Is a W2 or 1099 Better for a Dental Associate? | Is an Associate Dentist Better Off as a W2?

Is a W2 or 1099 better for a dentist or dental associate? I would say it depends—just explaining the difference between the two. If you have an independent contractor agreement, then you’ll be a 1099 employee. It means you’ll receive a 1099 at the end of the year from the employer, with whom I guess you had a relationship. Then a W2 is just a salaried employee. And so, you’ll have an employment agreement if you’re a W2. Independent contractor agreement if you’re 1099. The difference between the two is in the employment agreement. The dentist will benefit from benefits, meaning literal benefits like health, vision, dental, life, disability, retirement, and the usual things you get in a typical job.

They’ll also likely pay for your licensing board, DEA registration, continuing education, and maybe associations in societies. They’re going to support the dentist with those ancillary benefits financially. And then they’ll have compensation, straight base salary. Many dental associates have daily rates, or perhaps it could be a hybrid of a base salary, plus the dental associate will get net-collections. They’ll often have a smaller. You can almost call it a draw or the dentist could get paid a certain monthly amount. Then they’ll get a percentage of any services collected based upon what they did. Generally, in that scenario, it always depends. Still, if it’s a hybrid, it’ll usually be somewhere between 18 to 25% percent of the net-collections over a certain amount. That’s not uncommon.

Advantages of Working as an Employee in Terms of Benefits

That’s what an employment agreement and kind of the W2 relationship is for dentists. Now, in an independent contractor agreement, generally, you’re not an employee, and you’re not going to receive such employment benefits. They may pay for your malpractice insurance, but unlikely they’re not going to pay for your licensing. DEA, they’re not going to provide any actual benefits. So, all of that is going to be on the dentist. And then, as far as taxes go, federal or state taxes will be taken from whatever you’re getting paid. An independent contractor agreement’s theoretical benefit is that it should be accessible in and out. The notice requirements should be much less than in an employment agreement. There shouldn’t be a lot of strings attached. Hopefully, there’s no non-compete, but I don’t find that’s the case in practice. 

Typically, I find in most independent contractor agreements for a dentist. There is a non-compete. Usually, the without-cause termination notice requirement is like the employment agreement. It may make sense if it’s a part-time job where you’re just filling in randomly. That certainly would make sense to have an independent contractor agreement because the employer will not want to provide all benefits of someone’s working once every two weeks. In that scenario, a 1099 independent contractor agreement relationship makes total sense. If this is like a full-time gig for a dentist, I don’t think the independent contractor relationship makes sense to them. Now, for expense purposes wise, in this scenario, the dentist should create an LLC. Then other things that go along with that. They can deduct all those expenses for the year the employer spent.

Why do Employers Require an Independent Contractor Agreement?

Most employers require an independent contractor agreement, even if the dentist is full-time. It’s because they want to avoid paying employment tax, and that’s the truth. The IRS has a 20-factor test to determine if an employee or an independent contractor is an employee or an independent contractor. And so, if you run through the factors of that test, you could Google that. I mean, it’s everything else. Most of the time, in the scenarios where the dentist is working full time. But they must sign an independent contractor agreement that they fail the test. They’re almost always employees. Some things go into that: does the employer dictate where and when the independent contractor will work? Do they provide them with supplies, support, or an office?

I mean,  if a dentist was working for somebody, they’re going to be provided. Now, it also gets into the benefits, the comp relationship, and everything else. For the most part, an employment agreement is a way to go if you’re full-time. An independent contractor agreement will make sense if it’s a hit-or-miss part-time fill-in. But if this is the only job you work five days a week, an independent contractor agreement, in my opinion, doesn’t make a lot of sense. You’re going to lose out on all those benefits. And usually, you’ll get all the downsides of the restrictive covenants too. So, a non-solicit, non-compete maybe depends upon what type of liability insurance you have. If you must purchase tail insurance, that’s on you as well—just a lot of things to consider.

Other Blogs of Interest

• Can a Dental Associate Break Their Contract?
• What You Need to Know about a Dental Associate Employment Agreement 

Dentist Independent Contractor Tax Deductions | Tax Deductible Considerations for Dental Independent Contractors

What deductibles can be taken by dentists’ taxes when they are independent contractors? Suppose you are an independent contractor or received an independent contractor opportunity. Then, at the end of the year, you’ll receive 1099, and no taxes are deductible from the employer’s provided compensation. You’ll not get a W2, and then you will be responsible for paying those taxes quarterly or at the end of the year. If you are considering being an independent contractor and haven’t before, what are some things you need to consider? And then what are the possible tax deductions advantages of doing that? First, I’m not a tax attorney. I’m an employment contract attorney.

Tax Deduction Expenses For Dental Professionals

So, I’ll give you kind of the bare-bones knowledge that I have based on drafting and reviewing independent contractor agreements for the last couple of decades. But I would suggest if you are thinking of beginning as a first-time independent contractor, you should ask for advice from an accountant. I’m not sure a tax attorney is necessary. And then, you would set up an LLC, a bank account, and then run everything through that. But they can walk you through the tax advantages for setting that up. As I said before, if you are a 1099 independent contractor, you would essentially think of yourself as your own little corporation. So, you’d set up a limited liability company/corporation. Then you would get your own federal tax ID number, set up your bank account, and run all the compensation through that.

All the business financial expenses would go out of that as well. And then you would be able to deduct those things at the end of the year. I’m going to go through a list of things you can deduct briefly, and then we’ll talk about why an independent contractor arrangement might not make the most sense. First, you can deduct mileage, health insurance premiums, home office deductions, work supplies, travel, car expenses, and cell phones. In this case, be either business or malpractice insurance, and you can depreciate the assets. You can deduct all the things that would go into working as a dentist in that situation. 

Suppose you’re just coming into the practice to work a few times a week, and they’ll pay you as an independent contractor. You won’t deduct the supplies they give you, or if the practice somehow decides to pay for your annual malpractice premiums, you couldn’t do that either.

Making an Independent Contractor Agreement Worthwhile

But there are a whole bunch of things you can do and some creative ways of making it worthwhile. Now, you’re not going to get all the ancillary benefits that a normal employee would like health, vision, dental, disability life retirement. They will not pay for your dental license, DEA registration, or continuing education. You won’t get any paid time off. You’re not going to get any of that as an independent contractor. But as an independent contractor, it should be easy in, easy out. You can work as little or as much as you want. And you are essentially or should be, in charge of your schedule. There are situations where being an independent contractor would make no sense. And then there are probably other situations where being an employee wouldn’t make a lot of sense either.

Tax Credits and Deductions for Dental Employees

It’s situationally dependent, so you must weigh if I have to pay for these things. However, I can ultimately most likely dig into most of them. Still, you won’t be able to easily get all the insurance if your only work is as an independent contractor. Health insurance is tough to get. Disability is not tough to get but expensive. Retirement, like those things, is not easy to set up. And I know that some dentists are like, I don’t want to deal with that. I want to be an employee. I want them to set everything up and opt into it. I don’t want to have to deal with all of this stuff on my own. And that’s great. But suppose you are an independent contractor who pays for everything. 

In that case, you should probably get compensation at a little higher level than if you are an employee because the employer doesn’t have to pay employment tax.

They don’t have to pay for anything I went through: the licensing, the continuing education, the paid time off. Those are their exemptions. So, it would make sense if they were free from all those business financial expenses. That would at least pass on in some percentage to the dentist. Those are the deductions on the taxes that a dentist can take when they’re an independent contractor. There are a bunch of factors that go into whether it makes sense or not. But hopefully, that was a little bit of information you may not have had before.

How to Negotiate a Dental Associate Contract | Dentist Employment and Dental Negotiations

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

For most dentists, the most important things are salary. Is it a base salary? A daily rate? Is it a net collection? How do you terminate the contract? Can you get out of it with a certain amount of notice or benefits? Are they paying for your license, DEA registration, credentialing, or continuing education, and are there signing bonuses and relocation assistance? Will you be paying them back if you leave within a certain time? Probably the two highest priorities are: who’s paying malpractice insurance? And who must be paying for tail insurance after the contract terminates if it’s a claims-made policy. 

Also the non-compete. This is some people’s absolute, most important thing in the contract. If they’re tied to a community, kids in school, or family, they absolutely can’t leave. Then you need a reasonable non-compete that’s not going to make you move entirely out of the area.

Know The Average Pay for an Associate Dentist 

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

Other Things to Consider Beyond Compensation

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

Mostly, anywhere between one to two years and 5 to 15 miles from your primary practice location would be reasonable. If you’re in a non-compete that’s more than two years, or it knocks out like multiple counties. Or maybe they’ve attached the non-compete radius to 10 locations. Say, it’s a corporate practice in a big city having 10 locations. And they’re saying, well, you can’t work within 10 miles of every site we own. That’s not a reasonable non-compete.

The actual negotiation will depend on two things. One, do they give you an offer letter, or do they give you the employment agreement? If they give you an offer letter, they expect those terms will be negotiated in advance. Then incorporated into the employment agreement. And then, they’re going to give you the employment agreement. Sometimes it’s challenging coming to terms with the main parts of an offer letter without seeing the full employment agreement. If I had a perfect scenario, there would be no offer letter. They would give the employment agreement.

Then you’d completely understand what the work entails and the expectations for both parties. You could agree to a salary, the length of term, that there’s a non-compete, that’s the things they’ll pay for. But when you see the specific language in the contract, it could significantly change the way you look at its value.

You Can Negotiate The Contract Even After Signing the Offer Letter

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

It usually means they’re difficult to work with down the road or have a very rigid and unprofessional environment. So, if you find that someone says, take it or leave it, I would leave it and move on. And try to find a better opportunity. I’m just telling you. If they take the mindset that they’re not going to change anything in the contract, like nothing at all. No change at signing bonus, relocation assistance, benefits, anything like that. It is a bad sign moving forward. 

Top Tip: Check the Without Cause Termination

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

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

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

Talk to Dental Associate Contract Lawyers

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

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

Are Associate Dentists Independent Contractors? | Dental Independent Contractor

Are dental associates independent contractors? In short, it depends upon what kind of agreement they sign. Any dental associate will be either an employee or you’ll sign an employment agreement. Or you’ll be an independent contractor and you’ll sign an independent contractor agreement. Let’s talk about the differences between the two. Well, first, if you sign an employment agreement, you will receive a W2. Taxes will be taken out, it’ll usually be provided benefits such as health, vision, dental, life, retirement, and disability. They’ll pay for your dental license, DEA registration, usually some amount for continuing education, and you’ll get paid time off. There are certainly benefits as far as ancillary benefits if you’re an employee versus an independent contractor. As an independent contractor, the dental associate will not be given any of those things. 

So, they’ll have to pay for nearly all the benefits themselves. They’ll have to pay for their license, their own DEA. Professional liability insurance is one thing that many practices will pay for, even if it’s an independent contractor agreement. However, if it’s a claims-made policy, which it normally is, the dental associate would be on the hook for tail insurance. The benefit of an independent contractor agreement, or at least theoretically, is that it should be easy in and out. Meaning that either party can get out of the agreement quickly. I don’t find that’s usually the case. Most practices still include the negatives of an employment contract in an independent contractor agreement and don’t offer any benefits.

Factors That Affect Dental Associate Employment Agreement When Contracts Are Completed

One of the main points I discuss with the dental associate about their contract. What are the things that will affect you after the contract finishes? Those would be: do you have to repay anything? Like signing bonuses, relocation assistance, or any licensing fees. And if you leave within a certain period, do you have to pay those back? Second, who pays for tail insurance? As I said before, if it’s a claims-made policy, you need to purchase tail insurance, then who’s responsible for that? And then, more importantly, the restrictive covenants. Those will be the non-compete and the non-solicit. 

A non-compete is, you can’t for a period, usually a year or two, work as a dental associate within a specific geographic region. Usually 5 to 10 miles from the practice location that you worked at, or maybe multiple practices. The independent contractor agreement, ideally, wouldn’t have any of those things in it, but I find that they usually do. 

What Is the Benefit of a Dental Independent Contractor Agreement? 

What is the benefit of an independent contractor agreement? Well, it depends upon the compensation. A dental associate would have to do the math. Alright, if they’re offering me an employment agreement, and the compensation is this. In contrast, if they’re offering me an independent contractor agreement, my compensation is this? 

The reason why they’re different is if the employer doesn’t have to pay any of the benefits. Which usually could add up to thousands of dollars a year. Theoretically, dental associates should make more under an independent contractor agreement. Suppose you receive the same compensation but are offered one versus the other. It doesn’t make sense to go the independent contractor route. You’re going to have the same restrictive covenants, you’re going to have the same compensation.

But then you’ll have to pay for all the expenses of being a dental associate. Now, you could form an LLC and then expense those as business expenses. But still, it’ll likely be more expensive for you to get your health, vision, dental, life coverage, etc. than if you went through a group plan with an employer. Now, most dental associates, honestly, don’t have the option. I mean, most practices aren’t going to say, “Okay, you can be an employee or independent contractor. I don’t care. It’s up to you.” Most of the time, you’re just going to figure out what they are offering. And then what are my alternatives elsewhere? If I were a dental associate, the employees’ route would probably make the most sense, at least at first.

Volume-Dependent Independent Contractor Agreements

A lot of the independent contractor agreements are kind of volume-dependent. Maybe you’ll get a daily rate, but perhaps it’ll be based on your collections, your encounters. And when you enter into a practice, they make it sound great, but the volume indeed cannot. I don’t want to say usually, but many times it’s not what they told you during the interview process. If you’re being paid purely on productivity and the volume’s not there, it’s a problem.

And if you decide, alright, this isn’t working out, and you leave. Well, you still have all those negative things I mentioned. The restrictive covenants, paying back the bonuses, the tail insurance, etc. So, is one better than another? It depends on the situation, but as a dental associate, you need to think, well, which one best suits me? And if it’s the same terms for both, it doesn’t make sense to be an independent contractor. The main reason why employers do this is so they can avoid paying employment tax. I mean, they’re not going to say that, but that’s at least I find why most of them do it.

Dental Associate Non-Compete vs Non-Solicit | Solicitation Concerns for Dentists

Non-solicitation clauses versus non-compete clauses for dental associates. What’s the difference? What’s the similarities? And what is typical in a dental employment agreement? Let’s start with non-solicitation clauses. This prohibits soliciting patients, employees, or third-party contractors for a specific period after the contract terminates with your dental practice. What this looks like is they either terminate you, or you terminate your employment with the dental practice, and you leave. A non-solicitation clause states that for a period, typically one to two years, you are prohibited from reaching back out to those employees of the dental practice. Or to the patients to whom you had provided dental services while you were an employee. Solicitation, sometimes, is defined in the dental employment agreement itself. It may say you’re prohibited from directly soliciting or indirectly soliciting.

Associate Dentists Can Have Restrictive Agreements

If you see a language like that, it’s important to see within the employment agreement if it’s defined; if it’s not, it’s customary that you should reach back out to that prospective employer and ask them to define those terms for you. And to me, directly soliciting means typically reaching out to entice and encourage those employees or patients to come with you. Now, if you’re leaving the dental practice and a patient or an employee asks, where are you going? You can tell them. That’s not a solicitation. Solicitation is when you are the one who initiates the contact, you’re reaching out, you’re trying to poach those employees and those patients; that’s when you would violate a non-solicitation clause. 

Let’s talk about general advertisements concerning a non-solicitation clause. Sometimes, the employment agreement directly outlines this, and it’s always best to start there first, looking at the clause itself. But if it just says you cannot solicit, normally, general advertising is not considered a solicitation. So, that’s a billboard, social media advocacy, news, and things like that, not a solicitation. You would only be in danger of violating a non-solicitation clause when you reach out directly to those patients and employees. What this looks like is maybe you are sending employees or clients lists. Likewise, you’re getting their addresses and sending letters directly to them, or you’re seeking them out directly, things like that would be a solicitation. 

What Are the Consequences of a Non-solicitation Clause?

What are the consequences of a non-solicitation clause? Sometimes there are liquidated damages. You may have to pay tens of thousands of dollars if they find you in violation. And then usually, I would say there is equitable relief. And what that looks like is if the dental practice feels like you violate their non-solicitation clause, they can bring it before a judge. What they would do is they would declare an injunction, or they may sign something like a restraining order simply stating that you cannot solicit those employees/clients. That’s typically what a non-solicitation clause looks like. They’re standard. Now, let’s look at and talk about a non-compete clause. A non-compete clause is like a non-solicitation clause because it’s a promise not to do something; you promise not to compete with a dental practice. 

Also, a non-compete clause is typically for the same period as the non-solicitation clause. So anywhere between six months to two years. The non-compete clause is also going to have a restricted area. This could be miles, it could be city blocks, it could be counties, or it could be municipalities. It just kind of depends on your classification, what state you’re in, and are you in rural or are you in the city? If you’re in New York City, I always use this example. You wouldn’t use miles for a restricted area in a non-compete clause. You would likely use city blocks. 

Enforcement of Non-Compete and Non-Solicitation

We’ve talked about a non-solicitation clause and a non-compete clause. Again, with the non-compete clause, another similarity is how it’s enforced. So again, there could be a liquidated damage clause. Which would state that if the employer finds you violating the non-compete clause, you could pay tens of thousands of dollars. Also, there’s equitable relief, meaning the dental practice would go before a judge. They would ask for an injunction or a temporary restraining order. Which again is a piece of paper that states you cannot compete in that restricted area. Non-compete clauses can be a little bit more complicated than non-solicitation clauses. And what I mean by that is a non-compete can attach to multiple locations.

It could be your primary place where you provide services. Also, it could be any location where you provide services, or it could be any location that’s owned and operated by the practice. So again, the golden rule is that you always want to refer to your employment agreement to ensure you fully understand what you’re signing. Otherwise, this could have big implications in the future after your employment terminates. Also, another similarity, non-solicitation clauses, and non-compete clauses are typically found in the same part of the contract under the restrictive covenants. Restrictive covenants just mean a promise not to do something. You’re promising not to compete with a dental practice, or you’re promising not to solicit.

Is a Non-Compete Enforceable Against a Dentist?

Is a non-compete enforceable against a dental associate? First, there are a handful of states in the United States where non-competes are completely unenforceable. However, you could count them on one hand. It is very likely if you’re reading this blog, the state you’re in does acknowledge reasonable and enforceable non-competes. So, I’m just going to talk about the states where they are enforceable and what they would consider whether it’s reasonable or enforceable. In your dental contract, there will be a section called restrictive covenants. And that section will have a non-solicitation clause, a non-disparagement clause, confidentiality provisions, and then a non-compete. 

What Is Non-compete?

And a non-compete simply stops you from working in your specialty for a period within a specific geographic area. What would be considered reasonable for all those things? First, it will likely list what you can’t do. And for the most part, it will say the practice of dentistry. If you have some kind of a multi-specialty dental practice and you can do different things, and you’re only doing one of those things for the employer, I would make sure that the specialty restricted is the one you’re only doing for that employer. That way, you have other options after the contract ends to do other things. 

For instance, maybe you’re doing orthodontics for a dental practice, and you could still do general dentistry. Maybe it’s a year-long non-compete, and you don’t want to move; you could at least do general dentistry for a year and then hop back to do orthodontics after the year ends. That’s a little bit into what is listed as a specialty in the non-compete. As far as how long, most non-competes for a dental associate last somewhere between one to two years. I think it would likely be unenforceable if it’s longer than that. You always want a shorter non-compete. If someone is offering you a non-compete that’s three years or five years, that’s completely unacceptable and very likely unenforceable. 

Geographic Restriction of the Non-Compete

Regarding the geographic limitation, that’s kind of for the, I guess the negotiation usually turns to, so as these corporate dental practices continue to gobble up these dentist-owned practices, they continue to multiply. In a city, they may have multiple locations. In a big city, there are dozens of locations. If the non-compete states you can’t work within, let’s just say 10 miles of every location of the employer, and they have 10 locations in your city. It could effectively knock you out of practice in that city, which I don’t believe would be considered reasonable and would likely be unenforceable. You want to make sure when it comes to how many locations the non-compete attaches to. It’s only ideally the locations you’re working at and then no more than two locations. 

If it were just 10 to 15 miles from your primary dental practice location, that would also be considered reasonable and enforceable. Let’s say you signed a non-compete, and then you think, alright, they’re not going after me, I’m just going to break it anyway. And then you establish dental practice within the geographically limited area. What can happen? Well, they can sue you. If your contract has an arbitration clause, they could go to arbitration over it. They could go to court and obtain a temporary restraining order or an injunction, which would stop them from working. They could sue you for, one, breaching the contract law, and two, the damages associated with you establishing a practice within that area. 

Lawyer’s Advice Regarding Signing an Employment Contract with Non-Compete

So, I would not suggest signing a dental agreement with a non-compete and expecting to ignore it. I think that’s a shortsighted way of thinking about contract law and a terrible strategy. I’m surprised how many dentists I speak to say, ” Oh, I spoke to a colleague, and they say non-competes are totally unenforceable. Unless you’re in the state where they are, I would not sign anything just saying, well, I’ll sign it, but I expect they can’t enforce it down the road.

So, non-competes are very likely enforceable against a dental associate if they’re considered reasonable. And for some people, let’s say they have grown up in a city and want to move back, maybe they’re living there and have kids in school. And they cannot move, or there’s family there, for whatever reason. Having a very onerous non-compete can make a great job potentially terrible if you have to move from the city to practice for whatever the limited period is. That’s something you want to negotiate and take a hard look at. It can be a deal-breaker for some people.

How to Get Out of a Dental Associate Contract?

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

Are Contractual Provisions For Length and Termination Present?

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

There is a fixed term with automatic renewals. It could be like a one-year term, which automatically renews for one year unless terminated. More often, there have been evergreen contracts where no term is listed. It just states the contract continues until someone ends it. One is not better than the other. It’s ultimately the same result. After you find out what the term is, go to the section about termination. The ways to terminate a contract are one, by mutual agreement. If both parties feel like it’s not working out, they don’t need or require a certain amount of notice. They 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 say it was one year, and there was no language about automatic renewal. If the one-year term expires and neither party decides to renew, it might terminate the contract. That’s it. Cause-termination is another type of termination. Suppose one party is in breach of contract. In that case, there’ll be language that states the party who thinks that the other party is in breach has to give them written formal notice that says, you’re in breach of contract due to this. And then, typically, there would be a language called a cure period. And the cure gives the party breaching the contract a period to fix whatever the problems are. Usually, it’s somewhere between 15 to 30 days. 

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

Without Cause Termination

The last and most frequent way is through without-cause termination. Every contract agreement a dental associate employee 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 employment agreement that I’m terminating the agreement, per without-cause termination. That is the most typical method of terminating a dental associate agreement. My last day at work will be X date. I must appreciate the opportunity. The same goes for them as well. If maybe they don’t think it’s working out with the dentist, they can give them notice. Then they can make the dentist work out whatever the notice period is, or sometimes they can tell them, look, go home, or we don’t need you anymore.

How Many Days Are There in the 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. It would be best if you didn’t 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 not to show up one day and say I’m leaving.

And then there’s a bunch of patients on schedules, people who need work done, and there’s no one to provide that. They can put the patients in a tough spot if there’s just no notice and their provider leaves. It is not the dental associate’s problem. However, if they give enough information, these are the patients of the practice, not the dental associate. And so, when the dental associate terminates the job 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.

Consultation with Chelle Law

Coming into a new organization with a favorable contract can put the medical professional in a positive financial situation for years to come. Before you sign the most important contract of your life, turn to Chelle Law for assistance.

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!