Can a Dental Associate Break Their Contract? | How to Break a Contract for a Dental Associate

Can you break a dental associate contract? The most important thing is what you consider breaking a  dental associate employment contract. In my mind, it could be two things, and the analysis of those two things is very different. First, breaking a contract could mean you have signed an employment agreement but have decided not to go through with it. And so, in that mind, I think that would be considered breaking the contract. And then the second one would be, you’re in a current agreement, and you want to get out of it, is that considered breaking a contract? The first one, yes, I would consider breaking a contract. The second one is just terminating the agreement, probably not breaking the contract.

Not Interested in Continuing the Practice

Let’s take, for instance, you’ve signed an agreement and don’t want to go through with the job. In that scenario, let’s say you’re in your last year of training. You’ve been approached by practice, and they say, hey, we’d like you to come in, be a dental associate, you negotiate the dental associate contract, sign the agreement. Then something happens, or you don’t want to go through with it. It could be a family issue, could be a better job opportunity. 

Several things could make someone not want to go through with it, but how do you handle that scenario? Well, one, it may be stated in the agreement that if the dental associate doesn’t start, these are the consequences, and it could be a penalty. They may say there are liquidated damages like a monetary amount you must pay because you’re not going to start. It could come after you for recruitment fees or any credentialing fees they’ve paid to get credentialed if they assisted in your licensure. Or any of those types of things. Breaking the contract, meaning deciding not to start, could open the dental associate to liability.

Reasons Why Some Employers May Be Forgiving About Breaking a Contract

Now, I find most employers reasonably understand for a couple of reasons. If somebody doesn’t want to be there, they don’t want to force someone to start or make a big stink about them not coming. Now, the more extended notice you can provide the employer, the more likely it is that it can be a peaceful break. If you have an employment contract and you’re supposed to start on July 1st and on June 30th, you say, oh, by the way, I can’t begin to. Well, that employer is going to be angry. They may come after you for minor damage unless there’s an excellent excuse. 

And when I say come after you, they could sue you, or if there’s an arbitration clause, they could go to arbitration. If you have more notice, you need to come to the employer and say, look, the situation has changed. I apologize for backing out. Due to these reasons, I can’t start. I appreciate all that you’ve done for me. I was looking forward to starting here, but I’m trying to give you as much notice, you can find someone to replace me. In that scenario, most employers will be understanding and won’t make a big deal out of it. That’s breaking the contract if you’ve signed it and don’t want to start.

4 Ways You Can Terminate Contracts

I don’t consider breaking the contract if you’re in a current employment agreement and want to get out of it. There will be a language in the agreement that states how to get out of the term. There are four ways to terminate a contract.

Fixed Term and Mutual Agreement

One, there could be a fixed term, meaning how long the contract is. There’s no language about renewing, meaning there’s no automatic renewal language in the agreement. The term ends, neither party wants to continue it, the contract is made, and the contract terminates. You could terminate a contract by mutual agreement, meaning, both parties say, you know what, this isn’t working out. We can both get out of it, no harm. That’s it.

With Cause Termination

The other one would be a breach of contract. If one of the parties is breaching the contract, let’s say the employer isn’t paying on time or there’s a bonus structure. They’re not paying the dental associate the proper amount. In that scenario, the dental associate would provide written notice to the employer saying you’re in breach of contract. Usually, they’d have a short period to fix the breach, a cure, somewhere between 15 to 30 days. And then, if they did fix it in that period. The contract couldn’t be terminated for-cause. 

Without Cause Termination

The last way, and usually the most, I guess, common practice for a contract to be terminated is called without-cause termination. Without-cause termination and this is probably what some people may think is breaking a contract. It means any party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. For most dental associate contracts, that’ll be somewhere between 30 to 90 days. And in that scenario, if the dental associate wanted to terminate the agreement, they would give the employer proper notice in writing.

If it was 60 days, they give them 60 days’ notice; they say, per the agreement, here’s my 60 days’ notice, my last day of work will be this, appreciate the opportunity. And that’s it. I guess the only way you could break the contract, meaning be in breach of contract, would be if you gave notice, but it wasn’t enough. If the contract said 60 days and you only gave 30, they could come after you for damages like lost profits, replacement, recruiting fees, and all that type of thing. And then sometimes, in the agreement, it’ll state if the dental associate leaves at a specific time. In that case, they’ll have to pay back signing bonuses, relocation assistance, credentialing, licensing, and all those fees. 

Tip From Dental Associate Contract Lawyers

So, can you break a contract? Yes, you can break a contract, but there will be repercussions. But for the most part, if your associate contract has without-cause termination, it gives you options to get out of the agreement at any time. And if you have a contract that doesn’t have without-cause termination, do not sign that contract. It is an enormous red flag. Usually, that means employers have a challenging time retaining dental associates. And so, they’re trying to ensure they can’t leave within a certain period. You do not want to be in that position.

Other Blogs of Interest

• How Long Are Most Dental Associate Contracts?
• What Should be in a Dental Associate Termination Letter?
• Difference Between a Dental Associate Offer Letter and a Contract

How do you Terminate a Dental Associate Contract Without Cause? | Agreement Termination

How can a dental associate terminate an employment contract without-cause? Let’s first talk about the basics of terminating a contract. There are four general ways of terminating an employment contract. 

One, the initial term expires, and there’s no renewal. In the contract, it’s usually going to state how long the contract lasts and the term of it. Usually, it’s somewhere between one to three years. However, I’d say more and more contracts will have no fixed term. Meaning they’ll go on forever unless terminated by a party through one of the three ways we will discuss. So, look at how long it lasts and whether it automatically renews. If it does, it’s usually for one-year terms, and then we continue until terminated. That’s the first way parties can terminate a contract. 

Second, with mutual agreement. If both parties say, hey, it’s not working out. We don’t need you to give us any notice. Let’s wash our hands of it and move on. That’s fine. So, either party can terminate by mutual agreement. The third way is with-cause termination. If one party is in breach of contract, they must provide written notice to the other party. Then that party would have a certain amount of time to fix the breach. They will do that during what’s called a cure period. The cure period allows one of the parties accused of being in breach of contracts to fix whatever the problem is. Usually, it’s 15 to 30 days.

Terminating Employment via Without Cause Termination

Let’s take a dental associate with productivity-based compensation where they’re earning a bonus monthly. And the employer isn’t paying the monthly bonus, even though the employee earned it well. The dental associate could give them written notice that says, hey, you’re in breach of contract. You’re supposed to pay me my monthly bonuses, and you’re not. If you don’t fix this within 15 days, I can terminate the agreement immediately for-cause. For-cause termination is the third way.

Now, the purpose of this blog is, how does the dental associate terminate the contract without-cause? So, this is the most common way of terminating a contract. In any dental associate agreement, you must ensure no-cause termination, and I’ll say why. Usually, it would be somewhere between 60 to 90 days.

And that means either party can terminate the agreement anytime with a certain amount of notice to the other. As I said, somewhere between 60 to 90 days is a kind of industry standard. In that scenario, let’s say a dental associate got a better job offer and wanted to move on. They give a letter to the practice stating, I’m using the without-cause termination section in the agreement to terminate it. I will work the 60 days as required. And at the end of that, I’ll terminate the agreement, the agreement terminates, and both of you can move on. 

Employment Agreement Red Flag

It is an enormous red flag if you have a dental associate contract that does not have without-cause termination. And why? If you can’t get out of a contract, you’re there for as long as the term. If it’s a three-year contract and there’s no without-cause termination, you must stay for the three years, no matter what. Now, why would you want to leave? Let’s say the volume would be this amount, and it’s not, and they pay you on pure productivity. You’re getting paid a quarter of what you expected. Maybe the hours are bad, or the call is bad. Or there’s a lack of staffing which makes you completely inefficient. Or perhaps the practice owner is just a jerk, and you don’t enjoy working with him.

There could be dozens of reasons you’d want to leave an employer. But if you can’t terminate the contract at any point, you are stuck. Why would an employer not have without-cause termination in their agreement? Well, the first thing is they’ve had an enormous turnover. People keep leaving. And so, they’re trying to ensure that someone can’t leave before a period. That’s kind of the first thing that I look at when I see no without-cause termination.

Summary

Rarely, it wouldn’t have without-cause termination. But if it’s not there, it’s usually because the employer is a bad manager, you’re a terrible business person, etc. And they can’t keep people on staff. And therefore, they’re trying to secure them for a period. So, no matter what, you want without-cause termination, somewhere between 60 to 90 days. Now, why that amount of time? In any healthcare professional, there needs to be continuity of care. It would help if you considered that. 

So, there need to be arrangements to either hire a new dentist to take over or refer the patients out to someone else. That’s usually why there needs to be a little lead time to ensure continuity of care. It’s kind of paramount to the termination. Well, that’s about it for without-cause termination.

How to Get Out of a Dental Associate Contract?

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

Are Contractual Provisions For Length and Termination Present?

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

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

With Cause Termination

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

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

Without Cause Termination

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

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

Notice Period

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

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

Dental Associate Contract Red Flags

Associate contract red flags. There are dozens of red flags in a contract. However, there is a handful that is necessary to take a solid look at, and we’ll go over those. The first thing would be no without-cause termination. In any employment contract, there will be a term, which means how long the contract is. And termination, how people can terminate the contract.

Parties can terminate contracts in several ways. The term could end, and it’s not renewed. Parties can terminate it by mutual agreement. Or for-cause. Suppose one of the parties breaches the contract but doesn’t fix the breach. The other party generally has the option to terminate the contract immediately. And then, the last and most important way is without-cause termination.

This means that either party can terminate the agreement at any moment with a certain amount of notice. Normally, it takes somewhere between 30 to 90 days. I find this especially important for dental associates for whatever reason. Suppose the associate has a two-year contract and cannot terminate without-cause. You’re essentially stuck there for two years without the ability to terminate the contract at any time. Unless the other party breaches the contract.

Employment Red Flags: Net Collections and Long Notice Period

If an associate is on net-collections, volume, and compensation, the owner will generally overestimate what the associate will make. And so, they can get into a job if they’re not paid a daily rate or a salary. It’s more of eating what you kill and getting a percentage of whatever is collected and the volume isn’t there. And you’re not making nearly as much as you expected.

You still would have to play out the rest of those two years. And that is a situation no one wants to be in. So, the first thing is to make sure there’s without-cause termination at any moment. Sometimes, the employer will say, you can’t give notice in the first year, or in the first six months, whatever. No, anytime, if you start, you provide notice, you do your, whatever the notice period is, move on. It’s necessary. Two, compensation. If you’re a dentist earning on either net-collections, encounters, or some volume metric. And you are not 100% certain that the volume is there for you. You need to be very careful about taking that job.

Ensure Guaranteed Salary

A daily rate or a base salary, especially in the first year or two, insulates the associate dentists from just getting completely screwed by an employer. Someone who’s unwilling to make an income guarantee and bring in a dentist. But in that circumstance, only compensate them based upon volume metric. Suppose a dentist starts and their compensation is based purely on production and the production is entirely out of their hands. They’re not doing the marketing, it is on the employer to drive the business, it’s a problem.

So, for anyone new, maybe just out of training, it’s important to have a guaranteed salary or daily rate. Once you’re there, maybe you’ve been there a year or two, and you see that the volume is there. Potentially you can make more under the collections model. Well then, talk to the owner about switching. But at the very beginning, I find that most places try to lure dental associates in with big numbers. It rarely shakes out that way. 

Dental Employment Contract and Non-Competes

Another big red flag in dentistry is the non-compete. This is one thing that varies from state to state. Each state has its view on what’s a reasonable non-compete. Non-competes are enforceable in almost every state. California, New Mexico, and Massachusetts are three of the few states where they’re completely unenforceable. But for most states, it must be a reasonable length, usually about 12 months.

Sometimes they’ll try to do two years and then some reasonable geographic restrictions, usually somewhere between 5 to 15 miles. If you have a five-year, 50-mile non-compete, that’s crazy! You don’t want to sign something like that. You want it to be no more than a year. And no more than that, I would prefer 10 miles from your primary practice location.

Many of these big corporate dental offices have multiple locations in the area. They will state it’s 10 miles or whatever the geographic restriction is from every place they own. Even if the associate didn’t provide care or work in that location. No, you can’t agree with that. It needs to state that it will only apply to the areas where the dentist provided care. And even then, try to limit it to no more than two locations. In big cities, corporate dental conglomerates continue to gobble up some dentist-owned practices.

If someone has 10 locations in a city and it’s 10 miles from 10 locations. It’ll knock you out of your city. 

So, what’s in the non-compete is certainly important. And last, I’ll touch on the benefits briefly. The employer should arrange for your license, DEA registration, and continuing education if an associate is an employee. If you’re moving from out of state, reasonable moving expenses and reimbursement are normal things an employer should pay for. So, think about that as well.

Consultation with Chelle Law Dental Contract Lawyers

When dental contracts are reviewed by an experienced lawyer, you will find great financial benefits which end up outweighing the cost of the contract’s review.  If you are in need of legal assistance with a dental contract review schedule a review with Chelle Law today!