You will have signed an employment contract agreement if you are an employee. And in that employment contract agreement, it’s going to contain restrictive covenants. And restrictive covenants are things you can’t do either during or after the contract is terminated. Typical restrictive covenants in a veterinary practice employment contract include:
A non-disparagement clause.
A non-solicitation agreement.
Confidentiality provisions.
A noncompete.
A noncompete essentially prohibits the vet from operating for a period within a specific geographic radius of their workplace. In the agreement, let’s say you’re a general vet. It’ll say you can’t practice as a general veterinarian for one year within 15 miles of your primary practice location.
What the Veterinarian Employee Noncompete Agreements Says
Let’s talk about some sneaky things the employer tries to do in a non-compete. First, vets can do multiple things. They can do emergency medicine, they could do urgent care, and they could do general vet issues. You want to ensure that the specialty written into the contracts is what you’re doing for that employer. If you’re doing emergency medicine, you don’t want them prohibiting you from being a general vet after the contract terminates. You want as many options as possible when the contract ends, so you don’t have to move. Prohibiting things that you didn’t even do for that employer doesn’t make a lot of sense to me. So, you want to ensure that it doesn’t say you can’t do any veterinary medicine. It needs to be specific to what you were doing for that employer.
For some specialists, say you’re a radiologist, there’s going to be no way around that. But it needs to state what you’re explicitly doing for that employer, nothing more. Regarding time, most non-competes for vets are usually going to be somewhere between one to two years. If you have a noncompete that’s three or five years, that is probably not enforceable and completely unreasonable too. Somewhere between one to two years is the ideal range. One year would be better than two. But it’s not uncommon to see both of those lengths in the contract. So, is two years too long for a noncompete? Ideally, you would want one, but two years, I think, could be considered reasonable in some states.
Geographic Restriction for Veterinary Practice Employment
Let’s discuss geographic restriction. Suppose you’re working in two locations for 5 to 15 miles. That’s a decent range. And these corporate-owned veterinary practices continue to gobble up these veterinarian-owned animal care practices. With that in mind, you must ensure that the geographic restriction only attaches to the places you’re working. Let’s say you’re in a big city and a business-owned vet practice owns ten clinics there. If you have a 10-mile noncompete from 10 clinics, that could knock you out of a city. It’s more reasonable if it were just 10 miles from where you worked.
It might be annoying to go outside that radius for however long non-compete lasts. However, you’ll at least have other opportunities. If you’re with a huge business-owned practice, you must ensure that the noncompete only applies to your primary practice locations. No more than two. Only one or two at most. Some contracts don’t just do a radius but also counties. You can’t work in this or any contiguous counties. Any counties that touch your county would be unreasonable. Now, it’s going to depend upon the setting. If you’re in an urban environment, 10 miles could knock out hundreds of opportunities.
If you’re in a rural community, there may be no other opportunities within 10 miles of your clinic. Consider that. The larger the city, the more opportunities. The smaller the radius, the more reasonable. Why does it matter? Suppose you grew up in a town, and your kids go to school there. Your family has deep ties to the community. The last thing you’d want is for you to move out. Maybe it’s just impossible. It’s imperative to focus on the geographic limitation and how many places it attaches to in that scenario. And then also, how long it is.
Negotiation with the Employer about Non-Compete in the Agreement
You’d want to aim for one year rather than two. That way, you have the shortest inconvenience if you must work outside of the restriction for that 1-year span. Now, how do you negotiate employee non-compete agreements? You must ask for what you want. If they come to you and offer two years and 50 miles from your primary practice location, that’s likely unenforceable. Undoubtedly unreasonable. Say you want a one-year non-compete with a 10-mile restriction from the two places I generate most of my charges. Some big corporate-vet practices may say oh, I’m sorry, we can’t change the non-compete. They can change it. They just don’t want to.
You have to decide if they say take it or leave it, what you’ll do. For some people, it’s the most important thing when negotiating contracts. For others, it doesn’t matter at all. Maybe you move to the community for a job, but don’t have any plans of staying there after. Then you want to focus your attention on negotiating more important things, and don’t bother mentioning the non-compete. It depends upon the vet. Where they’re at in life, whether they have ties to the community. To determine how much capital they want to put into negotiating the terms of the non-compete. There are states where non-competes are wholly unenforceable for providers. There’s only a handful of them.
So, you’re likely in a state where non-competes are enforceable. I get comments like, hey, I talked to a colleague. They said non-competes are completely unenforceable everywhere. For vets, that’s just not true. They are, in most states, if they’re reasonable. Whether something is reasonable or not varies on the viewer. But I would consider never signing a contract agreement, just expecting something not to be enforceable, and always trying to negotiate better terms.
Can veterinary associates in animal care practice break their employment agreements? Yes, they can. If employees breach the employment agreement and don’t adhere to the agreement terms, they’d likely open themselves up to liability. Which includes litigation costs and arbitration as set in the employment agreement. The employer can ask for damages that might include recruitment costs for new veterinarians for the practice. They may ask for administrative fees, credentialing fees, etc. because of the resources they spent to find a new employee. So, it’s never a good idea for veterinarians employed in veterinary practice to break employee agreements. We never advise our veterinary associates to breach their employment contracts. The best way to break the contract is by doing it exactly as outlined in the agreement. Typically, there is a termination clause.
Three Practices of Ending Contracts
There are three ways to terminate employment contracts. The first is for both parties to mutually agree to terminate the agreement and go their separate ways. However, this is rare, and we don’t see it happen often. The second way is for-cause termination. This is typically weighted more towards the employer. The employer can terminate the employment agreement without notice if any egregious acts happen. Typically, they are listed on the employment agreements themselves. It might be violating a law, being convicted of a felony, or losing your license to practice animal care. The list goes on. Lastly, the third way to terminate a contract would be for no cause. The employment agreement typically outlines the no-cause termination. You must give the other party 60 to 90 days’ notice. Then the contract is terminated, and you can go your separate ways.
The veterinarian’s employment contract also typically outlines how they’ll give that proper notice. It usually has an address. You’d either mail in a letter or hand-deliver it. In rare instances, you’re even allowed to email. We encourage giving notice in multiple ways, as long as the law allows it. The proper way to save you from liability is to terminate a contract properly. So that both parties can save on resources by avoiding litigation as permitted by law. You also want to know if there are any repercussions. Do you have to pay back any signing bonuses or relocation expenses? Typically, those have a payback provision or a forgiveness period. If you are to break the contract within that time, you must repay those. So, that’s something you want to look at in your veterinary contract. Keep that in mind whenever you decide to terminate the agreement.
Restrictive Covenants
Lastly, most veterinary employment agreements have a provision with restrictive covenants. They include your non-compete clauses and non-solicit clauses to clients and employees in animal care practice. Ensure you’re not within the prohibited area of practice during your restricted time as stated in your agreement. Typically, you’re not allowed to solicit clients. That means associates leaving the job can’t ask clients or entice them to come with the veterinarian to a new job location. The same for employees at your practice. In summary, you never want to breach a contract. If you want out of it, you need to terminate it properly and give proper notice. You also need to remember, are there any repercussions to look for? Anything you’ll need to pay back, like signing or relocation bonuses. And then look at those restrictive covenants to ensure you’re not violating any of them.
What is a Non-Compete Agreement?
The Treasury Department defines a non-compete agreement in the following way: non-compete agreements are contracts between workers and firms that delay employees’ ability to work for competing firms. Employers use these agreements for various reasons. They can protect trade secrets, reduce labor turnover, impose costs on competing firms, and improve employer leverage in future negotiations with workers.
Employers gain a lot of upside value from requiring their employees to sign non-compete forms before they begin working there. This can help them lock down workers who might have jumped from job to job for other opportunities. The practice is so widespread in the animal care industry that it generally works in favor of all participants equally. They are all rushing to secure their veterinary practice workforces, such as a veterinary associate. Non-compete agreements help ensure that at least some of the veterinary practice workforce is locked in place where they are. So there isn’t so much shuffling veterinarians around all the time. Non-competes are many times justified by the employer in return for the professional benefits offered in the practice.
Lawyer Review of a Non-Compete Agreement
Veterinary practice non-compete clauses can be rather complex for the employee and are relevant to your work life moving forward. Some people prefer to take their veterinary practice agreements to a lawyer to have them review said veterinary agreement before they sign on the dotted line. Doing so will likely give the signer some peace of mind. It makes it less intimidating to think whether the documents you just signed are in your best interest or not. Beyond the non-compete clauses, veterinarians must also determine their malpractice insurance responsibilities if they terminate their contract. What type of professional liability policy did you have?
If you would like more information about employee non-compete agreements, how they operate, and the law that covers non-competes. And what you should do if a company gives you an offer to sign, get in touch with us today! We’ll be more than happy to discuss the content of clauses of the agreements of veterinary practice. Also its average job wage, a different approach to negotiating the veterinarian’s contracts clauses, and other resources.
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What is a draw in a veterinary associate employment contract? A draw is related to compensation. Basically, it means how much money you are going to make each month in some way.
What Are the Different Kinds of Compensation?
Let’s kind of talk about the different compensation models and then when a draw would come into play. Usually, the vet would have a guaranteed base for at least the first year or two of their contract. It’s very unlikely that you would come into a new employment opportunity and just have straight productivity. In the veterinary arena, it’s almost always calculated through net-collections. Net-collections are any of the money that the practice receives for the vet’s personally performed services.
How Do These Compensations Put Into Practice?
Whatever they collect, that’s what would be considered net-collections for that vet. And one common way of doing it is, let’s just say you have a one-year guarantee, and the reason why they do that is it takes time to build up a practice. Now, I guess it depends upon what specialty you’re in, but for the most part, let’s just say you’re a general vet. You’re not just going to hop into practice and have an immediate client base. It takes a while to build up. So, they’ll give you a guaranteed base in year one. Then after year one, they’ll probably switch you to the productivity/net-collections model. And that’s when a draw would come into play. The veterinary industry utilizes the ProSal method commonly. And it’s kind of a methodology for a veterinary practice to pay their employees, which allows them at least a small profit margin.
And in that method, they will basically take a projection of what your net-collections would be. And the vet would then receive a smaller percentage of that per month. Then there would be a reconciliation or true-up at the end of the year. Let’s just go through some examples. Let’s say the vet is making 120,000 per year in their first guaranteed base year. And then they collected that amount as well.
While under ProSal, they would maybe knock it back to 80%. You would make 10,000 in that scenario per month. And so, they would say, alright, what is going to knock it back to 80%? And then the vet is going to get a draw of $8,000 per month. Throughout the year, they’ll make 8,000 per month. Then at the end of the year, they’re going to take whatever the total net-collections were for that vet versus what was paid out.
In that scenario, 8,000 times 12 minus 6,000. And then if there is a difference, meaning, if they collected more, they would then get a percentage of those net-collections. Now, the downside is if you are in a negative balance, meaning, if you collected less than they paid out, they generally are going to make you pay that back over time. And what they’ll normally do is they’ll take however much you’re in the deficit for. Let’s just say it’s $6,000. Over the next three pay periods, they might take 2000 out of your paycheck until you’re back to zero. Is that fair? It just depends. Obviously, no one wants to employ any employee that doesn’t cover their own salary and expenses.
What Is the Effect of This on Production?
Now, if there are some underlying problems as to why a vet is not as productive, this is big in the vet industry right now due to lack of staffing. If you can’t get the vet techs if you can’t get the front office staff, if they can’t have any efficient workflow, and the vet is doing all the things that they didn’t have to do before, that will slow them down, and their collections are going to decrease. Just a side note: you need to make sure there’s language in your employment agreement that states the veterinary practice will provide you with proper support to make your practice efficient. Back to the draw, it could change over time. Let’s say you had a 120 base, and then you moved into a kind of a decreased percentage per month as your draw, but then you collected 160,000.
Well, then they would probably bump up your draw to 120,000, and then they would do another reconciliation at the end of a year. There are a ton of different ways to calculate compensation in a veterinary associate contract, but that’s probably the most common way when it comes to productivity. I also find many vets are just paid a straight base no matter what for year one to year five. And that makes it simple, to be honest.
How to Get Out of a Veterinary Associate Contract
How can a veterinarian associate get out of a contract? So, you’re working for an employer, you’re unhappy, you want to leave. How do you get out of the contract? Your employment contract should contain four ways of terminating the contract.
Fixed Term Contract
One, if there’s a fixed term, meaning, it’s a set amount of time, and there’s no language that states it automatically renews for successive terms, let’s just say it’s two years, you finish those two years, it doesn’t renew, the contract terminates, you can move on. That’s the first way.
Mutual Agreement
The second way is mutual agreement. At any point, either party can say, look, this isn’t working. Let’s just wash our hands of this relationship and move on. That does not happen very often, but that’s another way.
With Cause Termination
The third way would be with-cause. If one party is in breach of contract, the other party can provide them with written notice. And then normally, they’d have a short period to fix whatever the alleged breach is. That’s usually somewhere between 15 to 30 days. And then, at the end of that period, if they did fix the breach, then they couldn’t terminate the contract immediately. If let’s just say the vet has bonus productivity calculated quarterly, the employer just either refuses to pay or has been slow to pay or whatever, the veterinarian provides them a written notice. And then they have 15 days to fix it. If they don’t fix it within those 15 days, then the vet can terminate the contract immediately at their option.
Without Cause Termination
And then the last and most common way to terminate a contract is without-cause termination. Without-cause termination simply means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. For most vets, it’s somewhere between 30 to 90 days. And that’s just the most common way. I mean, probably 9 out of 10 contracts are terminated in that way if you’re a vet.
There are plenty of ways to get out of a contract. Now, what are the repercussions if you do end up leaving and terminating the agreement? Well, many contracts, and this is mostly for the initial term. As I said before, let’s just say you have a two-year initial term. If you receive a signing bonus, relocation assistance, probably licensure, malpractice, or some benefits, there may be language in the contract that states that if you leave within that initial term, you must pay back a portion of that signing bonus or that relocation assistance, or maybe you’re not eligible for productivity bonuses or something like that.
Important Things to Know About Compensation Before Signing a Contract
So, investigate the language of your contract and see, alright, if I do terminate the contract early, what are the repercussions? What do I have to pay? What do I have to pay back to them? Or what am I losing out on compensation? A lot of vet clinics use the ProSal method, and in that kind of model, you’re paid basically on your production. And so, you need to be very careful that if you do terminate the agreement, there’s language in the contract that states you will be compensated for any of the services that you’ve rendered that haven’t been collected. In veterinary medicine, you don’t have, at least generally don’t have kind of the same log time as a physician would have where maybe they do services.
And the vast majority wouldn’t be paid out for 60 to 90 days. Just based on the cash nature of veterinary medicine, the percentage of outstanding collections is much less than other specialties, but you still don’t want to miss out on that. I’d say veterinary insurance for individuals is becoming more popular. And so, the average count’s receivable cycle is somewhere between like 30 to 90 days for that. Think about this: if you’re paid on productivity on just what your net-collections are, and then you terminate the agreement, and you have a bunch of net-collections outstanding, and the contract states you’ll only get paid up to the date of the contract terminates, well, you just work for free for a month or two, so nobody wants to do that.
If you do decide to terminate the agreement, make certain, and this is before you sign the contract, make certain it states that you’ll be paid any of the collected services for anything that you did while you’re there, even after the contract has been terminated. Having to get out of a contract is honestly just a kind of normal part of doing business. With all these enormous conglomerates gobbling up all of the vet-owned practices, I’d say there’s a lot of unease and unhappiness for many veterinarians at this point. And they may be in a practice that they’ve loved for ten years, and then the corporation sweeps in, buys it out, and things change immediately. And then they have to decide, alright, am I going to sign this new contract? Am I going to terminate the old one to leave?
There’s just a lot of turnover in that field right now. And figuring out the most effective way of getting out of your contract is very beneficial. Hopefully, that helps and gives you the little basics on how to get out of an employment agreement.
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Is 10 miles a reasonable non-compete geographic restriction? If you are a veterinary associate and you are an employee or have potentially been bought out by these enormous veterinary conglomerates gobbling up all the veterinarian-owned practices lately, you will likely have a non-compete in your contract. A non-compete simply says you cannot work within your specialty for a set period within a certain geographic radius from where you work. Let’s kind of break down the elements of that.
Are Non-Compete Clauses Enforceable?
One, non-competes are enforceable in nearly every state. There are a handful of states where they are completely unenforceable. However, you should go into signing the contract, assuming it’s going to be enforceable.
I find that most providers, for some reason, think that all non-competes are completely unenforceable. Yes, maybe if it’s unreasonable. Still, most states find that a reasonable non-compete would be considered enforceable. You first need to identify whether your state recognizes non-competes for providers or not. Okay, let’s just assume, yes, you’re in a state where it’s enforceable. The non-compete is going to state you cannot practice in your specialty. You want to make sure you’re a specialist and have multiple options specific to the task that you’re doing for that employer. Now, if you’re a general vet and it says you cannot act as a general veterinarian, okay. But maybe if you’re in emergency medicine, urgent care, an animal hospital, or something like that. Keep it specific to what you are doing.
And then it will be for somewhere between one to two years. You want to keep it less. One year would be considered reasonable pretty much anywhere. Sometimes, they’ll try to push it out to two, sometimes three years. I do not think three is a fair amount. So, you would want to keep it down to one year at most. And then finally, what we’re focusing on today is the geographic restriction. So, is 10 miles of reasonable non-compete geographic restriction? I would say, yes, it is. Now, the setting is important. If you’re in an urban environment, 10 miles can knock out hundreds of opportunities. Whereas if you’re in a rural environment, there may be no other place to compete within 10 miles.
Depending upon where you are. If you’re in a bigger city and there are dozens to hundreds of different practices. You may be able to work after the contract terminates. A smaller radius would be considered more reasonable. Now, there will be employers that try to push the limits of the geographic restriction. And they’ll do it in several ways. One, they could try to stretch out the mileage 30 or 50 miles from your practice location. That would not be considered reasonable in most places. Two, if they are a vet clinic with multiple locations within a city, they may say it attaches to every location they own. If you’re not working at those other locations, it is not fair if that is included in your non-compete. You want to remove that and limit it to where you just work.
Now, what if you work at multiple locations? Well, one or two locations, okay, it could attach to both of those. But an employer may try to be sneaky. And it states any place you’ve worked over the last 12 months it attaches to. And maybe they have four or five locations. They might just try to place you at one location one day per year to attach the non-compete to that. You need to make certain that they are not allowed to do that.
And the easiest way to do that is just to state in the contract that if there are any locations that the employer wants you to work at beyond the initial location. There must be a mutual agreement. When is the right time to negotiate a non-compete? Before you sign the contract. You have no leverage after the fact if you sign an agreement and then come back to the employer.
What are the effects of non-compete clauses in the veterinary field?
So, you want to ensure that they understand that the non-compete will not work for you for whatever reason. People who live in a city have kids who go to school, have family in the area, and cannot move after the contract is terminated. This could be the biggest problem with any kind of employment contract. Others just move to a city for a specific job and do not care because they don’t plan on staying there if the job doesn’t work out.
You need to prioritize what’s most important to you, but the non-compete, certainly for a lot of my clients, is the number one thing. And you need to make it clear to the employer. Look, I’m not going to accept this the way it’s written. If you want me to work for you, we’re going to have to come to a compromise, and some will say, okay, and then others will say, no, take it or leave it. And then it’s up to you to decide whether it’s something you want to leave or not. So, is 10 miles a reasonable non-compete for a vet? For the most part, yes, it would be considered reasonable, but you must take into account all the other factors I just talked about.
Can You Break a Veterinarian Contract?
Can veterinarians or veterinary associates in animal care practice break their employment contracts? And the short answer is yes. They can. However, if this means that veterinarians or the employee, in general, are breaching the employment contract and not adhering to the employment contract terms, then they would likely open themselves up to liability, which includes litigation costs and arbitration as set in the employment agreement.
The employer can ask for damages that might include recruitment costs for new veterinarians for the practice, they may ask for administrative fees, credentialing fees, and the list kind of goes on from there because of the resources they spent to find a new employee. So, it’s never a good idea for veterinarians employed in veterinary practice to break employee agreements. We never advise our veterinarians or veterinary associate to breach their employment contracts. The best way to break or terminate the contract is by doing it exactly as outlined in the contract agreement. Typically, there is a clause called a termination clause, and there are normally three ways to terminate a contract agreement.
Mutual Agreement Termination
The first way is that both parties, the employer and employee, mutually agree to terminate the contract and go their separate ways. However, this is rare, and we don’t see it happening often.
For Cause Termination
The second way is for-cause termination. And this is typically weighted more towards the employer. The employer can terminate the veterinary employment contract without notice if any egregious acts happen; typically, they are listed on the veterinary employment agreements themselves. This might be violating a law, being convicted of a felony, and losing your license to practice animal care. And again, the list just goes on from there.
Without Cause Termination
Then the last way to terminate a contract would be for no cause, and a no-cause termination is typically outlined in the employment agreement. You must give the other party 60 to 90 days’ notice, and then the contract is terminated, and you can go your separate ways.
Proper and Effective Notice of Termination
The veterinarian’s employment contract also typically outlines how veterinarians or a veterinary associate will give that proper notice. It normally has an address, and you would either mail in a letter, hand-deliver it, and in some rare instances, you’re allowed to email it. We also encourage our clients to give notice in multiple ways, as long as the law allows for it. The proper way to save the employee from liability is to properly terminate a contract, so both parties can save on resources by avoiding litigation as permitted by the law.
Is There Any Repercussions?
But when you’re deciding to do this or break the veterinary employment agreements, you also want to keep in mind, are there any repercussions? Meaning, do you have to pay back any signing bonuses, or any relocation expenses, so you are near the job site? Typically, those have a payback provision or a forgiveness period. And if you are to break or terminate the veterinary contract within that time, you must repay those. So, that is something you want to look at in your veterinary contract, and keep that in mind whenever you decide to break or terminate the veterinary contract agreements.
Restrictive Covenants
And then lastly, most veterinary employment agreements have a provision with restrictive covenants. Restrictive covenants include your non-compete and non-solicit clauses to clients and employees in animal care practice. In the non-compete clauses, you want to ensure that you’re not practicing animal care within the restricted area of practice during your restricted time, as determined by the noncompete clauses in your veterinary employment agreement. Typically, you’re not allowed to solicit clients, which means veterinarians leaving the job can’t ask clients or entice them to come with the veterinarian to a new job location, and the same for employees at your clinic or practice.
In summary, you never want to breach a contract. If you want out of it, you need to terminate it properly and give proper notice to your employer. And then you also need to remember, are there any repercussions to look for? Sort anything you’ll need to pay back, like signing or relocation bonuses, and then look at those restrictive covenants to ensure you’re not violating any of them.
Lawyer Review of a Non-Compete Agreement
Veterinary practice noncompete clauses can be rather complex for the employee and are certainly relevant to your work life moving forward. Some people prefer to take their veterinary practice agreements to a lawyer to have them review said veterinary agreement before they sign on the dotted line. Doing so will likely give the signer some peace of mind, and it will certainly make it less intimidating to try to figure out if the documents that you just signed are in your best interest or not. Beyond the non-compete clauses, veterinarians must also determine their malpractice insurance responsibilities if the veterinarian’s contract is terminated. What type of professional liability policy did you have?
If you would like more information about employee non-compete agreements, how they operate, the law that covers noncompetes, and what you should do if a company gives you an offer and you are asked to sign one, please contact us today! We will be more than happy to discuss the content of clauses of the agreements veterinary practice, average job wage, a different approach in negotiating the veterinarian’s contracts clauses, and other resources.
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How long are most veterinarian associate contracts? First, you need to know two things to determine the average length of a contract. One is how to terminate the agreement, and two, does the contract automatically renew? Let’s kind of hit all of those.
There’s usually an initial term to the contract. An initial term means the length of the contract before it ends. Or, if there’s a language, it could automatically renew for successive terms after the initial period ends. The average length for an initial term is somewhere between two to three years. And so, in most contracts, after that two or three-year period ends. As I said before, there’d be language that states it automatically renews for one-year terms after that. And then it just continuously renews unless terminated by the vet. That’s a normal amount of time. If you have a five-year contract, it’s abnormal.
Employee or Employer Can Terminate Employment Agreements
Now, does it ultimately matter? Not really, because of this: every contract will have ways that the vet or the employer can terminate the agreement. There will be a without-cause termination clause. And this means either party can terminate agreements any time with a certain amount of notice to the other party.
You could be one month into your job. You hate it, maybe especially lately, the lack of staffing makes your job impossible. Or perhaps you’re being paid on pure productivity, and the volume is terrible. And you’re like, this is not for me. In the contract, if you have without-cause termination, usually, it’s somewhere between 30 to 90 days for most veterinary associates. And so, you would say, I’m giving you my notice, and then, let’s say it’s a 60-day time. You’d work out those 60 days, and you could leave at the end of the 60 days. If you can terminate the contract at any time and reason, the contract length doesn’t matter in some ways.
If you had a five-year term but could terminate the contract with 60 days’ notice, it’s only a 60-day contract. You can think of it that way. Now, when is a good time to renegotiate the agreements? Well, usually, it would be at the end of whatever year period. Let’s say you’re just on a straight-based salary. You may approach the employer, and say, I’ve been this productive, and I believe I deserve an increase to this amount. Some people are concerned that if it just automatically renews forever, the job’ll stick them with the same salary forever.
Veterinarians Can Negotiate their Employment Agreements
You can renegotiate at any time. Go to the employer and say, look, I’m generating $600,000 a year, and only making a hundred thousand. I want an increase. For most veterinarians, it would be between 18 to 22% of their net-collections. In that scenario, you’ll say, if you don’t raise my salary, I’m going to give you notice and then leave. And obviously, they may call your bluff if you’re not willing to leave. But that’s a good stopping point to say to them, look, I’m worth more than what. And it’s time to renegotiate.
The average contract length doesn’t matter if you can terminate the contract at any point. Is there one length that’s better than another? Not really, not taking that into account. Now, there is one other type of length of term, it’s called an evergreen contract. And this is being used more and more lately for whatever reason. There is no initial term set. So the contract will continue forever until one of the parties terminates agreements per the contract terms. Once again, that’s fine if you can terminate the contract without-cause at any point. If it’s a contract that goes on forever still is just if the notice period is required. So, that’s a little primer on the average length of a veterinary employee contract agreement.
Veterinarians are in high demand. People want to do everything within their power to care for pets so near and dear to their hearts. And the skills that a veterinarian brings to the table are highly prized. The supply of veterinarians is somewhat lacking compared to the overall demand in the market at this time. This meant employers had to look at ways to sweeten the deal to get as many vets as possible.
Why Employers Require a Contract for Veterinarians
Many jobs in any business or industry require a potential employee to sign an employment contract. One that lays out the foundation and terms of employment. And the benefits of coming to work at a specific facility. Often, they do this as means of encouraging people to accept a particular job offer they might not have otherwise. When benefits are laid on the table, it’s easier for people to see why they should work for a specific employer. One they consider working for.
Employers will always ask veterinarians to sign a contract of employment before they can begin their work. After all, the business veterinarians do is often so delicate and sensitive that no aspect of it can be compromised. The employer needs to know what they are getting for their business when they offer employment to a veterinarian. On the plus side for incoming vets. They can see the benefits they’ll receive all laid out in a way that makes it clear what to expect.
Benefits of Veterinarian Contracts
Employment agreements benefits include the fact that it can provide some much-needed stability to the veterinarian. Many veterinary contracts are designed to run for 12 months or longer. Thus, veterinarians can feel confident that they will be employed at a specific facility for at least a year. That is, if they don’t do anything egregious, that will nullify the contract. We’d also explore some additional upsides to veterinarian contracts to clarify why these documents are so important to many.
Professional Liability Insurance
No matter how talented someone is at their job, there is always a risk that something terrible could go wrong. Veterinary Practice News explains why vets are strongly encouraged to purchase protection that’ll keep them and their veterinary practice safe:
As claims become more common and damages rise, defending against malpractice claims becomes more expensive and necessary for veterinary practices. Like many professionals, veterinarians commonly purchase professional liability (malpractice) insurance to guard against the expense of defending against such claims. If an employer can add professional liability insurance as a benefit to the contract, this is all upside for the veterinarian. It is a total relief. It means they may not have to pay for this insurance out of their pocket. Unless they want supplemental coverage beyond what the employer provides.
Clients are often very particular about how their pets are taken care of. They may feel that they have a claim against you if something goes wrong with their pet’s care. And in the business of medicine, events related to malpractice can have a long damaging effect on the vet’s career. That’s why all vets considering a new employment offer should speak with a veterinary contract lawyer. In order to review the paperwork the employer asked them to sign. And to ensure it includes extensive liability insurance protections.
Retirement Accounts
Everyone must think about their financial future as they are still actively working. Preparing for the fact that you won’t be able to work as you do now someday is a wise practice. Simply because it is the reality of the situation. It would help if you prepared for the day when you are past the age of working. And need to rely on the savings you have accumulated throughout your working life. A 401(k) plan for veterinarians should be automatic in any agreements they sign. This is to say what any veterinarian thinking about signing up for a job with a given employer should recognize. The employer needs to offer a 401(k) plan for the vet to consider it.
PTO and Sick Days
Veterinarians considering a new work may want to give special consideration to personal time off (PTO) and sick days allotted. The reason? Because they must have the opportunity to establish some work/life balance in their existence.
A burnout crisis is sweeping through the practice at this time as the number of clients continues to grow. Many vets must work far more hours under far more challenging conditions than they usually would. Given all this, it’s abundantly clear that vets need to catch some breaks. And be allowed to recover from the onslaught that is their job. When looking over contracts, veterinarians should see how their time off breaks down into different categories, such as:
Sick days
Vacation days
Personal time off (PTO)
Flex time
Holidays
Employers have different definitions for how they look at time provided to their employees to take care of their needs. Before signing employment or independent contractor agreements, it is crucial to understand what those definitions are.
Discounted or Free Services
It would be unusual for a veterinarian not to have a pet (or two, or three!) of their own. Thus, it is a reasonable assumption that the vet may receive special discounts or even free services from their employer. They may not want to work on their pet for understandable reasons. But they may have the opportunity to receive veterinary care from a co-worker who can help them out. Their employer should discount this service as part of the terms of their employment. This may seem like a small thing. But it makes a big difference in the lives of busy veterinarians with multiple pets that need taking care of. Getting a little break on those services can be the cherry on top.
Reach Out Today
Before you sign on to any professional veterinary offer, we would like to have the opportunity to discuss it with you. We intend to help you understand every element of your contract (including an analysis of your non-compete agreement). And if said contract makes sense for your needs. Please get in touch with us. Let us know how we can start the process of helping you receive the assistance that you require.
https://www.chellelaw.com/wp-content/uploads/2022/07/How-Long-are-Most-Veterinarian-Contracts-banner-scaled.jpg14402560adminhttps://www.chellelaw.com/wp-content/uploads/2020/01/cropped-favicon-1-300x300.pngadmin2022-05-25 00:01:392023-04-05 05:43:23How Long are Most Veterinarian Contracts? | Veterinary Contract
How much time off should veterinarians get? If you’re an employed veterinary associate, how much total time off should the employer give you each year? First, it will be in the employment contract how much time off you get. And time off has four components. One is vacation, two would be sick days, three would be continuing education, and four, federal holidays. Those four things make up the total time off. There are two types of systems for vacation. You have a pure PTO system, so PTO is paid time off. And I guess the corporate-owned practices, the big conglomerates that are gobbling up all the veterinary-owned practices. Lately, they’re more likely to use a pure PTO system.
Pure PTO (Paid Time Off) system
In a pure PTO system, the vet would have one bucket of time off. And they can do whatever they want with that time off. It doesn’t matter if it’s a sick day, a holiday, or whatever. It’s coming out of that bucket if they’re not in the office for that day. In a system like that, the vet would usually accrue a certain amount per pay period, assuming they’ve accrued enough. They can use it. One tip: no vet should accept an accrual system. It should be. This is how much time off you get per year and from the beginning of the year. Having to accrue time off is just rare for an advanced-level healthcare provider. You don’t want to accept an accrual system. It should just be, you get what you get. Now, how much is a normal amount?
Veterinarian Work Leave Data
Most vets will take 10 to 15 days of vacation. It’ll be 3 to 5 days for sick leave. Now, sick days are sometimes state-dependent. Many states have laws stating if you are a full-time employee, you’re then allowed this many days of sick time off yearly. Continuing education is somewhere between 3 to 5 days as well. Lastly, for the federal holidays, most places observe six to seven. Let’s add them up. Say you got ten vacation days, three sick days, and seven federal holidays, that’s 20. Continuing education, another 3, which gets you to 23 total days off. That’s okay.
It should be somewhere between 20 to 30 days of total time off. You’re not going to see more, or at least it’s improbable you’d see more than that in any veterinary contract. If you’re only getting 15 days of total time off, that’s a big red flag. Why is that a red flag if you’re getting a meager amount?
Some employers don’t appreciate a work-life balance or expect the vet to always be in the office. They’re usually more difficult to work with or don’t appreciate the need for a little time off. If they only offer a small amount, that’s a job you should probably move on from. Veterinary associates should look for opportunities to take breaks for themselves and not just work.
One benefit of these bigger corporate-owned practices is the standardized amount of time off they provide. And it’s usually good. I find that kind of egregious time off is usually for the smaller veterinary-owned practices. It’s possible, maybe they don’t understand what the industry standard is. Perhaps it’s likely they just don’t want to give that much time off. But you’ll usually receive a decent amount of time off if you’re worth a corporate-owned practice.
Veterinarians Can Negotiate Taking Longer Vacation
So, what can you negotiate? Well, the vacation is what you want to focus on. It depends if it’s a pure PTO system or it’s segmented. But if you’re going to focus on one thing and like, let’s say you want five more days. Then you want five more vacation days. You don’t want to add five continuing education days because you can do what you want with a vacation day.
Whereas if it’s a continuing education day, you must do continuing education. Some people want flexibility. And then as far as holidays go, that is what it is. There’s not going to be any negotiation for holidays. Maybe if you’re in a veterinary specialty when you’re on call, that’s one thing you need to think about. Okay, you’re giving me 20 days, including these seven federal holidays. But I’m going to be on call for three of them. Will I receive an additional three days of time off that way? It equals out.
Most places would do it that way, but it won’t be in the contract. Make sure and talk to the employer about, if I am on call and I must come in on these days. Will I get makeup days after the fact? That’s something to keep in mind if you’re in a veterinary specialty that’s on call. If you’re just a general vet who’s never on call, that’s not something you need to worry about.
In summary, somewhere between 20 to 30 days would be a standard time off for a veterinary associate. You can negotiate whether the employer is willing to do that or not. I don’t know. But it’s certainly something that you don’t want to, I guess, acquire the short end on one.
ProSal
Another consideration I forgot to mention. If you are in a pure production employment relationship, meaning, especially in the veterinary industry, they use ProSal a lot. And that means you receive a percentage of the practice’s collections. The more time off you take, the less money you’re going to make. If you’re just on a straight-based salary, take as much downtime as you want that won’t affect your compensation. If you’re on the productivity model where it’s in the veterinary industry, it’s almost always based upon net-collections. The fewer hours you work, the less you’re going to make. There is a balance in between, alright, if I want to make this much money, I can’t take 30 days off. Versus what your target is as far as what you want to make per year. That’s one consideration for you.
How long are most veterinary associate contracts? First, you need to know two things to determine the average length of a contract. One is how to terminate the agreement, and two, does the contract automatically renew? Let’s kind of hit all of those.
There’s usually an initial term to the contract. An initial term means the length of the contract before it ends. Or, if there’s a language, it could automatically renew for successive terms after the initial period ends. The average length for an initial term is somewhere between two to three years. And so, in most contracts, after that two or three-year period ends. As I said before, there’d be language that states it automatically renews for one-year terms after that. And then it just continuously renews unless terminated by the veterinary associate. That’s a normal amount of time. If you have a five-year contract, it’s abnormal.
Employee or Employer Can Terminate Employment Agreements
Now, does it ultimately matter? Not really, because of this: every contract will have ways that the vet or the employer can terminate the agreement. There will be a without-cause termination clause. And this means either party can terminate agreements at any time with a certain amount of notice to the other.
You could be one month into your job. You hate it, maybe especially lately, the lack of staffing makes your working hours impossible. Or perhaps you’re being paid on pure productivity, and the volume is terrible. And you’re like, this is not for me. In the contract, if you have without-cause termination, usually, it’s somewhere between 30 to 90 days for most veterinary associates. And so, you would say, I’m giving you my notice, and then, let’s say it’s a 60-day time. You’d work out those 60 days, and you could leave at the end of the 60 days. If you can terminate the contract at any time and reason, the contract length doesn’t matter in some ways.
If you had a five-year term but could terminate the contract with 60 days’ notice, it’s only a 60-day contract. You can think of it that way. Now, when is a good time to renegotiate the agreements? Well, usually, it would be at the end of whatever year period. Let’s say you’re just on a straight-based salary. You may approach the employer, and say, I’ve been this productive, and I believe I deserve an increase to this amount. Some are concerned that if it just automatically renews forever, the job will stick them with the same salary forever.
Veterinarians Can Negotiate their Employment Agreements
You can renegotiate at any moment. Go to the employer and say, look, I’m generating $600,000 a year, and only making a hundred thousand. I want an increase. For most veterinary associates, it would be between 18 to 22% of their net-collections. In that scenario, you’ll say, if you don’t raise my salary, I’m going to give you notice and then leave. And obviously, they may call your bluff if you’re not willing to leave. But that’s a good stopping point to say to them, look, I’m worth more than what. And it’s time to renegotiate.
The average contract length doesn’t matter if you can terminate the contract at any point. Is there one length that’s better than another? Not really, not taking that into account. Now, there is one other type of length of term, it’s called an evergreen contract. And this is being used more and more lately for whatever reason. There is no initial term set. So the contract will continue forever until one of the parties terminates agreements per the contract terms. Once again, that’s fine if you can terminate the contract without-cause at any point. If it’s a contract that goes on forever still is just if the notice period is required. So, that’s a little primer on the average length of a veterinary employee contract agreement.
Veterinary Professional Practice Benefits
Veterinary associates are in high demand. People want to do everything within their power to care for pets so near and dear to their hearts. And the skills that veterinarians bring to the table are highly prized. The supply of veterinary associates is somewhat lacking compared to the overall demand in the market at this time. This meant employers had to look at ways to sweeten the deal to obtain as many vets as possible.
Why Employers Require a Contract for Veterinarians
A lot of jobs in any business or industry require a potential employee to sign an employment contract. One that lays out the foundation and terms of employment. And the benefits of coming to work at a specific facility. Often, they do this as means of encouraging people to accept a particular job offer they might not have otherwise. When benefits are laid on the table, it’s easier for people to see why they should work for a specific employer. One they consider working for.
Employers will always ask veterinarians to sign a contract of employment before they can begin their work. After all, the business veterinarians do is often so delicate and sensitive that no aspect of it can be compromised. The employer needs to know what they are getting for their business when they offer employment to a veterinary associate. On the plus side for incoming vets. They can see the benefits they’ll receive all laid out in a way that makes it clear what to expect.
Benefits of Veterinarian Contracts
Employment agreement benefits include the fact that they can provide some much-needed stability to veterinarians. Many veterinary contracts are designed to run for 12 months or longer. Thus, veterinarians can feel confident that they will be employed at a specific facility for at least a year. That is, if they don’t do anything egregious, that will nullify the contract. We’d also explore some additional upsides to veterinarian contracts to clarify why these documents are so important to many.
Professional Liability Insurance
No matter how talented someone is at their job, there is always a risk that something terrible could go wrong. Veterinary Practice News explains why vets are strongly encouraged to purchase protection that’ll keep them and their veterinary practice safe:
As claims become more common and damages rise, defending against malpractice claims becomes more expensive and necessary for veterinary practices. Like many professionals, veterinarians commonly purchase professional liability (malpractice) insurance to guard against the expense of defending against such claims. If an employer can add professional liability insurance as a benefit to the contract, this is all upside for \veterinarians. It is a total relief. It means they may not have to pay for this insurance out of their pocket. Unless they want supplemental coverage beyond what the employer provides.
Clients are often very particular about how their pets are taken care of. They may feel that they have a claim against you if something goes wrong with their pet’s care. And in the business of medicine, events related to malpractice can have a long damaging effect on the vet’s career. That’s why all vets considering a new employment offer should speak with a veterinary contract lawyer. In order to review the paperwork, the employer asked them to sign. And to ensure it includes extensive liability insurance protections.
Retirement Accounts
Everyone must think about their financial future as they are still actively working. Preparing for the fact that you won’t be able to work as many hours as you do now someday is a wise practice. Simply because it is the reality of the situation. It would help if you prepared for the day when you are past the age of working. And need to rely on the savings you have accumulated throughout your working life. A 401(k) plan for veterinarians should be automatic in any agreements they sign. This is to say, what any veterinarians thinking about signing up for a job with a given employer should recognize. The employer needs to offer a 401(k) plan for the vet to consider it.
PTO and Sick Days
Veterinary associates considering new work may want to give special consideration to personal time off (PTO) and sick days allotted. The reason? Because they must have the opportunity to establish some work/life balance in their overall health and existence.
A burnout crisis is sweeping through the practice at this time as the number of clients continues to grow. Many vets must work far more hours under far more challenging conditions than they usually would. Given all this, it’s abundantly clear that vets need to catch some breaks for their mental and physical health. And be allowed to recover from the hours of onslaught that is their job. When looking over contracts, veterinarians should see how their time off breaks down into different categories, such as:
Sick days
Vacation days
Personal time off (PTO)
Flex time
Holidays
Employers have different definitions for how they look at the time provided to their employees to take care of their needs. Before signing employment or independent contractor agreements, it is crucial to understand what those definitions are.
Discounted or Free Services
It would be unusual for veterinarians not to have a pet (or two, or three!) of their own. Thus, it is a reasonable assumption that the vet may receive special discounts or even free services from their employer. They may not want to work on their pet for understandable reasons. But they may have the opportunity to receive veterinary health care from a co-worker who can help them out. Their employer should discount this service as part of the terms of their employment. This may seem like a small thing. But it makes a big difference in the lives of busy veterinarians with multiple pets that need taking care of. Getting a little break on those services can be the cherry on top.
Reach Out Today
Before you sign on to any professional veterinary offer, we would like to have the opportunity to discuss it with you. We intend to help you understand every element of your contract (including an analysis of your non-compete agreement). And if said contract makes sense for your needs. Please reach out to us. Let us know how we can start the process of helping you receive the assistance that you require.
https://www.chellelaw.com/wp-content/uploads/2022/07/How-Much-Time-Off-Should-a-Veterinarian-Get-banner-scaled.jpg14402560adminhttps://www.chellelaw.com/wp-content/uploads/2020/01/cropped-favicon-1-300x300.pngadmin2022-05-20 16:01:412022-09-18 22:49:34How Much Time Off Should a Veterinarian Get? | Veterinary Hours
What is the difference between a veterinary associate’s offer letters and employment agreements? Often, if a vet is either coming out of training or switching jobs, the organization they’re looking at may say, well, we want you to sign this offer letter before we present you with an employment contract. That’s standard.
Should You Negotiate the Terms of the Offer Letter?
Now, a couple of things to think about: do you or should you negotiate before signing the offer letter? The answer is yes. I mean, an offer letter contains basic terms. So, compensation bonus structure, the length of the agreement, probably some basic information about a non-compete and benefits. It will not be detailed. It’s usually one to two pages at the most that just kind of goes over basic terms. If they offer you a hundred thousand dollars and you want 120, you should say that in advance and get that amended into the offer letter.
Are Offer Letters Binding?
Now, an offer letter is not binding. It could potentially say in the offer letter that it is binding. In that case, then I guess, yes, it could be, but I can’t recall a time where an offer letter ever had any language that states it’s binding. If you sign an offer letter, agree to terms, and then they present you with an employment contract. It doesn’t mean you can’t renegotiate the terms you’ve already come to an agreement on.
Why? Well, if you just see the basic terms of an agreement, it may look great at the time. And then when you get into the language of the contract and the specific details, it could change things. For instance, let’s say the offer letter stated there is a non-compete, but it had no details about how long it lasts or the geographic restriction. Then in the contract, it states you can’t work as a vet for two years within 50 miles of your clinic, which would then force you to move if you wanted to get a new job.
It might have looked great at the time, but once you see there’s some insane non-compete, it completely changes whether the agreed-upon salary is worth it. Maybe they might say, well, it was worth it for a hundred thousand with a normal non-compete. But with this very restrictive non-compete, I want 140, or I’m not going to sign. So, don’t feel like you’re locked into the terms you’ve agreed upon if the contract has changed, or at least once you see the details, it changes how you think about it.
Should You Negotiate the Terms of the Employment Contract?
Now, how to approach the employer in that situation? It’s delicate. You do need to go back to the employer and just say, these are the reasons why I was okay accepting this salary before, but now I’m not. I think most savvy business people are going to understand. They might be ticked off or act like, well, we’re not changing anything, and that’s fine. But then it’s your decision whether to sign the employment agreement or not.
Providing them details and reasons why you were okay with the initial terms but now you’re not after reading the contract’s language is important to reduce the amount of, I guess, potential bad blood between the new employer and yourself. Once you sign the employment agreement, those terms are set. There’s no wiggling out of the terms reached once you sign the employment agreement. So you need to make certain prior to signing the employment agreement everything that you are concerned about is in the document, it’s been negotiated.
Any employer states to you, oh, we’ll work out the details after you sign, or I’ll work out the details after you start, that is a bad idea. It’s a big red flag as far as an employer goes as well. Any good professional employer is not going to take that tact. They’re going to say; we want to have all the details. We want all the cards on the table, everyone knows their roles. And everyone knows what they can, can’t do, and what’s required. Starting there and working out the details is a bad idea.
Other Employment Contract Terms You Can Negotiate
As far as an employment agreement goes, I’ll just break down in the most basic way the things that most vets need to think about. The length of the term and how to terminate the contract.
You want to have a reasonable without-cause termination. You want to make certain that the employer is paying for your license, DEA if needed, malpractice, some kind of ancillary benefits. The non-compete needs to be reasonable. There shouldn’t be any kind of penalties or liquidated damages if you terminate the agreement, the compensation structure needs to be clear, it needs to state when bonuses are paid out, when the salary is paid out, and how it’s calculated.
I find that vet contracts generally list specific things for which the vet will be paid. You want to make certain that what is on that list is everything that you value and plan on doing. And that they’re not excluding things that normal vets would be paid for.
Summary of the Differences Between Offer Letters and Contracts
The main difference between an offer letter and an employment agreement is the offer letter is just kind of an entree that you may agree to terms. It is 99% of the time not binding. And you can still renegotiate terms once you’ve seen the language of the employment agreement. Negotiate the terms before signing the employment agreement. Because once you sign it and it’s, in fact, binding, you need to follow the terms of that.
What are some veterinarian employment contract red flags? Let’s say you are just coming out of training, or maybe you’re even switching jobs, and you have a new employment agreement. What things do you need to consider regarding what could make an agreement, maybe not such a great opportunity?
Salary
Compensation clearly is usually the number one thing in most people’s minds. Many veterinarians will use the ProSal method, which involves a percentage of the net collections that the practice receives based upon your personally produced services. There’s usually some kind of hybrid where you’ll get a base plus a percentage of the net collections. But negative balances in that situation can be moved forward. Let’s kind of dive into that quickly.
If you’re a veterinarian associate and you’re moving into practice, you need to think if it’s not just a straight-based salary, which is often. In that scenario, you get paid a base amount, a hundred thousand a year, you work your normal hours, and that’s that. If it’s a collections-based method, your volume, how many clients you see, and how much you do per day will directly affect how much money you make annually.
Lack of Staff
And especially lately with kind of vet staffing at difficult levels for nearly anyone in the industry. Vet techs and front office staff are difficult to find at this point. I know plenty of vets are struggling with volumes simply because they’re having to do things that a vet tech would do in addition to seeing all the normal patients that they would. So, monetarily, looking at whether the practices staff appropriately and as efficiently, which will allow you to be as efficient as possible and then be as productive as possible, is important.
You need to ask those hard questions. Have you had any problems with staffing lately? If you have, what are you doing to correct those problems? What’s the average volume for the current veterinarians in the practice? Those questions are important and even ask hard numbers. What is the average net collection for a veterinarian in my specialty in this practice? That way, you can kind of gauge what your ultimate compensation is going to be.
Unwillingness to Provide Data
If you’re looking at an employer and they’re unwilling even to give you moderate data as far as that’s concerned, it’s a huge red flag. Because normally, it means, either they’re so disorganized, they don’t know what the numbers are. Or, they’re so bad, they don’t want the vet to know about them. So, the first red flag is ensuring they’re staffed appropriately. Which will make you more efficient and ultimately lead to more money for you.
No Without-Cause Termination in the Agreement
The second huge red flag is if there’s no without-cause termination in the agreement. In almost any provider agreement across any industry, physicians, dentists, veterinarians, or whoever, there needs to be without-cause termination. And that means that either party can terminate the agreement at any time with a certain amount of notice to the other party. If there is no without-cause termination, let’s say a vet has a three-year contract, and then there’s no way to terminate contracts early.
Well, I find that the contracts that cannot terminate the agreement without-cause usually mean that that employer has had a very difficult time staffing and wants to lock in vets under any circumstances. And if they have high turnover, they have trouble holding onto vets. It usually means they’re kind of. I would say, bad business people, or maybe they treat the vets inappropriately or not with the professionalism that they deserve.
So, you need without-cause termination in the associate veterinarians’ contracts. Normally, it would be somewhere between 30 to 90 days. If it’s 180 days a whole year’s notice, you can’t accept that. It needs to be shorter just for that situation. And especially if you’re being paid purely on production and you have no way of getting out of the agreement, and your compensation is just completely nose-dived, you are stuck. Unless you find some way that they’ve breached the contract, you need the ability to get out.
Terms of the Restrictive Covenants
And then the last major red flag would be the restrictive covenants. The non-solicit and then the non-compete more importantly. The non-competition clause is enforceable in most states. There are few where it’s not, but for the most part, non-competes are enforceable. And that says the vet can’t act in their specialty for a period within a certain geographic radius. Normally, a non-compete would be one to two years, somewhere around there. One would be more favorable. And then as far as the geographic restriction kind of varies wildly amongst location and a rural environment.
It might knock the vet completely out of the town. Whereas if you’re in a big metropolitan area, it could be five miles up to 20. You want to ensure those are as tight as possible. Meaning you want it only from one location or your primary location for the smallest radius possible. That way, you don’t have to necessarily move.
Long Non-Compete
Now, if you get a non-compete, it’s five years long and knocks you out of the five contiguous counties that you’re in, that is not a reasonable non-compete, and you absolutely should not sign that. Now, some people may move for a job and then have absolutely no intention of staying there if the contract ends. So, for them, the non-compete doesn’t matter at all. But if you have ties to an area, you have family in the area. Your kids are going to school. There’s like 0% chance you can move if the contract ends.
You need to ensure that you have a reasonable non-compete, so it doesn’t completely affect your lifestyle for a year or two or however long it is. So, those are three major red flags. Doesn’t have cause termination, are they staffed appropriately so that your compensation isn’t affected? And is the non-compete fair? There are several other red flags too, but I’m just going to focus on those three in this blog.
How Should You Negotiate a Veterinary Associate Contract?
How should you negotiate a veterinary associate contract? There are many things to consider when you want to negotiate your contract or an employment agreement. First, you want to understand how much leverage you have and what I mean by leverage. I mean, are you just out of your schooling? Do you have any experience? Are you specialized? If you’re specialized and very few are in the veterinary industry, you have more leverage.
But you might have a little less leverage if you’re just out of school for general veterinary practice. And then also, if you’ve been practicing and you have a substantial client base and lots of years of experience, you may have more leverage in relation to that. Once you understand how much leverage you have, then you need to understand what you should be asking for.
Negotiating Base Salary
The first thing I always see our clients want to negotiate is their base salary. Base salary or base compensation is just the flat you’ll get every month upon continuing your employment. The problem is that veterinarians are normally compensated, not just through base compensation. You’re also normally compensated through collections. That’s the typical sort of layout of compensation for really any type of veterinarian. Even if you’re specialized, it’s normally base compensation, and then there’s a part of collections. So yes, the base compensation is important, but there are so many other aspects to an employment agreement.
Your percentage of collections can be huge. You want to fight probably for a larger percentage of collections over just a base salary because the base salary will never change unless you renegotiate in the future. But if you have a substantial client base and you know that you’re going to be bringing those clients in, you will want a higher percentage of your collections which you can make well over your base salary. It’s something to consider. I know base salary is the big number on an employment agreement, but you also want to think about collection percentage as well, because you can make a lot more money with a higher collection percentage if you know that you are going to be bringing in those clients.
Other Contract Terms Found Better Than Compensation Alone
Now, if you are out of school and do not have an established client base, and maybe you’re not replacing someone at a veterinary practice or clinic, they’re just expanding. It will take a while to build up that client base. Then you, in that situation, might want to fight for a higher base compensation or salary for a year or two so that you can establish, as I said, that nice client base.
Restrictive Covenants
Other things that can be more detrimental to you than even the compensation are those restrictive covenants. And what I mean by restrictive covenants are non-compete clauses and non-solicitation clauses, but specifically the non-compete. Right now, the veterinary industry is booming, and practices bringing on and employing veterinarians are protecting their interests. And so, sometimes, these non-competes can be unreasonable and can attach to many locations or just many miles from one practice.
So, you want to consider that because if you are establishing a client base, you’re working hard, you’re bringing in clients, and then you decide to leave the practice, or they decide to terminate their employment with you, you could have a serious problem. You might not be able to practice in the area. You could even have to up and move your family. Non-compete clauses are extremely important that you want to negotiate in your initial employment agreement. And often, it’s overlooked because it’s something way in the future. And you’re excited about this prospective future employer, or you’re right out of school and want to start earning money.
A Word of Caution About Non-Competes
And so, that’s what you’re focused on, but non-competes are those sneaky clauses in employment agreements that can hurt you in the future. I would say more than anything. A non-compete agreement is something that you should always negotiate. Now, they’re normally a mileage from specific locations that you can negotiate. And then also, for a specific period, they can be anywhere from six months to three years.
And I would always try to negotiate that amount of time down and then always the miles down. When you’re negotiating how many miles, you also need to consider, can you find work outside of that restricted area without having to up and move? And then you also want to know what’s restricted. Sometimes the non-compete clauses specifically for veterinarians may just say that the practice of veterinary medicine is very general. If you’re specialized, I would negotiate that it’s only within your specialty.
Negotiate Non-Competes
So, you want to negotiate non-compete clauses. Those are most important. Non-solicitation clauses just mean you can’t solicit clients or employees coming with you. And sometimes, that period can be negotiated down to six months or a year before you can reach out directly to those clients or to those employees. Then you have your sort of ancillary benefits. In your continuing education, you’re typically given an allowance yearly, anywhere from 2,000 to 4,000, typically within a veterinary practice.
You can negotiate that money because if you don’t, then you must pay for your continuing education to keep your license. So, that’s something I would negotiate as well. And then also any dues, fees, licensing, all those costs add up. And we don’t think about that when we’re just looking at the base salary and how much money you’re going to make, but these sorts of costs can be negotiated at the beginning. Then it will save you a lot of money in the end and a lot of headaches as well.
What Needs to Be in a Termination Letter for a Veterinarian?
What needs to be in a termination letter for a veterinarian who’s employed at a veterinary practice? The short answer is that it needs to be direct and doesn’t need to include too much. To start, though, first, you need to know if you can terminate your contract if it has to be for-cause or without-cause, and you’re going to start with your employment agreement.
There’s normally, or there should be, and you should always look for this before you sign an employment agreement, a without-cause termination. And what that means is you can have a cause, or you can have no cause at all. And you don’t have to disclose that when you terminate your employment with the veterinary practice. Normally, there is a notice provision in there that states that you must give the employer anywhere from 60 to 90 days’ notice that you will be ending your employment agreement.
How to Give the Proper Notice of Termination?
There’s also going to be a clause in your employment agreement itself that normally states how to give proper notice. So, where are you going to be turning that termination letter into? Is it a person? Do you have to mail it, hand-deliver it, or email it? Every contract should have a notice clause. However, they’re all vastly different. So again, read that employment agreement. It will tell you how to turn in that letter.
Now, most of the time, I would say that it has to be in writing. Sometimes you can email it. Sometimes you can hand deliver it. You also want to be careful if it states that you must mail your termination letter. Normally, there’s an address where to send it, and even sometimes, there’s more than one address. So, you want to be careful. Also, it will explain to you if your notice starts the day you mail your letter or if you have to count anywhere from one to three days before your notice starts.
This is important. You should read this before you write your termination letter because, in the termination letter, it should state that you are terminating your employment, giving you proper notice and that your last day will be, and then you can fill that in. If you want to thank them for all of their support and opportunities, you can, but only what’s required is that it’s in writing that you are notifying them that you’re going to terminate this agreement. It’s also helpful sometimes if you want to let them know that you will assist them with the transition to a new veterinarian, but all situations are kind of different, depending on your relationship with them.
https://www.chellelaw.com/wp-content/uploads/2022/07/Blog-27-scaled.jpg14402560adminhttps://www.chellelaw.com/wp-content/uploads/2020/01/cropped-favicon-1-300x300.pngadmin2022-05-16 19:07:282023-04-05 07:30:40Difference Between a Veterinary Associate Offer Letter and a Contract | Veterinary Contracts
How can a veterinarian associate get out of a contract? So, you’re working for an employer, you’re unhappy, you want to leave. How do you get out of the contract? Your employment contract should contain four ways of terminating the contract.
Four Ways of Terminating a Contract
One, if there’s a fixed term, meaning, it’s a set amount of time and there’s no language that states it automatically renews for successive terms, let’s say it’s two years, you finish those two years, it doesn’t renew, the contract terminates, you can move on. That’s the first way.
The second way is mutual agreement. At any point, either party can say this isn’t working. Let’s wash our hands of this relationship and move on. That does not happen very often, but that’s another way.
The third way would be with-cause. If one party is in breach of contract, the other party can provide them with written notice. And then, normally, they’d have a short period to fix whatever the alleged breach is. That’s usually somewhere between 15 to 30 days. And at the end of that period, if they did fix the breach, they couldn’t terminate the contract immediately. If let’s say the vet has bonus productivity calculated quarterly, the employer just either refuses to pay or has been slow to pay or whatever, the veterinarian provides them a written notice. And then they have 15 days to fix it. If they don’t fix it within those 15 days, then the vet can terminate the contract immediately at their option.
And then the last and most common way to terminate a contract is without-cause termination. Without-cause termination means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. For most vets, it’s somewhere between 30 to 90 days. And that’s just the most common way. Probably 9 out of 10 contracts are terminated that way if you’re a vet.
Repercussions of Terminating Contract Terms
There are plenty of ways to get out of a contract. Now, what are the repercussions if you do end up leaving and terminating the agreement? Well, as I said before, many contracts for the initial term, let’s say you have an initial two-year term. Receive a signing bonus, relocation assistance, probably licensure, malpractice, or some benefits. There may be language in the contract that states that if you leave within that initial term, you must pay back a portion of that signing bonus or relocation assistance, or maybe you’re not eligible for productivity bonuses.
So, investigate the language of your contract and see, if I terminate the contract early, what are the repercussions? What do I have to pay? What do I have to pay back to them? Or what am I losing out on compensation? Many vet clinics use the ProSal method. In that model, they pay you on your production. And so, you need to be very careful that if you terminate the agreement, there’s language in the contract that states you will be compensated for any services you’ve rendered that haven’t been collected. In veterinary medicine, you don’t have, at least generally don’t have kind of the same log time as a physician would have where maybe they do services.
And the vast majority wouldn’t be paid out for 60 to 90 days. Based on the cash nature of veterinary medicine, the outstanding collections percentage is much less than other specialties, but you still don’t want to miss out on that. I’d say veterinary insurance for individuals is becoming more popular. And so, the average count’s receivable cycle is between 30 to 90 days.
Think about this: if you earn on productivity on just what your net-collections are, and then you terminate the agreement and you have a bunch of net-collections outstanding, and the contract states you’ll only get paid up to the date of the contract terminates, well, you just work for free for a month or two, so nobody wants to do that.
Important to Know About Compensation
If you decide to terminate the agreement, make sure that before you sign the contract, it states that you’ll be paid any of the collected services for anything you did while you’re there, even after you terminate the contract. Having to get out of a contract is honestly just a kind of standard part of doing business.
With all these enormous conglomerates gobbling up the vet-owned practices, I’d say there’s a lot of unease and unhappiness for many veterinarians. And they may be in a practice that they’ve loved for 10 years, and then the corporation sweeps in, buys it out and things change immediately. And then they have to decide, am I going to sign this new contract? Am I going to terminate the old one to leave?
There’s just a lot of turnover in that field right now. And figuring out the most effective way of getting out of your contract is very beneficial. Hopefully, that helps and gives you the little basics on how to get out of an employment agreement.
What are veterinarian employment contract red flags? Say you’re just out of training or even switching jobs. You have a new employment agreement. What are some things you need to consider? What could make a contract not such a great opportunity?
Compensation is usually the number one thing in most people’s minds. Many veterinarians will use the ProSal method. It involves a percentage of the net-collections the practice receives based upon your personally produced services. Or usually a hybrid of base plus a percentage of the net-collections. But negative balances in that situation can be moved forward.
Let’s dive into that quickly. First, if you’re a veterinarian associate moving into practice, you must think if it’s not just a straight-based salary. Many times it is. In that scenario, you get paid a base amount, a hundred thousand a year, you work your normal hours. That’s that. If it’s a collections-based method, your volume and how much you do per day will directly affect how much you’ll make annually. Especially lately, with vet staffing at difficult levels for nearly anyone in the industry. Vet techs and front office staff are difficult to find at this point.
Plenty of vets are struggling with volumes because they’re having to do vet tech things. In addition to seeing all the normal patients. Monetarily, looking at whether the practice staffs appropriately, allowing you to be as efficient and productive as possible. Ask those hard questions. Have you had any problems with staffing lately? If yes, what are you doing to correct those problems? What’s the average volume for the current veterinarians in practice? Those are important. Even ask hard numbers. What’s the average net collection for a veterinarian in my specialty in this practice? That way, you can gauge what your ultimate compensation will be.
Disorganized Leadership
If you’re looking at an employer and they’re unwilling even to give you moderate data as far as that’s concerned. It’s a huge red flag. Because normally it means that they’re so disorganized, they don’t know what the numbers are. Or they’re so bad, they don’t want the vet to know about them. The first red flag is ensuring they have proper staffing which will make you more efficient. And ultimately lead to more money for you.
The second huge red flag is if there’s no without-cause termination in the agreement. In almost any provider agreement across any industry, physicians, dentists, veterinarians, or whoever, there needs to be without-cause termination. That means either party can terminate the agreement at any time with a certain amount of notice to the other. If there is no without-cause termination, say a vet has a three-year contract, there’s no way to terminate contracts early.
I find contracts that cannot terminate the agreement without-cause usually mean the employer has had a very difficult time staffing. And wants to lock in vets under any circumstances. If they have high turnover, they have trouble holding onto vets, it usually means they’re kind of, bad business people. Or maybe treat the vets inappropriately or not with the professionalism they deserve. So, you need without-cause termination in the associate veterinarians’ contracts. Usually, it would be somewhere between 30 to 90 days. If it’s 180 days a whole year’s notice, you can’t accept that. It needs to be shorter just for that situation. And especially if you’re being paid purely on production. You have no way of getting out of the agreement and your compensation is just completely nose-dived. You are stuck. Unless you find some way that they’ve breached the contract, you need the ability to get out.
Terms of the Restrictive Covenants
The last major red flag would be restrictive covenants. The non-solicit and non-compete more importantly. The non-competition clause is enforceable in most states. There are few where it’s not, but mostly, non-competes are enforceable. That says the vet can’t act in their specialty for a period within a certain geographic radius. Normally, a non-compete would be one to two years. Somewhere around there, one would be more favorable. Lastly, the geographic restriction varies wildly amongst locations and a rural environment.
It might knock the vet completely out of the town. Whereas if you’re in a big metropolitan area, it could be five miles up to 20. You want to ensure those are as tight as possible. That means you want it only from one or your primary location for the smallest radius possible. That way, you don’t have to necessarily move. If you get a non-compete, it’s five years long and knocks you out of the five contiguous counties you’re in. That’s not a reasonable non-compete and you shouldn’t sign that. Some people may move for a job and have no intention of staying there if the contract ends. For them, the non-compete doesn’t matter at all. But if you have ties to an area, you have family in there, your kids are going to school. There’s like 0% chance you can move if the contract ends.
You need to ensure that you have a reasonable non-compete. So it doesn’t completely affect your lifestyle for a year or two or however long. Those are three major red flags. Doesn’t have cause termination; staffed appropriately so that your compensation isn’t affected. Is the non-compete fair? There are several other red flags too, but I’ll focus on those three in this blog.
Know Your Services, Negotiate Your Contract
How should you negotiate a veterinary associate contract? There are many things to consider when negotiating your contract or an employment agreement. The first thing you want to understand is how much leverage you have. Are you just out of your schooling? Do you have any experience? Are you specialized? If you’re specialized and very few are in the veterinary industry, you have more leverage. But you might have less leverage if you’re just out of school for general veterinary practice. If you’ve been practicing, have a substantial client base and many years of experience, you may have more leverage.
Once you understand your leverage, you know what you should be asking for. The first thing I always see our clients want to negotiate is their base salary. Base salary is just the flat you’ll get every month upon continuing your employment. The problem is that veterinarians are normally compensated not just through their base compensation. You’re also normally paid through collections. That’s the typical layout of compensation for any veterinarian. Even if you’re specialized, it’s normally base compensation, and a part of collections.
Yes, the base compensation is important, but there are other aspects to an employment agreement. Your percentage of collections can be huge. You want to fight for a larger collection percentage over just a base salary. The base salary will never change unless you renegotiate in the future. Suppose you have a substantial client base and know you’re going to be bringing them in. You’ll want a higher collection percentage which you can make well over your base salary. Base salary is a significant number on an employment agreement. Still, you also want to consider the collection percentage. You can make more money with a higher collection percentage if you know you’ll bring in those clients.
Other Contract Terms Found Better Than Compensation Alone
Now, if you’re out of school and don’t have an established client base, and maybe you’re not replacing someone at a veterinary practice or clinic. They’re just expanding. It will take a while to build up that client base. Then you, in that situation, might want to fight for a higher base compensation or salary for a year or two. So that you can establish, as I said, that nice client base. Other things that can be more detrimental to you than even the compensation are those restrictive covenants. And what I mean by restrictive covenants are non-compete clauses and non-solicitation clauses, specifically the non-compete. Right now, the veterinary industry is booming, and practices bringing on and employing veterinarians are protecting their interests.
And so, sometimes, these non-competes can be unreasonable and attach to many locations or just many miles from one practice. So, you want to consider that. If you are establishing a client base, working hard, bringing in clients, then you decide to leave the practice or they decide to terminate your employment. You could have a serious problem. You might not be able to practice in the area. Or you could even have to up and move your family. Non-compete clauses are critical that you want to negotiate in your initial employment agreement. And often, it’s overlooked because it’s something way in the future. And you’re excited about this prospective future employer or you’re right out of school and want to start earning money.
Negotiate Non-Compete and Non-Solicit
Non-competes are those sneaky clauses in employment agreements that can hurt you in the future. More than anything, a non-compete agreement is something you should always negotiate. They’re usually a mileage from specific locations that you can negotiate. Also, for a specific period, they can be anywhere from six months to three years. And I would always try to negotiate that amount of time down and then always the miles down. When negotiating how many miles, also consider, can you find work outside that restricted area without having to move? And then you also want to know what’s restricted. Sometimes the non-compete clauses specifically for veterinarians may say that the practice of veterinary medicine is very general. If you’re specialized, I would negotiate that it’s only within your specialty. So, negotiate non-compete clauses.
Non-solicitation clauses mean you can’t solicit clients or employees coming with you. Sometimes you can negotiate down that period to six months or a year before reaching out to clients or employees. Then you have your sort of ancillary benefits. In continuing education, typically you’re given an allowance every year. Anywhere from 2,000 to 4,000 typically within a veterinary practice. You can negotiate that money because if you don’t, you must pay for your continuing education to keep your license. That’s something I would negotiate as well. And then any dues, fees, licensing, all those costs add up. We don’t think about that when we’re just looking at the base salary and how much money you will make. But you can negotiate these sorts of costs at the beginning. It will save you a lot of money and headaches in the end.
What Needs to Be in a Termination Letter for a Veterinarian?
What needs to be in a termination letter for a veterinarian employed at a veterinary practice? The short answer is that it needs to be direct and doesn’t need to include too much. First, you need to know if you can terminate your contract. If it has to be for-cause or without-cause, looking at your employment agreement. Normally, there should be, and you should always look for this before you sign an employment agreement, a without-cause termination. And what that means is you can have a cause, or you can have no cause at all. And you don’t have to disclose that when you terminate your employment with the veterinary practice. Normally, a notice provision states you must give the employer anywhere from 60 to 90 days’ notice you’ll end the contract.
How to Give Proper Notice
There’s also going to be a clause in your employment agreement that usually states how to give proper notice. So, where are you going to be turning that termination letter into, is it a person? Do you have to mail it, hand-deliver it, or email it? Every contract should have a notice clause, however, they’re all vastly different. So again, read that employment agreement and it will tell you how to turn in that letter. Now, most of the time, I would say that it has to be in writing. Sometimes you can email it, sometimes you can hand deliver it. You also want to be careful if it states that you must mail your termination letter. Normally, there’s an address to send it, and sometimes there’s more than one address.
So, you want to be careful. Also, it will explain to you if your notice starts the day, you mail your letter. Or if you have to count anywhere from one to three days before your notice starts. It would help if you read this before you write your termination letter. There, it should state that you are terminating your employment, giving you proper notice, and your last day will be. And then you can fill that in. If you want to thank them for their support and opportunities, you can, but only what’s required is that it’s in writing. That you are notifying them that you’re going to terminate this agreement. It’s also helpful sometimes if you let them know that you’ll assist them with transitioning to a new veterinarian. Still, all situations are different, depending on your relationship with them.
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Let’s just take what a W2 and 1099 mean and then the employment relationship between both of those. And then kind of talk about which one is probably better for the vet. First, if you are a W2 employee, you are an employee, you’re not an independent contractor, and you’ve signed an employment agreement. And so, the taxes will be taken from whatever your compensation is biweekly, monthly, whatever their pay period is.
Benefits of a W2 Employee
In a normal employment relationship, the benefits you’re going to get would be:
Malpractice insurance
Health
Insurance
Vision
Dental
Life
Disability
Retirement
they’ll pay for your license
DEA registration if necessary
Credentialing
So, they will pay for all the normal things that kind of go into being a vet.
Cons of a 1099 Independent Contractors
Whereas if you are a 1099, you are an independent contractor, you’ve signed an independent contractor agreement with the employer, and you are not an employee, meaning, no taxes are taken out of your payment, so they’ll just pay you. And then ultimately, it will be your responsibility to then pay the state and the federal government for any of the taxes.
Now, when you are an independent contractor, the employer, generally, isn’t going to provide any of those benefits at all. Sometimes, they’ll pay for the underlying malpractice insurance, although malpractice insurance is extraordinarily reasonable for vets. It could be $300 or $400 a year for a general vet. They’re not going to pay for your license, for your DEA. They won’t provide benefits.
So, no health, vision, dental, disability, life retirement. You’re just not going to get that stuff if you’re an independent contractor. Why would you be an independent contractor if you’re not going to get any of those things? Well, I guess it would come down to compensation. You should make more theoretically as an independent contractor to kind of offset not getting all those benefits. If you’re going to have a hundred thousand dollars offer from an employer when you’re going to be an employee. And they’re offering you all those benefits. And then they will offer you a hundred thousand dollars to be an independent contractor and not provide any of those benefits. It’s just not as good of an offer.
Why Employees Would Prefer You To Become Independent Contractors
For most independent contractors, you’d create an LLC. And then you would expense all those things, but it’s also much more difficult to get any of the ancillary benefits when you’re completely on your own. Like, it’s very hard to find health, vision, dental, you can’t find disability, you can’t get life insurance obviously, and you must also pay for your own things. The reason why, I mean, this is just the honest reason why most employers would pay as an independent contractor versus an employer or an employee is they don’t have to pay employment tax.
Employment tax is usually somewhere between 8% to 12%. So, they’re saving 12% on what your compensation is each year. They’re essentially treating you as an employee. They tell you where to go, how much you’re working, who to see, and so you’re a quasi-employee, and the employer is just trying not to pay employment tax.
The IRS lists a 20-factor test on kind of an analysis of if someone is an employee or an independent contractor. So, maybe look at that and say, alright, look, you’re not giving me or any of the benefits of being an employee, but you require me to do all the things that an employee would normally do.
When Does Being an Independent Contractor More Beneficial?
Being an independent contractor will make sense if it’s more of like a side gig. So, maybe you’re just doing moonlighting work for somebody. And it’s up to you how often you’re working. That would make sense to be an independent contractor. But if this is like a full-time job where you’re going in five days a week, and you’re interacting with the vet tech, the front office, and all the patients and all that kind of thing, it’s unlikely that you’re an actual independent contractor and it doesn’t make a lot of sense.
Overall, most of the time, it would make the most sense to be an employee, so you’d get a W2. It wouldn’t make sense to get a 1099 and be an independent contractor, for it’s for a full-time job. Opinions on that may vary, but I just find overall, most of the time, if an employer is offering an independent contractor position, they’re not actually an independent contractor.
What tax deductions can veterinary associates make if they are classified as independent contractors? First, if you are an employee of a veterinary practice, you’ll receive W2 at the end of the year. And taxes will be withheld from your regularly scheduled paychecks. If you’re an independent contractor, you’ll receive a 1099 at the end of the year. No taxes will be withheld from your compensation. You will be responsible for paying all those taxes to the state. What benefits do independent contractors get? Well, it makes the most sense to be an independent contractor working part-time for an employer or a care center owner. For instance, maybe you’re in an emergency veterinary care business, and you’re only going to work maybe one or two weekends a month.
Income Deduction for Practice Expenses
In that situation, being an employee doesn’t really make sense. It makes more sense to be independent contractors. As an employee, you will have ancillary benefits coverage in your contract. The veterinary practice should pay for your licensing, DEA registration, continuing education reimbursement, signing bonus, and moving expenses if you’re moving from out of state. And then they’re also going to offer health, vision, dental, disability, and life retirement. The employer will cover all those things. Whereas for independent contractors, none of those things will be covered. These veterinarians are responsible for paying for all of that themselves. Now, does that mean they are at a disadvantage compensation-wise? Well, no, if you do the, I guess, correct things, and the correct things would be independent contractors need to create an LLC.
You need to meet with an accountant to kind of go over the best way to maximize your tax deductions. You need to get an EIN from the IRS, create a bank account, and run all the compensation expenses through that bank account so you can track them appropriately. Those are the things independent contractors need to do to ensure they’re setting themselves up to take the tax deductions when they’re ultimately filing taxes at the end of the year.
What are those things you can do? Alright, well, all the things I just discussed can be used as tax deductions:
Your license
DEA
CE
Any business expenses
Your home office
Travel
Malpractice insurance policy
Licensing Board
Defense Insurance
You could depreciate other assets if you have them for the business. All those things can be used as tax deductions when people decide to be independent contractors.
Benefits and Others Not Covered
Now, a couple of considerations: for 1099 independent contractors, the employer will not have to pay any employment tax on them. So, they usually save around 10 to 12% of their total compensation, which they don’t state upfront. They also do not have to spend any money on the benefits, which can sometimes be costly. If you work as an independent contractor for somebody, you should expect to make a little bit more because the employer is saving on all of those things. If you’re making the exact same amount as some people who work as an employee for a practice, you’re missing out. You should have at least some leverage and point out to them all the things they’re saving on for you to increase. Now, how much? It depends.
I mean, probably somewhere between 5% to 15% of a bump over some people who work as employees would make financial sense for the employer. But whether they’re willing to do that or not, I can’t tell you, but everything is in negotiation. If given an agreement, those are certain things independent contractors can push for because the employer is saving when classifying them as such. I know I mentioned this, but I’m just going to drive it home.
Veterinarians should meet with an accountant before signing any independent contractor agreement. You need to have the business structures and resources set up properly in advance and know exactly what you can and can’t deduct at the end of the year, which you should run through the bank account. It makes no sense just to sign an agreement and start without having any of those things in place. You could miss out on detecting a lot of valuable business expenses. Email us if you need help with these things.
Can a Non Compete be Enforced on a 1099 Employee?
Can a non-compete be enforced against a 1099 independent contractor? If you are a 1099, that means you are an independent contractor. Taxes will not be taken out of whatever your payment is. And then at the end of the year, you’ll get a 1099, and you’re responsible for all the taxes associated with any of your compensation throughout the year. Let’s just start at that basic level. If you are an employee, you’ll get a W-2, and you are not an independent contractor. In any employment agreement and most independent contractor agreements for professionals who are in sales or maybe at the executive level, and certainly in healthcare, there will be non-compete.
What Does Non-Compete Do in Work Agreements?
Now, what does a non-compete do? It essentially prohibits the professional from doing what they do for a certain amount of time within a specific geographic region. Are non-competes enforceable in every single state? No, there are a few states where they’re completely unenforceable. However, in most states, they are enforceable if they kind of meet that state’s requirements. Most states do not have specific laws about non-competes, it’s kind of through case law from people suing, and then the court’s making decisions. But the courts will look at the following factors to determine if the non-compete is reasonable and enforceable.
First, does the non-compete protect the employer’s legitimate business interests? Does it cause undue hardship for the employee/contractor? It doesn’t harm the public and has a reasonable time or geographic scope associated with it.
Can You Enforce Non-competition Agreements?
Let’s talk about what to expect in the actual independent contractor agreement. First, can a non-compete be enforced in a 1099 independent contractor agreement? Yes, they can, unless it’s in a state where, as I said before, it’s completely unenforceable. In most non-compete, it’s going to state that the professional can’t do their specific profession for usually somewhere between a one-to-two-year time. And then the geographic scope really can be dramatically different based upon the industry that the professional is in. For healthcare, somewhere between 5 to 15 miles is normal. For some sales positions, it can be the entire state or several Counties from where they are called upon with the sales targets. It really is industry specific.
Top Tip: Make Independent Contractor Agreement Specific
Some things you must keep in mind: one, you want to make sure that the specific profession listed is very narrowly tailored. Let’s just say you’re a software salesperson. You don’t want it to say you can’t do sales for two years within this County. You wanted to say you can’t do the very specific software banking sales. That way, you’re not completely kept from doing sales. You just can’t do sales for a competitor.
That’s kind of an important part of this. If an employer is stating you can’t do sales at all and they’re a bank, it doesn’t make sense if you’re doing cleaning supply sales that they would prohibit you from doing that. That’s the first thing you need to think about, narrowly tailored the scope of what you can’t do. And then, as far as time goes, anywhere between one to two years would normally be enforceable. If you have a five-year, 10-year non-compete, that’s ridiculous!
Very unlikely that that would be enforced. And then, as far as geographic scope, you want that narrowly tailored as well. Some things to think about: you always want it to be from your primary location. If you’re in healthcare, certainly your primary practice location. If you’re in sales, you want to keep that as tight as possible and maybe just one County, or if you’re throughout the state, it’s tougher, but still, you want to open as much area as possible. Multi-State non-competes generally are not enforced. However, if you’re in sales and you’re in Cincinnati, and you’re on the border of Ohio, Kentucky, and Indiana, well, they may say somewhere around there. And so, like that, it would likely be enforced as well.
Summary: Non-Compete Could Be Enforceable to Independent Contractors
So, are non-competes enforceable in 1099? Yes, if they are reasonable in scope. It’s tough. I mean, non-competes can be a huge part of any contract negotiation. Now, for some people, it doesn’t matter at all. If I have a physician moving into a city just for that job, they have no ties to the area, and they say, you know what, if this job doesn’t work out, I’m moving anyway. I don’t care about the non-compete at all.
Whereas someone who is established in the city may have kids in school or family close by, being able to stay in the area and continue to do the profession might be the absolute, most important thing. So, suppose an employer/independent contractor customer is completely unwilling to make any changes to the non-compete. In that case, that can be a deal-breaker for some people. Unfortunately, the non-compete can be enforced in an independent contractor agreement but must be narrowly tailored.
I would have someone look it over. An attorney looks it over to give you their opinion on whether it’s enforceable and never go into a contract signing something, just saying, well, it’s too broad. It won’t be enforced if need be. Yes, that might be true, but you might have to litigate it or go to arbitration. I would never suggest that someone sign a contract just thinking, ah, well, it won’t be enforced. I don’t have to worry about it. That’s a bad idea, in my opinion.
Veterinary Contract: How is Veterinarian Production Calculated?
The ProSal method is used in the veterinary industry, which takes a percentage of the collection. So, whatever the practice received that is specific to the veterinarian’s personally performed services, the vet will get a percentage of that. Many are just on straight-based salary, so there is no productivity necessary or at least they don’t get paid more for seeing more patients. Let’s just take a net-collections percentage and talk about that. As I said before, if you’re on a productivity-based compensation model, there are two ways of doing it, at least as far as most vets go.
Veterinarians Calculate Production Based on Pure net-collections
One would just be pure net-collections, meaning, you only get a percentage of what the practice receives from your services. And almost all those agreements will have a fee schedule. These are the things that you can bill for. And then these are the other things that will not count towards yours. Maybe like any food that’s bought from one of your patients would just go to the practice and not be attributed to you or maybe ongoing prescriptions after the first one.
You need to look into that, obviously, that varies based upon the specialty, but they’re usually very specific about the services that count towards the collections of the vet. If you’re on pure net-collections and you’ll get a percentage of what comes in, and then that’s what you get paid. Usually, it’s monthly. They would just do an inventory of what the practice received that month. Then the percentage would be taken. And then that’s what the vet would get.
Veterinarian Production Based on Draw
Another way of doing it would be they would have draw. Let’s just say they made 120,000 a year, so it’s 10,000 a month, they would say any of the net-collections received above 10,000 a month after you reached your salary threshold, then you would get, I mean for vets, 18 percent is kind of a standard amount. Then you get 18 percent of any of the collections received monthly above 10,000 a month. Or maybe they would do it quarterly. Then you’d get the 10,000, 10,000, 10,000, and then they would take any amounts received over the 30,000, and then you’d get 18 percent of what those net-collections are.
In that model, usually, if you have a negative balance, meaning, you didn’t bring in 10,000 per month, that negative balance would be carried forward. And if you’re only generating 10,000 a month, you’re getting paid 10,000 a month, something is very wrong as far as the practice goes. Normally, somewhere between like 35 to 40 percent of the revenues generated by a provider would go to the provider. The rest contributes to overhead. That’s kind of the normal productivity model. Veterinarians don’t generally use just encounters or RVUs. It’s just usually a straight net-collections base. Now, a couple of things you need to think about if you’re injured handing an offer would be, especially in the vet industry lately, just a lack of staffing.
Do They Have Enough Staff?
So, do they have an appropriate amount of vet techs to assist the vet in providing quick and efficient care? I know many vets who must do everything. They have to room the patients; they have to do the initial assessments and everything that a vet tech normally would do. Do they have to do that daily and care for the animal. And that makes the vet less efficient. You need to make sure that they are staffed appropriately and that they are efficient. That way, it doesn’t affect you if you are on one of these productivity-based models.
If you’re entertaining a new job and the employer is not explicit about what they’re going to do to ensure they’re appropriately staffed. Or is wishy-washy as far as, oh yes, we’ve had problems. Still, you need hard data to determine if a job is worth taking or not. And if an employer is unwilling to give you any of that, you need to move on. You need to find a better opportunity. I don’t know if sneaky is the right word for places that are secretive about their numbers, staffing, or anything like that. That is a huge red flag. And that would be someplace that you’d most likely want to avoid.
From a Lawyer to a Veterinarian
I think the vet industry is probably simpler than some of the others because it’s usually just a straight base net collection, pure net-collections, or a hybrid of that. And I mean, in my opinion, it is easy to understand, but you need to make certain that the negative balance part is usually the biggest concern for most vets.
You need to make certain how much you’re at risk of a negative balance carrying forward. And especially, this is the most important thing in this blog, if you’re joining a practice and your net-collections from the very beginning and they’re carrying forward negative balances and again, if you make 120,000 a year, if you’re just establishing a patient base, it will take your time to get up to speed. And whatever that threshold is, you may carry a negative balance forward, and you might be in the hole, tens of thousands of dollars in the first couple of months.
You want to make certain that there’s like a guaranteed base draw that won’t be held against you for those first few months while you’re building up a practice. Usually, it takes 12 to 18 months for practice to reach maturity. Now, if you’re coming in and replacing a vet, that’s just left. Well, obviously, you have an established base. Therefore, it’ll kind of get you up to speed quicker, but if you’re just building from scratch and you’re on pure net-collections, it’s going to be lean in the first few months.
How is a Veterinarian Given a Draw in a Contract?
What is a draw in a veterinary associate employment contract? A draw is related to compensation. It means how much money a veterinarian will make each month. Let’s talk about the different compensation models and when a draw would come into play. Usually, the veterinarian would have a guaranteed base for at least the first year or two of their contract. It’s very unlikely that you would come into a new employment opportunity and have straight productivity. In the veterinary arena, compensation is almost always calculated through net-collections. Net collections are any money the practice receives determined for the vet’s personally performed services.
Whatever they collect, that’s what would be considered in calculating net-collections for that vet. And one common way of doing it is to say you have a one-year guarantee, and they do that because it takes time to build up a veterinary practice. Now, I guess it depends upon what specialty you’re in, but for the most part, let’s say you’re a general vet. You’re not just going to hop into new practice and have an immediate client base. It takes a while to build up. So, they’ll give you a guaranteed base in year one. Then after year one, they’ll probably switch you to productivity/net collections model. And that’s when a draw would come into play. The veterinary industry utilizes the ProSal method commonly. And it’s a methodology for a veterinary practice to pay their employees, which allows them at least a small profit margin.
ProSal Method
And in that method, they will take an estimated projection of what your net-collections would be, based on different factors and conditions or information from past years. The vet would then receive a smaller percentage of that per month. And then there would be a reconciliation or true up at the end of the year. Let’s go through some examples. Let’s say the veterinarian makes 120,000 per year in their first guaranteed base year. And then they collected that amount as well.
While under ProSal, they would maybe knock it back to 80 percent. You would make 10,000 in that scenario per month. And so, they would say, alright, what will knock it back to 80 percent? And then the vet will get a draw of $8,000 per month. Throughout the year, they’ll make 8,000 per month. And then, at the end of the year, they will take whatever the total net-collections were for that vet versus what was paid out.
In that scenario, 8,000 times 12 minus 6,000. And then if there is a difference, meaning, if they collected more, they would then get a percentage of those net-collections. The downside is if you are in a negative balance, meaning, if you collected less than they paid out, they would generally make you pay that back over time. And what they’ll normally do is they’ll take however much you’re in the deficit for. Let’s say it’s $6,000. Over the subsequent three pay periods, they might take 2000 out of your paycheck until you’re back to zero. Is that fair? It just depends. No one wants to employ employees who don’t cover their salary and expenses. If the vet is entirely unproductive, they can expect a termination letter.
Veterinary Contract Production Compensation
Now, if there are some underlying reasons why a vet is not as productive, this is big in the vet industry right now due to lack of staffing. If you can’t get the vet techs, if you can’t get the front office staff if they can’t have any efficient workflow, and the vet is doing all the things that they didn’t have to do before, that will slow them down, and their collections are going to decrease. Just a side note: you need to make sure there’s language in your employment agreement that states the veterinary practice will provide you with proper support to make your practice efficient.
Back to the draw, it could change over time. Let’s say you had a 120 base, then you moved into a kind of a decreased percentage per month as your draw, and then you collected 160,000. Well, they would probably bump up your draw to 120,000 and then do another reconciliation at the end of a year. There are many different ways to calculate compensation in a veterinary associate contract, but that’s probably the most common way to productivity. I also find that many vets are just paid a straight base for years one to five. And that makes it simple, to be honest.
Pros and Cons of Employment at a Corporate Veterinary Office
What are the pros and cons of a veterinarian working in more of a corporate clinic setting? First, are you working as an employee or 1099 independent contractor? When working for a corporation, there are a lot of pros. Starting with the benefits typically offered, such as health insurance, retirement, disability, life insurance, sometimes travel, and cell phones. The list just goes on from there. More benefits will be offered to you in a more corporate clinic. Also, the facilities are typically more standardized. If there’s more than one location that you’re going to be providing services at, typically, they’re standard between the locations. And then also support staff. Usually, you’re fully staffed with the people you need and the equipment within the facilities.
Salary Talks, Corporate Practice or Solo?
So, this is great. You’ve got benefits, the facilities are great. Sometimes the pay can be more in a corporate setting. I would say often. You are typically compensated more. Those are just kind of the pros, depending on what you’re looking for. Suppose you’re looking for benefits (which will be provided with any W2 position). In that case, if you’re looking for things that are more standardized policies, also with admin, then that’s considered a pro for a corporate clinic.
Some cons you want to think about are you’re normally not able to negotiate quite as much in an employment contract. When starting your employment with them, it’s typically offered the same sort of agreement for all the other similarly situated veterinarians. Also, you want to think about your compensation. That is one thing that you can sometimes negotiate in a corporate clinic.
Other Important Cons
Some other cons and probably the biggest one. Well, I would say there are probably two. One, there are usually a lot of expectations for how many clients you will see in their animals per day. There are quotas, there are maximums, and there are minimum expectations that you must meet. And if you’re not meeting those, there are consequences to those. That’s something that you want to consider if that’s something that you feel up to. I would say another con is usually the non-compete clauses. They are extensive. There will probably be multiple locations, large miles from each location that you will be restricted to. Also, be careful if you are working as an independent contractor that the agreement does not contain a non-compete clause.
And then, usually, for an extended period, the biggest con of a corporate clinic is those non-compete clauses. Because those can come back to bite you. Going back to the pros, I would say another pro would probably be just marketing and advertising. They’re marketing and advertising on your behalf. They’re bringing in tons of clients and their pets, so there’s no worry that you will have that client base there. It’s easy to build up because you have them supporting you in this setting.
Veterinary Clinic Contract and Benefits
How should you negotiate a veterinary associate contract? There are many things to consider when you want to negotiate your contract or an employment agreement. The first thing you want to understand is how much leverage do you have and what I mean by leverage. I mean, are you just out of your schooling? Do you have any experience? Are you specialized? If you’re specialized and very few are in the veterinary industry, you have more leverage. But you might have a little less leverage if you’re just out of school for general veterinary practice. And then also, if you’ve been practicing and you have a substantial client base, and you have lots of years of experience, you may have more leverage in relation to that.
Once you understand your leverage, you need to understand what you should be asking for. The first thing I always see our clients want to negotiate is their base salary. Base salary or base compensation is the flat you’ll get every month upon continuing your employment. The problem is that veterinarians are normally compensated, not just through base compensation. You’re also normally compensated through collections. That’s the typical sort of layout of compensation for really any type of veterinarian. Even if you’re specialized, it’s normally base compensation, and then there’s a part of collections.
Base Compensation is Not Everything
So yes, the base compensation is important, but there are many other aspects to an employment agreement. Your percentage of collections can be huge. You want to fight probably for a larger percentage of collections over just a base salary because the base salary will never change unless you renegotiate in the future. But suppose you have a substantial client base, and you know you will bring those clients in. In that case, you will want a higher percentage of your collections which you can make well over your base salary. It’s something to consider. I know the base salary is a significant number on an employment agreement. Still, you also want to consider the collection percentage. Because you can make a lot more money with a higher collection percentage if you know you will bring in those clients.
Clinical Office Work Pros and Cons
Now, if you are right out of school and you do not have an established client base, and maybe you’re not replacing someone at a veterinary practice or clinic, they’re just expanding. It will take a while to build up that client base. Then you, in that situation, might want to fight for a higher base compensation or salary for a year or two so that you can establish, as I said, that nice client base. Other things that can be more detrimental to you than even the compensation are those restrictive covenants. And what I mean by restrictive covenants are non-compete clauses and non-solicitation clauses, specifically the non-compete. Right now, the veterinary industry is booming, and practices that are bringing on and employing veterinarians are protecting their interests.
Look Out For The Non Competes
And so, sometimes, these non-competes can be unreasonable and attach to many locations or just many miles from one practice. So, you want to consider that because if you are establishing a client base, you’re working hard, you’re bringing in clients, and then you decide to leave the practice, or they decide to terminate their employment with you, you could have a serious problem. You might not be able to practice in the area. You could even have to up and move your family. Non-compete clauses are extremely important that you want to negotiate in your initial employment agreement. And often, it’s overlooked because it’s something way in the future. And you’re excited about this prospective future employer, or you’re right out of school and want to start earning money.
That’s what you’re focused on, but non-competes are those sneaky clauses in employment agreements that can hurt you in the future. I would say more than anything. A non-compete agreement is something that you should always negotiate. They’re normally a mileage from specific locations that you can negotiate. And then also, for a specific period, they can be anywhere from six months to three years. And I would always try to negotiate that amount of time down and then always the miles down. When you’re negotiating how many miles, you also need to consider, can you find work outside of that restricted area without having to up and move? And then you also want to know what’s restricted. Sometimes the non-compete clauses specifically for veterinarians may just say that the practice of veterinary medicine is very general. I will negotiate that it’s only within your specialty if you’re specialized.
Business Non-Compete
So, non-compete clauses want to negotiate those, most important. Non-solicitation clauses just mean you can’t solicit clients or employees coming with you. And sometimes that period can be negotiated down to six months or a year before you can reach out directly to those clients or to those employees. Then you have your sort of ancillary benefits. In your continuing education, typically you’re given an allowance every year, which is anywhere from 2,000 to 4,000 typically within a veterinary practice. You can negotiate that money because if you don’t, then you must pay for your continuing education to keep your license. So, that’s something I would negotiate as well. And then also any sort of dues, fees, licensing, all those costs really add up.
And we don’t think about that when we’re just looking at the base salary and how much money you’re going to make, but these sorts of costs can be negotiated at the beginning. It’s really going to save you a lot of money in the end, and a lot of headaches as well.
Breaking a Corporate Clinic Contract
Can a veterinarian break an employment contract? I think the most important matter is defining what break means. Do you mean, can I terminate the contract, meaning get out of it if I’ve already signed it and have started? Yes, that’s one way to think of breaking the contract. In my mind, breaking a contract usually means you’ve signed the agreement but haven’t started yet. But we’ll kind of look at both of those. Let’s talk about the first one first. Can you break a contract? In any employment agreement, there’s going to be language about how to terminate the agreement. And there are generally four ways to terminate an agreement.
You can do it if the term expires, then there’s no automatic renewal, so let’s say you have a two-year contract, get through the two years, neither party has renegotiated an extension, the contract ends, it’s terminated. Next, by mutual agreement. If either party is like, you know what? This isn’t working out. Let’s move on. The contract can end. The third would be for cause termination.
If one party is in breach of contract and doesn’t fix the breach, then they will have the option of terminating the contract immediately. And then the last way would be without cause termination. And that just means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. In the veterinary industry, somewhere between 30 to 90 days is kind of a standard amount for without cause termination. Just because you’re utilizing one of those four ways of terminating a contract doesn’t necessarily mean you’re breaking it.
https://www.chellelaw.com/wp-content/uploads/2022/07/Blog-34-scaled.jpg14402560adminhttps://www.chellelaw.com/wp-content/uploads/2020/01/cropped-favicon-1-300x300.pngadmin2022-05-11 15:08:452023-04-05 02:14:19Is a W2 or a 1099 Better for a Veterinarian? | Veterinarians
What are veterinarian employment contract red flags? Say you’re just out of training or even switching jobs. You have a new employment agreement. What are some things you need to consider? What could make a contract not such a great opportunity?
Check the Compensation Package
First, compensation is usually the number one thing in most people’s minds. Many veterinarians will use the ProSal method. It involves a percentage of the net-collections the practice receives based upon your personally produced services. Or usually a hybrid of base plus a percentage of the net-collections. But negative balances in that situation can be moved forward.
Let’s dive into that quickly. First, if you’re a veterinarian associate moving into practice, you must think if it’s not just a straight-based salary. Many times it is. In that scenario, you get paid a base amount, a hundred thousand a year, you work your normal hours. That’s that. If it’s a collections-based method, your volume and how much you do per day will directly affect how much you’ll make annually. Especially lately, with vet staffing at difficult levels for nearly anyone in the industry. Vet techs and front office staff are difficult to find at this point.
Plenty of vets are struggling with volumes because they’re having to do vet tech things. In addition to seeing all the normal patients. Monetarily, looking at whether the practice staffs appropriately, allowing you to be as efficient and productive as possible. Ask those hard questions. Have you had any problems with staffing lately? If yes, what are you doing to correct those problems? What’s the average volume for the current veterinarians in practice? Those are important. Even ask hard numbers. What’s the average net collection for a veterinarian in my specialty in this practice? That way, you can gauge what your ultimate compensation will be.
Red Flags To Look Out For In Your New Practice
If you’re looking at an employer and they’re unwilling even to give you moderate data as far as that’s concerned. It’s a huge red flag. Because normally it means that they’re so disorganized, they don’t know what the numbers are. Or they’re so bad, they don’t want the vet to know about them. The first red flag is ensuring they have proper staffing which will make you more efficient. And ultimately lead to more money for you.
Include This In Veterinary Contract Negotiations
The second huge red flag is if there’s no without-cause termination in the agreement. In almost any provider agreement across any industry, physicians, dentists, veterinarians, or whoever, there needs to be without-cause termination. That means either party can terminate the agreement at any time with a certain amount of notice to the other. If there is no without-cause termination, say a vet has a three-year contract, there’s no way to terminate contracts early.
I find contracts that cannot terminate the agreement without-cause usually mean the employer has had a very difficult time staffing. And wants to lock in vets under any circumstances. If they have high turnover, they have trouble holding onto vets, it usually means they’re kind of, bad business people. Or maybe treat the vets inappropriately or not with the professionalism they deserve. So, you need without-cause termination in the associate veterinarians’ contracts. Usually, it would be somewhere between 30 to 90 days. If it’s 180 days a whole year’s notice, you can’t accept that. It needs to be shorter just for that situation. And especially if you’re being paid purely on production. You have no way of getting out of the agreement and your compensation is just completely nose-dived. You are stuck. Unless you find some way that they’ve breached the contract, you need the ability to get out.
Terms of the Restrictive Covenants
The last major red flag would be restrictive covenants. The non-solicit and non-compete more importantly. The non-competition clause is enforceable in most states. There are few where it’s not, but mostly, non-competes are enforceable. That says the vet can’t act in their specialty for a period within a certain geographic radius. Normally, a non-compete would be one to two years. Somewhere around there, one would be more favorable. Lastly, the geographic restriction varies wildly amongst locations and a rural environment.
It might knock the vet completely out of the town. Whereas if you’re in a big metropolitan area, it could be five miles up to 20. You want to ensure those are as tight as possible. That means you want it only from one or your primary location for the smallest radius possible. That way, you don’t have to necessarily move. If you get a non-compete, it’s five years long and knocks you out of the five contiguous counties you’re in. That’s not a reasonable non-compete and you shouldn’t sign that. Some people may move for a job and have no intention of staying there if the contract ends. For them, the non-compete doesn’t matter at all. But if you have ties to an area, you have family in there, your kids are going to school. There’s like 0% chance you can move if the contract ends.
You need to ensure that you have a reasonable non-compete. So it doesn’t completely affect your lifestyle for a year or two or however long. Those are three major red flags. Doesn’t have cause termination; staffed appropriately so that your compensation isn’t affected. Is the non-compete fair? There are several other red flags too, but I’ll focus on those three in this blog.
Veterinarians are in high demand. People want to do everything within their power to care for pets so near and dear to their hearts. And the skills that a veterinarian brings to the table are highly prized. The supply of veterinarians is somewhat lacking compared to the overall demand in the market at this time. This meant employers had to look at ways to sweeten the deal to get as many vets as possible.
Why Employers Require a Contract for Veterinarians
Many jobs in any business or industry require a potential employee to sign an employment contract. One that lays out the foundation and terms of employment. And the benefits of coming to work at a specific facility. Often, they do this as means of encouraging people to accept a particular job offer they might not have otherwise. When benefits are laid on the table, it’s easier for people to see why they should work for a specific employer. One they consider working for.
Employers will always ask veterinarians to sign a contract of employment before they can begin their work. After all, the business veterinarians do is often so delicate and sensitive that no aspect of it can be compromised. The employer needs to know what they are getting for their business when they offer employment to a veterinarian. On the plus side for incoming vets. They can see the benefits they’ll receive all laid out in a way that makes it clear what to expect.
Benefits of Veterinarian Contracts
Employment agreements benefits include the fact that it can provide some much-needed stability to the veterinarian. Many veterinary contracts are designed to run for 12 months or longer. Thus, veterinarians can feel confident that they will be employed at a specific facility for at least a year. That is, if they don’t do anything egregious, that will nullify the contract. We’d also explore some additional upsides to veterinarian contracts to clarify why these documents are so important to many.
Professional Liability Insurance
No matter how talented someone is at their job, there is always a risk that something terrible could go wrong. Veterinary Practice News explains why vets are strongly encouraged to purchase protection that’ll keep them and their veterinary practice safe:
As claims become more common and damages rise, defending against malpractice claims becomes more expensive and necessary for veterinary practices. Like many professionals, veterinarians commonly purchase professional liability (malpractice) insurance to guard against the expense of defending against such claims. If an employer can add professional liability insurance as a benefit to the contract, this is all upside for the veterinarian. It is a total relief. It means they may not have to pay for this insurance out of their pocket. Unless they want supplemental coverage beyond what the employer provides.
Clients are often very particular about how their pets are taken care of. They may feel that they have a claim against you if something goes wrong with their pet’s care. And in the business of medicine, events related to malpractice can have a long damaging effect on the vet’s career. That’s why all vets considering a new employment offer should speak with a veterinary contract lawyer. In order to review the paperwork the employer asked them to sign. And to ensure it includes extensive liability insurance protections.
Retirement Accounts
Everyone must think about their financial future as they are still actively working. Preparing for the fact that you won’t be able to work as you do now someday is a wise practice. Simply because it is the reality of the situation. It would help if you prepared for the day when you are past the age of working. And need to rely on the savings you have accumulated throughout your working life. A 401(k) plan for veterinarians should be automatic in any agreements they sign. This is to say what any veterinarian thinking about signing up for a job with a given employer should recognize. The employer needs to offer a 401(k) plan for the vet to consider it.
PTO and Sick Days
Veterinarians considering new work may want to give special consideration to personal time off (PTO) and sick days allotted. The reason? Because they must have the opportunity to establish some work/life balance in their existence.
A burnout crisis is sweeping through the practice at this time as the number of clients continues to grow. Many vets must work far more hours under far more challenging conditions than they usually would. Given all this, it’s abundantly clear that vets need to catch some breaks. And be allowed to recover from the onslaught that is their job. When looking over contracts, veterinarians should see how their time off breaks down into different categories, such as:
Sick days
Vacation days
Personal time off (PTO)
Flex time
Holidays
Employers have different definitions for how they look at time provided to their employees to take care of their needs. Before signing employment or independent contractor agreements, it is crucial to understand what those definitions are.
Discounted or Free Services
It would be unusual for a veterinarian not to have a pet (or two, or three!) of their own. Thus, it is a reasonable assumption that the vet may receive special discounts or even free services from their employer. They may not want to work on their pet for understandable reasons. But they may have the opportunity to receive veterinary care from a co-worker who can help them out. Their employer should discount this service as part of the terms of their employment. This may seem like a small thing. But it makes a big difference in the lives of busy veterinarians with multiple pets that need taking care of. Getting a little break on those services can be the cherry on top.
Reach Out Today
Before you sign on to any professional veterinary offer, we would like to have the opportunity to discuss it with you. We intend to help you understand every element of your contract (including an analysis of your non-compete agreement). And if said contract makes sense for your needs. Please get in touch with us. Let us know how we can start the process of helping you receive the assistance that you require.
The ProSal method is used in the veterinary industry, which takes a percentage of the collection. Whatever the practice received that is specific to the veterinarian’s personally performed services, the vet will get a percentage of that. Many are just on straight-based salary. So there is no productivity necessary, or at least they don’t get paid more for seeing more patients. Let’s just take a net-collections percentage and talk about that. As I said before, if you’re on a productivity-based compensation model, there are two ways of doing it, at least as far as most vets go.
Veterinarians Calculate Production Based on Pure net-collections
One would just be pure net-collections, meaning, you only get a percentage of what the practice receives from your services. And almost all those agreements will have a fee schedule. These are the things that you can bill for. And then these are the other things that will not count towards yours. Maybe like any food that’s bought from one of your patients would just go to the practice and not be attributed to you. Or maybe ongoing prescriptions after the first one.
You need to look into that, obviously, that varies based upon the specialty. But they’re usually very specific about the services that count towards the collections of the vet. If you’re on pure net-collections and you’ll get a percentage of what comes in, and then that’s what you get paid. Usually, it’s monthly. They would just do an inventory of what the practice received that month. Then the percentage would be taken. And then that’s what the vet would get.
What is ProSal?
ProSal, short for “production-salary,” is a hybrid compensation model frequently used in various professional fields, such as dentistry and veterinary medicine. This payment structure combines a guaranteed base salary with a performance-based commission. Under the ProSal model, professionals receive a fixed minimum income to ensure financial stability, while also benefiting from a percentage of their generated revenue. This incentivizes increased productivity and quality of work, as the professional’s total compensation directly correlates with their performance. By blending the security of a salary with the motivation of a commission-based system, ProSal aims to strike a balance that encourages both employee satisfaction and business growth.
Veterinarian Production Based on Draw
Another way of doing it would be they would have draw. Let’s just say they made 120,000 a year, so it’s 10,000 a month. They would say any of the net-collections received above 10,000 a month after you reached your salary threshold. Then you would get, I mean for vets, 18 percent is kind of a standard amount. Then you get 18 percent of any of the collections received monthly above 10,000 a month. Or maybe they would do it quarterly. Then you’d get the 10,000, 10,000, 10,000, and then they would take any amounts received over the 30,000. And then you’d get 18 percent of what those net-collections are.
In that model, usually, if you have a negative balance. Meaning, you didn’t bring in 10,000 per month, that negative balance would be carried forward. And if you’re only generating 10,000 a month, you’re getting paid 10,000 a month. Something is very wrong as far as the practice goes. Normally, somewhere between like 35 to 40 percent of the revenues generated by a provider would go to the provider. The rest contributes to overhead. That’s kind of the normal productivity model. Veterinarians don’t generally use just encounters or RVUs. It’s just usually a straight net-collections base. Now, a couple of things you need to think about if you’re thinking of accepting an offer would be, especially in the vet industry lately, just a lack of staffing.
Do They Have Enough Staff?
So, do they have an appropriate amount of vet techs to assist the vet in providing quick and efficient care? I know many vets who must do everything. They have to room the patients; they have to do the initial assessments and everything that a vet tech normally would do. Do they have to do that daily and care for the animal. And that makes the vet less efficient. You need to make sure that they are staffed appropriately and that they are efficient. That way, it doesn’t affect you if you are on one of these productivity-based models.
If you’re entertaining a new job and the employer is not explicit about what they’re going to do to ensure they’re appropriately staffed. Or is wishy-washy as far as, oh yes, we’ve had problems. Still, you need hard data to determine if a job is worth taking or not. And if an employer is unwilling to give you any of that, you need to move on. You need to find a better opportunity. I don’t know if sneaky is the right word for places that are secretive about their numbers. Staffing, or anything like that. That is a huge red flag. And that would be someplace that you’d most likely want to avoid.
From a Lawyer to a Veterinarian
I think the vet industry is probably simpler than some of the others. Because it’s usually just a straight base net collection, pure net-collections, or a hybrid of that. And I mean, in my opinion, it is easy to understand. But you need to make certain that the negative balance part is usually the biggest concern for most vets.
You need to make certain how much you’re at risk of a negative balance carrying forward. And especially, this is the most important thing in this blog. If you’re joining a practice and your net-collections from the very beginning and they’re carrying forward negative balances and again, if you make 120,000 a year, if you’re just establishing a patient base, it will take your time to get up to speed. And whatever that threshold is, you may carry a negative balance forward. And you might be in the hole, tens of thousands of dollars in the first couple of months.
You want to make certain that there’s like a guaranteed base draw that won’t be held against you for those first few months while you’re building up a practice. Usually, it takes 12 to 18 months for practice to reach maturity. Now, if you’re coming in and replacing a vet, that’s just left. Well, obviously, you have an established base. Therefore, it’ll kind of get you up to speed quicker. But if you’re just building from scratch and you’re on pure net-collections, it’s going to be lean in the first few months.
What is a draw in a veterinary associate employment contract? A draw is related to compensation. It means how much money a veterinarian will make each month. Let’s talk about the different compensation models and when a draw would come into play. Usually, the veterinarian would have a guaranteed base for at least the first year or two of their contract. It’s very unlikely that you would come into a new employment opportunity and have straight productivity. In the veterinary arena, compensation is almost always calculated through net-collections. Net collections are any money the practice receives determined for the vet’s personally performed services.
Whatever they collect, that’s what would be considered in calculating net-collections for that vet. And one common way of doing it is to say you have a one-year guarantee. And they do that because it takes time to build up a veterinary practice. Now, I guess it depends upon what specialty you’re in, but for the most part, let’s say you’re a general vet. You’re not just going to hop into new practice and have an immediate client base. It takes a while to build up. So, they’ll give you a guaranteed base in year one. Then after year one, they’ll probably switch you to productivity/net collections model. And that’s when a draw would come into play. The veterinary industry utilizes the ProSal method commonly. And it’s a methodology for a veterinary practice to pay their employees, which allows them at least a small profit margin.
ProSal Method
And in that method, they will take an estimated projection of what your net-collections would be, based on different factors and conditions or information from past years. The vet would then receive a smaller percentage of that per month. And then there would be a reconciliation or true up at the end of the year. Let’s go through some examples. Let’s say the veterinarian makes 120,000 per year in their first guaranteed base year. And then they collected that amount as well.
While under ProSal, they would maybe knock it back to 80 percent. You would make 10,000 in that scenario per month. And so, they would say, alright, what will knock it back to 80 percent? Then the vet will get a draw of $8,000 per month. And throughout the year, they’ll make 8,000 per month. And then, at the end of the year, they will take whatever the total net-collections were for that vet versus what was paid out.
In that scenario, 8,000 times 12 minus 6,000. And then if there is a difference, meaning, if they collected more, they would then get a percentage of those net-collections. The downside is if you are in a negative balance. Meaning, if you collected less than they paid out, they would generally make you pay that back over time. And what they’ll normally do is they’ll take however much you’re in the deficit for. Let’s say it’s $6,000. Over the subsequent three pay periods, they might take 2000 out of your paycheck until you’re back to zero. Is that fair? It just depends. No one wants to employ employees who don’t cover their salary and expenses. If the vet is entirely unproductive, they can expect a termination letter.
Veterinary Contract Production Compensation
Now, if there are some underlying reasons why a vet is not as productive. This is big in the vet industry right now due to lack of staffing. If you can’t get the vet techs, if you can’t get the front office staff if they can’t have any efficient workflow, and the vet is doing all the things that they didn’t have to do before, that will slow them down, and their collections are going to decrease. Just a side note. You need to make sure there’s language in your employment agreement that states the veterinary practice will provide you with proper support to make your practice efficient.
Back to the draw, it could change over time. Let’s say you had a 120 base. Then you moved into a kind of a decreased percentage per month as your draw, and then you collected 160,000. Well, they would probably bump up your draw to 120,000. And then do another reconciliation at the end of a year. There are many different ways to calculate compensation in a veterinary associate contract. But that’s probably the most common way to productivity. I also find that many vets are just paid a straight base for years one to five. And that makes it simple, to be honest.
Pros and Cons of Employment at a Corporate Veterinary Office
What are the pros and cons of a veterinarian working in more of a corporate clinic setting? First, are you working as an employee or 1099 independent contractor? When working for a corporation, there are a lot of pros. Starting with the benefits typically offered, such as health insurance, retirement, disability, life insurance, sometimes travel, and cell phones. The list just goes on from there. More benefits will be offered to you in a more corporate clinic. Also, the facilities are typically more standardized. If there’s more than one location that you’re going to be providing services at, typically, they’re standard between the locations. And then also support staff. Usually, you’re fully staffed with the people you need and the equipment within the facilities.
Salary Talks, Corporate Practice or Solo?
So, this is great. You’ve got benefits, the facilities are great. Sometimes the pay can be more in a corporate setting. I would say often. You are typically compensated more. Those are just kind of the pros, depending on what you’re looking for. Suppose you’re looking for benefits (which will be provided with any W2 position). In that case, if you’re looking for things that are more standardized policies, also with admin, then that’s considered a pro for a corporate clinic.
Some cons you want to think about are you’re normally not able to negotiate quite as much in an employment contract. When starting your employment with them, it’s typically offered the same sort of agreement for all the other similarly situated veterinarians. Also, you want to think about your compensation. That is one thing that you can sometimes negotiate in a corporate clinic.
Other Important Cons
Some other cons and probably the biggest one. Well, I would say there are probably two. One, there are usually a lot of expectations for how many clients you will see in their animals per day. There are quotas, there are maximums, and there are minimum expectations that you must meet. And if you’re not meeting those, there are consequences to those. That’s something that you want to consider if that’s something that you feel up to. I would say another con is usually the non-compete clauses. They are extensive. There will probably be multiple locations, large miles from each location that you will be restricted to. Also, be careful if you are working as an independent contractor that the agreement does not contain a non-compete clause.
And then, usually, for an extended period, the biggest con of a corporate clinic is those non-compete clauses. Because those can come back to bite you. Going back to the pros, I would say another pro would probably be just marketing and advertising. They’re marketing and advertising on your behalf. They’re bringing in tons of clients and their pets, so there’s no worry that you will have that client base there. It’s easy to build up because you have them supporting you in this setting.
Veterinary Clinic Contract and Benefits
How should you negotiate a veterinary associate contract? There are many things to consider when you want to negotiate your contract or an employment agreement. The first thing you want to understand is how much leverage do you have and what I mean by leverage. I mean, are you just out of your schooling? Do you have any experience? Are you specialized? If you’re specialized and very few are in the veterinary industry, you have more leverage. But you might have a little less leverage if you’re just out of school for general veterinary practice. And then also, if you’ve been practicing and you have a substantial client base, and you have lots of years of experience, you may have more leverage in relation to that.
Once you understand your leverage, you need to understand what you should be asking for. The first thing I always see our clients want to negotiate is their base salary. Base salary or base compensation is the flat you’ll get every month upon continuing your employment. The problem is that veterinarians are normally compensated, not just through base compensation. You’re also normally compensated through collections. That’s the typical sort of layout of compensation for really any type of veterinarian. Even if you’re specialized, it’s normally base compensation, and then there’s a part of collections.
Base Compensation is Not Everything
So yes, the base compensation is important, but there are many other aspects to an employment agreement. Your percentage of collections can be huge. You want to fight probably for a larger percentage of collections over just a base salary because the base salary will never change unless you renegotiate in the future. But suppose you have a substantial client base, and you know you will bring those clients in. In that case, you will want a higher percentage of your collections which you can make well over your base salary. It’s something to consider. I know the base salary is a significant number on an employment agreement. Still, you also want to consider the collection percentage. Because you can make a lot more money with a higher collection percentage if you know you will bring in those clients.
Clinical Office Work Pros and Cons
Now, if you are right out of school and you do not have an established client base, and maybe you’re not replacing someone at a veterinary practice or clinic, they’re just expanding. It will take a while to build up that client base. Then you, in that situation, might want to fight for a higher base compensation or salary for a year or two so that you can establish, as I said, that nice client base. Other things that can be more detrimental to you than even the compensation are those restrictive covenants. And what I mean by restrictive covenants are non-compete clauses and non-solicitation clauses, specifically the non-compete. Right now, the veterinary industry is booming, and practices that are bringing on and employing veterinarians are protecting their interests.
Look Out For The Non Competes
And so, sometimes, these non-competes can be unreasonable and attach to many locations or just many miles from one practice. So, you want to consider that because if you are establishing a client base, you’re working hard, you’re bringing in clients, and then you decide to leave the practice, or they decide to terminate their employment with you, you could have a serious problem. You might not be able to practice in the area. You could even have to up and move your family. Non-compete clauses are extremely important that you want to negotiate in your initial employment agreement. And often, it’s overlooked because it’s something way in the future. You’re excited about this prospective future employer, or you’re right out of school and want to start earning money.
And so, that’s what you’re focused on, but non-competes are those sneaky clauses in employment agreements that can hurt you in the future. I would say more than anything. A non-compete agreement is something that you should always negotiate. They’re normally a mileage from specific locations that you can negotiate. And then also, for a specific period, they can be anywhere from six months to three years.
And I would always try to negotiate that amount of time down and then always the miles down. When you’re negotiating how many miles, you also need to consider, can you find work outside of that restricted area without having to up and move? And then you also want to know what’s restricted. Sometimes the non-compete clauses specifically for veterinarians may just say that the practice of veterinary medicine is very general. I will negotiate that it’s only within your specialty if you’re specialized.
Business Non-Compete
So, non-compete clauses want to negotiate those, most important. Non-solicitation clauses just mean you can’t solicit clients or employees coming with you. And sometimes that period can be negotiated down to six months or a year before you can reach out directly to those clients or to those employees. Then you have your sort of ancillary benefits. In your continuing education, typically you’re given an allowance every year, which is anywhere from 2,000 to 4,000 typically within a veterinary practice. You can negotiate that money because if you don’t, then you must pay for your continuing education to keep your license. So, that’s something I would negotiate as well. And then also any sort of dues, fees, licensing, all those costs really add up.
And we don’t think about that when we’re just looking at the base salary and how much money you’re going to make, but these sorts of costs can be negotiated at the beginning. Then it’s really going to save you a lot of money in the end, and a lot of headaches as well.
Breaking a Corporate Clinic Contract
Can a veterinarian break an employment contract? I think the most important matter is defining what break means. Do you mean, can I terminate the contract, meaning get out of it if I’ve already signed it and have started? Yes, that’s one way to think of breaking the contract. In my mind, breaking a contract usually means you’ve signed the agreement but haven’t started yet. But we’ll kind of look at both of those. Let’s talk about the first one first. Can you break a contract? In any employment agreement, there’s going to be language about how to terminate the agreement. And there are generally four ways to terminate an agreement.
You can do it if the term expires, then there’s no automatic renewal, so let’s say you have a two-year contract, get through the two years, neither party has renegotiated an extension, the contract ends, it’s terminated. Next, by mutual agreement. If either party is like, you know what? This isn’t working out. Let’s move on. The contract can end. The third would be for cause termination.
If one party is in breach of contract and doesn’t fix the breach, then they will have the option of terminating the contract immediately. And then the last way would be without cause termination. And that just means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. In the veterinary industry, somewhere between 30 to 90 days is kind of a standard amount for without cause termination. Just because you’re utilizing one of those four ways of terminating a contract doesn’t necessarily mean you’re breaking it.
Is Negotiation Possible for Non-Compete?
Depending upon where you are, if you’re in a bigger city and there are dozens to hundreds of different practices, you may be able to work after the contract terminates. A smaller radius would be considered more reasonable. Now, there will be employers that try to push the limits of the geographic restriction, and they’ll do it in several ways. One, they could try to stretch out the mileage 30 or 50 miles from your practice location. That would not be considered reasonable in most places. Two, if they are a vet clinic with multiple locations within a city, they may say it attaches to every location they own. If you’re not working at those other locations, it is not fair if that is included in your non-compete. You want to remove that and limit it to where you just work.
Now, what if you work at multiple locations? Well, one or two locations, okay, it could attach to both of those, but an employer may try to be sneaky, and it states any place you’ve worked over the last 12 months it attaches to, and maybe they have four or five locations. And so, they might just try to place you at one location one day per year to attach the non-compete to that. You need to make certain that they are not allowed to do that.
And the easiest way to do that is just to state in the contract that if there are any locations that the employer wants you to work at beyond the initial location, there must be a mutual agreement. When is the right time to negotiate a non-compete? Before you sign the contract. You have no leverage after the fact if you sign an agreement and then come back to the employer.
What are the effects of non-compete clauses in the veterinary field?
So, you want to ensure that they understand that the non-compete will not work for you for whatever reason. People who live in a city have kids who go to school, have family in the area, and cannot move after the contract is terminated. This could be the biggest problem with any kind of employment contract. Others just move to a city for a specific job and do not care because they don’t plan on staying there if the job doesn’t work out.
You need to prioritize what’s most important to you, but the non-compete, certainly for a lot of my clients, is the number one thing. And you need to make it clear to the employer. Look, I’m not going to accept this the way it’s written. If you want me to work for you, we’re going to have to come to a compromise, and some will say, okay, and then others will say, no, take it or leave it. And then it’s up to you to decide whether it’s something you want to leave or not. So, is 10 miles a reasonable non-compete for a vet? For the most part, yes, it would be considered reasonable, but you must take into account all the other factors I just talked about.
Can You Break a Veterinarian Contract?
Can veterinarians or veterinary associates in animal care practice break their employment contracts? And the short answer is yes. They can. However, if this means that veterinarians or the employee, in general, are breaching the employment contract and not adhering to the employment contract terms, then they would likely open themselves up to liability, which includes litigation costs and arbitration as set in the employment agreement.
The employer can ask for damages that might include recruitment costs for new veterinarians for the practice, they may ask for administrative fees, credentialing fees, and the list kind of goes on from there because of the resources they spent to find a new employee. So, it’s never a good idea for veterinarians employed in veterinary practice to break employee agreements. We never advise our veterinarians or veterinary associate to breach their employment contracts. The best way to break or terminate the contract is by doing it exactly as outlined in the contract agreement. Typically, there is a clause called a termination clause, and there are normally three ways to terminate a contract agreement.
Mutual Agreement Termination
The first way is that both parties, the employer and employee, mutually agree to terminate the contract and go their separate ways. However, this is rare, and we don’t see it happening often.
For Cause Termination
The second way is for-cause termination. And this is typically weighted more towards the employer. The employer can terminate the veterinary employment contract without notice if any egregious acts happen; typically, they are listed on the veterinary employment agreements themselves. This might be violating a law, being convicted of a felony, and losing your license to practice animal care. And again, the list just goes on from there.
Without Cause Termination
Then the last way to terminate a contract would be for no cause, and a no-cause termination is typically outlined in the employment agreement. You must give the other party 60 to 90 days’ notice, and then the contract is terminated, and you can go your separate ways.
Proper and Effective Notice of Termination
The veterinarian’s employment contract also typically outlines how veterinarians or a veterinary associate will give that proper notice. It normally has an address, and you would either mail in a letter, hand-deliver it, and in some rare instances, you’re allowed to email it. We also encourage our clients to give notice in multiple ways, as long as the law allows for it. The proper way to save the employee from liability is to properly terminate a contract, so both parties can save on resources by avoiding litigation as permitted by the law.
Is There Any Repercussions?
But when you’re deciding to do this or break the veterinary employment agreements, you also want to keep in mind, are there any repercussions? Meaning, do you have to pay back any signing bonuses, or any relocation expenses, so you are near the job site? Typically, those have a payback provision or a forgiveness period. And if you are to break or terminate the veterinary contract within that time, you must repay those. So, that is something you want to look at in your veterinary contract, and keep that in mind whenever you decide to break or terminate the veterinary contract agreements.
Restrictive Covenants
And then lastly, most veterinary employment agreements have a provision with restrictive covenants. Restrictive covenants include your non-compete and non-solicit clauses to clients and employees in animal care practice. In the non-compete clauses, you want to ensure that you’re not practicing animal care within the restricted area of practice during your restricted time, as determined by the noncompete clauses in your veterinary employment agreement. Typically, you’re not allowed to solicit clients, which means veterinarians leaving the job can’t ask clients or entice them to come with the veterinarian to a new job location, and the same for employees at your clinic or practice.
In summary, you never want to breach a contract. If you want out of it, you need to terminate it properly and give proper notice to your employer. And then you also need to remember, are there any repercussions to look for? Sort anything you’ll need to pay back, like signing or relocation bonuses, and then look at those restrictive covenants to ensure you’re not violating any of them.
Lawyer Review of a Non-Compete Agreement
Veterinary practice noncompete clauses can be rather complex for the employee and are certainly relevant to your work life moving forward. Some people prefer to take their veterinary practice agreements to a lawyer to have them review said veterinary agreement before they sign on the dotted line. Doing so will likely give the signer some peace of mind, and it will certainly make it less intimidating to try to figure out if the documents that you just signed are in your best interest or not. Beyond the non-compete clauses, veterinarians must also determine their malpractice insurance responsibilities if the veterinarian’s contract is terminated. What type of professional liability policy did you have?
If you would like more information about employee non-compete agreements, how they operate, the law that covers noncompetes, and what you should do if a company gives you an offer and you are asked to sign one, please contact us today! We will be more than happy to discuss the content of clauses of the agreements veterinary practice, average job wage, a different approach in negotiating the veterinarian’s contracts clauses, and other resources.
https://www.chellelaw.com/wp-content/uploads/2022/07/Blog-38-scaled.jpg14402560adminhttps://www.chellelaw.com/wp-content/uploads/2020/01/cropped-favicon-1-300x300.pngadmin2022-05-04 15:54:172023-04-19 11:39:58How is Veterinarian Production Calculated? | Veterinary Contract
