60 to 90 days for most dental associates. And so, let’s say you found a new and better job, you want to move on. You give them written notice and then work out those. Let’s say it’s a 60-day notice. Work out those 60 days, the contract ends, and you can move on. 

What an Employee Need to Consider Before Ending Their Employment Agreement

Now, you need to think about a couple of things in that scenario. The restrictive covenants will continue after the contract ends, so the non-compete, the non-solicit. You also need to consider who will pay for tail insurance if you have a claims-made policy. Are you going to have to repay any bonuses if you leave early? And then also, if you’re on a hybrid productivity model, will you get paid for all the extras you’ve earned? Those are things to think about after the contract terminates. 

Not Getting Started After Signing an Employment Agreement

The other way would be if you signed a contract and decided not to go through with it. This one is more of a gray area. Some contracts will explicitly state that if you sign an agreement and then decide not to go through with it, here are the penalties. So, maybe they would have a set fee. You owe us $20,000 if you sign and don’t start, or you owe the recruitment costs, credentialing fees, and any licensure stuff that we’ve already paid out for you. Most of them honestly don’t have that. 

Suppose you are in a scenario where you’ve signed but don’t want to go forward. In that case, I find it’s best to be completely honest with the employer and say, look, these are why I signed the agreement, but things have changed. It could have been a family illness or a decision to pursue additional training. I mean, maybe you got a better job offer, although telling the employer, they’re not going to be too keen on hearing something like that. 

But if you can give them a reason, I don’t know if “excuse” is the right word, but just kind of, these are the reasons why I don’t want to go through with the contract. Most employers are okay with that without the dental associate having to pay anything. Now, the more extended amount of notice you give, the better. I mean, if you call the employer a day before you’re supposed to start and say, I’m not going to start. Unless you have a great excuse, they will not be okay with that. And they’ll likely, or probably come after you for some amount of money. 

Summary

So, you want to give as much time as possible, as much notice as possible if you’re not going to start, and then a reasonable explanation why you’re not going to start. I would never suggest entering a contract or starting a job that you absolutely don’t want. It’s a position that you wanted. Maybe you just had a much better compensation offer from someone else, or maybe there’s a better opportunity. Whatever it is, it’s better to deal with consequences before you start a job than to start and then leave a month later. 

You don’t want to burn bridges if possible, so providing a reasonable explanation and proper notice is the best way of handling that. But you are potentially open to liability if you’ve signed the agreement. Maybe they’ve paid out some signing bonus or relocation assistance, or as I said before, credentialing fees, licensure, stuff like that. Those are things that they’ve paid for that the dental associate will likely have to pay back at some point. So, that’s kind of how you get out of a dental associate employment contract.

Other Blogs of Interest

• What Are Non-Compete Agreements?
• How a Dentist Should Negotiate a Contract: Dental Agreement Negotiation
• Red Flags in a Dentist Employment Contract: Dental Employment Agreement Concerns

How to Get Out of a Dental Associate Contract?

How to get out of a dental associate contract? You will sign one of two contracts when you are a dental associate. It’s either a dental employment contractor or an independent contractor agreement. Ultimately, it’s the same way of terminating the dental employment contract agreement. Still, I’m going to talk specifically about dental employment contracts because those are, I’d say, the standard type of dental associate agreement to sign. 

Are Contractual Provisions For Length and Termination Present?

When the contract is signed, there will be language in the contract that states its term. So, how long it lasts and then termination means how either party can terminate the agreement. As far as the term is concerned, usually, it will be one of two things.

There is a fixed term with automatic renewals. It could be like a one-year term, which automatically renews for one year unless terminated. More often, there have been evergreen contracts where no term is listed. It just states the contract continues until someone ends it. One is not better than the other. It’s ultimately the same result. After you find out what the term is, go to the section about termination. The ways to terminate a contract are one, by mutual agreement. If both parties feel like it’s not working out, they don’t need or require a certain amount of notice. They just say, alright, this doesn’t work out. We’re both going to wash our hands of this and move on.

With Cause Termination

Two, if there was a fixed term, let’s just say it was one year, and there was no language about automatic renewal. If the one-year term expires and neither party decides to renew, it might terminate the contract. That’s it. Cause-termination is another type of termination. Suppose one party is in breach of contract. In that case, there’ll be language that states the party who thinks that the other party is in breach has to give them written formal notice that says, you’re in breach of contract due to this. And then, typically, there would be a language called a cure period. And the cure gives the party breaching the contract a period to fix whatever the problems are. Usually, it’s somewhere between 15 to 30 days. 

In this scenario, let’s say the dental office is not paying a bonus they said they would, or it’s not timely. Whatever the issue, the dental associate would send them a letter saying, “We agreed that you would pay me this amount of bonus, but you haven’t paid this.” You are in breach of contract, you have 15 days to fix the breach, or I have the option of terminating the contract immediately. That’s one way to get out of the contract.

Without Cause Termination

The last and most frequent way is through without-cause termination. Every contract agreement a dental associate sign needs to have without-cause termination. And that means either party can terminate the agreement at any time with a certain amount of notice. Why is this important? I find this, especially in the dental industry. The volume/if compensation tied to collections can be puffed up before the dentist starts. So, they might get into a situation where they’re being paid purely on production. The volume isn’t there, or they’re making nothing. And then they’re stuck in a contract if there’s no without-cause termination language.

So, what you want is somewhere between 30 to 90 days for without-cause termination notice. The way that would work is just like if someone is in breach. The dentist will then state in the written letters that I’m terminating the agreement, per without-cause termination. That is the most typical method of terminating a dental associate agreement. My last day at work will be X date. I must appreciate the opportunity. The same goes for them as well. If maybe they don’t think it’s working out with the dentist, they can give them notice. Then they can make the dentist work out whatever the notice period is, or sometimes they can just tell them, look, go home, or we don’t need you anymore.

Notice Period

However, they still must pay you for that notice period. So, if you had a 30-day notice, the dental office states were terminating the agreement. We don’t want you to come to work tomorrow. They still would have to pay the dentist for those 30 days. Now, the tricky part comes in. If you’re not on base salary, you’re not getting a daily rate, or you’re only getting paid on production. If you’re not productive, you’re not going to get paid. Then there needs to be a discussion before signing the contract and getting language in there. So that the dentist isn’t essentially working for free or not getting paid all for that notice period. There’s a notice period, at least in the healthcare field, generally for continuity of care. They don’t want a dentist or healthcare provider just not to show up one day and say I’m leaving.

And then there’s a bunch of patients on schedules, people who need work done, and there’s no one to provide that. They can put the patients in a tough spot if there’s just no notice and their provider leaves. It is not the dental associate’s problem. However, if they give enough information, these are the patients of the practice, not the dental associate. And so, when the dental associate terminates the employment agreement, once they leave. They have no obligations as far as the patients go or worry about referring them or transitioning somebody else. That’s the employer’s problem. So, to get out of a contract, the term can end. You can mutually agree to terminate it, terminate it for-cause termination. If the other party doesn’t fix a breach or give without-cause termination in a letter, finish your time and move on.

Can an Employee Terminate an Employment Contract?

The short answer is, obviously, yes. However, it will be determined based on the terms of the contract. In any employment contract, there will be a section that deals with the times, the contract’s length, and then termination, so how that contract ends. Let’s first talk about the terms of the agreement.

Most contracts will have a date, meaning it’s a year-long, two-year, or three-year contract. Then if the agreement doesn’t terminate, it will state a language. It will automatically renew for successive one-year terms. In that case, if a contract isn’t closed in another way after the initial period ends, it’ll just continue forever until terminated.

I would say there is a rarely fixed term with no language about automatic termination. If it’s just a two-year fixed term with no automatic renewal, it would just end at the end of two years, and that would be it. The parties can go their ways. 

What Are the Reasons for Contract Termination?

Now, regarding terminating the contract, the first part is that if there is no renewal, it ends, and the contract ends. Second, by mutual agreement. Suppose the employer and the employee agree that the relationship isn’t working. In that case, they can always, by contract, decide to move on, and then that’s it, you can move on. Next would be with-cause termination. In this case, if someone breaches the contract, there’ll be language that states why the employer can fire the employee. If you need a license to perform the activity and lose your license, or if insurance is required and you’re uninsurable. There are, I guess, vague behavioral clauses. 

If you’re disabled, you die, I mean, ordinary things, but there should also be a part called a cure. And so, in that case, if one of the parties believes the other party is in breach of contract, the most common reason is just payment concerns. Either someone is unpaid, they were promised an amount in the associate employment agreement, or maybe the timing. Also, the bonus payment is involved, and there is disagreement over the professional owed amount. That’s always a big, I guess, reason why there would be an allegation of breach of contract. 

What Happens if Breach of Contract Is Committed?

If you believe the employer was in breach of contract, you’d have to provide them with written notice. And then the cure period means the employer would have a period to fix whatever the breach of associate contract is. Typically, that’s somewhere between 15 to 30 days. And the same can go for an employee. 

If the employer thinks the employee is in breach of contract, they give them written notice, and then the employee has 15 to 30 days to fix the breach. If the breach is unfixed, the other party still believes the other party is in breach. Usually, that party has the option to terminate the dental associate agreements immediately. The last and most common way in most employment contracts is without-cause termination. There’ll be language that states that either party can terminate the employment agreement at any time, for any reason, with a certain amount of notice to the other party.

Typically, it would be somewhere between 30 to 90 days. Suppose the professional is unhappy and wants to move on. In that case, they give written notice saying I’m utilizing the without-cause termination notice in the contract. Then they must work out 30, 60, or 90 days, and then at the end of that period, they can move on without any concerns regarding terminating the contract. Yes, an employee can terminate an employment contract, but they must follow the terms of the agreement. 

Employment Contract Termination and Non-Compete Law

Just because an employee terminates the contract doesn’t mean it necessarily ultimately ends at that point. They could be required of the employee if they terminate the contract. Many times, if given a signing bonus or relocation assistance, The employee would have to pay back a prorated portion of that if they left within the initial term of the employment agreement. Others could have non-compete associated with it.

So, just because an employee terminates the contract doesn’t mean that the non-compete doesn’t apply. It does, or at least it does in most circumstances if you’re in a state where non-competes are enforceable. How long will that last if there is a geographic restriction and then some temporary condition? That will continue even if the employee terminates the contract. If some malpractice insurance is involved and tail insurance is needed, it will say who must pay for that in the contract. Employees may also be responsible for that if they terminate the agreement. Although the employee can terminate the employment agreement, it doesn’t mean that there aren’t at least some strings attached. 

One of the highest priority things I look at in the contract when I’m going over it with a professional. How do you get out of the agreement? And then what do you have to do if it ends within a certain period? In that way, the employee can know that I need to set aside this amount of money if I must pay for tail insurance or if I must pay back the signing bonus. So, they’re essential discussions, and things employees could negotiate before signing any employment agreement. Hopefully, that was helpful—kind of an overview of termination of an employment contract. 

How You Can Terminate an Agreement

You probably shouldn’t, and your employment contract probably prohibits it. In any agreement, it’s going to state how you can terminate an agreement. It could be for-cause, without-cause, mutual termination, or maybe the initial term ends. But in most cases, I mean most contracts are terminated without-cause termination. Without-cause termination, either party can terminate the contract with a certain amount of notice to the other. Typically, around 30 to 90 days is a standard amount for most employment agreements. Suppose you are an employee, and for whatever reason, you don’t want to work for the employer anymore. In that case, you must follow those terms written on the without-cause termination notice.

And it always needs to be written. It’s going to state that you must write a letter. And then, it will also say if it’s a 60-day without-cause termination. The employee has to provide it 60 days prior, work it out, and after the 60 days are over. The employees are free to go once the contract terminates, and the employees are free to move on. They want to go where they want to go after that—considering if there’s a non-compete or a non-solicit. Still, we’re not going to get into that today. 

How Do Employees Communicate a Notice?

The most crucial part as far as this goes is that it will be called “notice” or “notices.” It’s toward the back of the employment agreement initially provided by the company. And this will state who, then how you need to provide notice if there is communication.

An employee could provide in writing a certified letter or overnight hand delivery of whatever termination notice you’re going to provide. And that would then be considered adequate notice. Very few contracts allow email as an effective notice medium. If you gave, let’s say, you wrote an email telling your employer. I’m giving you without-cause termination notice, and I have 60 days. X will be my last day of work. I appreciate the opportunity. Well, if the email is not an effective communication medium within that notice section, that’s not considered effective notice. And then, the employer could make you work for another 60 days until you provide adequate notice. So, that’s the essential part. You need to look in the notices section and determine if the proper way to terminate the employment agreement includes email. 

I can tell you if I review a hundred contracts, 98 of them will not include email or fax. And you certainly can’t just verbally tell your employer you’re leaving. It must be in writing. And most often, it has to be sent either by certified mail or hand-delivered. It depends on whether you work for a small practice or a vast conglomerate with locations in every state. It’ll be impossible to hand-deliver the notice if you must provide notice to the headquarters, and that’s halfway across the country. 

The Consequence of Notice Not Received

To be safe for the most part, you need to write a letter. You’ll have to print it out and send it via certified mail that the employer is using. Usually, it’s one or two. You must send it to the owner if it’s a smaller practice. If it’s a big conglomerate, you have to send it to probably your boss plus the legal apartment of the company as well. If you look through, how much notice do I have to provide? And then how do I have to provide effective notice? You’ll be safe. 

I have a couple of scenarios, and people have called me after the fact. And they’ll say I sent a letter to my employer’s email. I told them I was going to terminate the contract, and they didn’t say anything. I assumed that my contract would end on a specific date. The employer was mad about the employee leaving the company. The employer ticked off that they were leaving. So, what they did was they just sat on it for 45 days. And then, 15 days before the physician thought he was going to leave, they said, you didn’t provide us with effective notice. Email isn’t an effective form of communication to provide notice. You owe us another 60 days until you give us adequate notice, meaning a written letter sent via certified mail. 

And so, the physician had already lined up another job, he had a start date in mind, and then he had to return to the new employer. He would say, I apologize; I will have to delay my start date by almost two months. That was a tough pill to swallow for the physician. If you follow the terms of the notice section, then you should be okay.