Dental Associate Non Compete vs Non Solicit: Solicitation Concerns for Dentists
Non-solicitation clauses versus non-compete clauses for dentists. What’s the difference? What’s the same? And what is typical in a dental employment agreement? Let’s start with non-solicitation clauses. Non-solicitation clauses are a promise to not solicit patients, employees, or third-party contractors for a specific period after your employment terminates with your dental practice. What this looks like is you’re either terminated or you terminate your employment with the 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 practice or to the patients that you had provided services for while you were an employee. Solicitation, sometimes, is defined in the 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 normally means reaching out to enticing and encouraging those employees or patients to come with you. Now, if you’re leaving the 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 be in violation of a non-solicitation clause. Let’s talk about general advertisement in relation to a non-solicitation clause. Sometimes, this is directly outlined in the employment agreement, and it’s always best that you start there first, look at the clause itself.
But if it just says you cannot solicit, normally, general advertising is not considered a solicitation. So, that’s billboard, social media commercials, 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 patient lists, you’re getting their addresses and you’re sending letters directly to them, or you’re seeking them out directly, things like that, that would be solicitation. What are the consequences of a non-solicitation clause? Sometimes there are liquidated damages. If you’re found in violation, you may have to pay tens of thousands of dollars. And then normally, I would say there is equitable relief. And what that looks like is if the practice feels like you’re in violation of a non-solicitation clause, they can bring it before a judge.
And 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 patients. That’s typically what a non-solicitation clause looks like. They’re standard. Now, let’s look at and talk about what is a non-compete clause. A non-compete clause is like a non-solicitation clause because it’s a promise not to do something, you’re promising not to compete with a practice. Also, a non-compete clause is typically for the same period that the non-solicitation clause is for. 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 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. 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 you were found in violation of the non-compete clause, you could pay tens of thousands of dollars. Also, there’s equitable relief, which means that the 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, 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, you always want to refer to your employment agreement to make sure you fully understand what you’re signing, because this could have big implications in the future after your employment has been terminated. 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 practice or you’re promising not to solicit.
Is a Non Compete Enforceable Against a Dentist?
Is a non-compete enforceable against a dentist? 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 that 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 then kind of what they would look at whether it’s reasonable or enforceable. In your contract, there’s going to be a section called restrictive covenants. And in that section, it’s going to have a non-solicitation clause, a non-disparagement clause, confidentiality provisions, and then a 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 practice and you can do different things, and you’re only doing one of those things for the employer, I would make certain that the specialty restricted is the one that you’re only doing for that employer. That way, you have some other options after the contract ends to do other things. For instance, maybe you’re doing orthodontics for a 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 is over with. 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 dentist last somewhere between one to two years, if it’s longer than that, I think it would likely be unenforceable. You always want a shorter non-compete, obviously. If someone is offering you a non-compete that’s three years or five years, that’s completely unacceptable and very likely unenforceable. As far as 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 and, 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 practicing in that city, which I don’t believe would be considered reasonable and would likely be unenforceable. You want to make certain when it comes to how many locations the non-compete attaches to, it’s only the locations that you’re working at and then no more than two locations, ideally. If it was just 10 to 15 miles from your primary practice location, that would be considered reasonable and enforceable as well. 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 a practice within the geographic 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 the court and obtain a temporary restraining order or an injunction, which would stop you from working and they could sue you for, one, breaching the contract, and then two, the damages associated with you establishing a practice within that area. So, I would not suggest signing an agreement with a non-compete and then just expecting to ignore it. I think that’s a shortsighted way of thinking about contract law and a terrible strategy. I mean, 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 that they can’t enforce it down the road.
So, yes, non-competes are very likely enforceable against a dentist 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 they have kids in school, and they just absolutely 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.
Length of Dental Practice Restriction?
Is a two year non-compete too long for a dentist? First, if you are either a dental associate or maybe you’re a partner, you’re still likely going to have non-compete. And so, if you sign an employment agreement, there’s going to be a section in there that’s called restrictive covenants. The restrictive covenants essentially prohibit you from either doing things during or after the contract ends. Standard restrictive covenants would be like a non-solicitation agreement, a non-compete, non-disparagement, confidentiality clause. As far as non-compete goes, a non-compete will then prohibit the dentist from working within a specific time, within a certain geographic region from the location that they’re practicing in. Let’s just give some examples.
Let’s just say your non-compete is for one year and then 15 miles from your primary practice location. For the most part, that would be considered a reasonable non-compete. Non-compete laws do vary from state to state. It’s one of the only things in employment contracts for dentists that kind of varies from state to state. There are some states that absolutely prohibit, meaning, it’s illegal to have non-compete for a healthcare provider in that state. There’s only a handful of those. Most states do acknowledge non-compete if they’re reasonable. Is a two-year non-compete reasonable? I would say no, ideally, it would be one year and no more than that. However, there are plenty of places that try to push it to two. In a scenario where they’re offering two or even beyond, you need to push back and say, I don’t want to sign more than a one-year non-compete.
And then two other things you need to think about as far as the non-compete. First, the location listed. As you know, big conglomerates are gobbling up these dentist-owned practices. And so, you could be in a city where there are eight locations for your employer. You want to make sure that it specifically says your location or maybe the two locations where you spend most of your time. You don’t want to sign a non-compete that states that it attaches to every single location owned by the employer, even if you never worked in those locations at all. This is especially true for dentistry.
If you’re in private practice, dentist-owned, and they only have one location, then it’s simple. It’s just going to be that location and nowhere else. But, if you’re in a big city and they own a bunch of locations, you want to make sure it specifically states your location, not all the locations. And then also, if you’re in a specialty, you don’t want to get stuck from not being able to do any kind of dentistry. You want it to say specifically what you’re doing for that employer, that way if you can do other things for the period like let’s say you just can’t move because of kids or family reasons, you could have an alternative for a year. That might not be ideal, but you could do that for a year and then come back to your normal specialty.
And so, you want to make it specifically not like all practice dentistry, but your specific focus as well. Non-competes are just a part of almost any employment contract. I’m not sure why most people think they’re just completely unenforceable. I get that a lot. Well, my colleague said that I can sign it, but it can’t be enforced anyway. That’s just not true. If it’s not in one of the states where it’s prohibited, it likely will be enforced if it’s reasonable. Now, if someone’s giving you a five-year non-compete that knocks you out of an entire state, clearly not going to be enforced, but you may have to litigate or go to arbitration if you’re going to fight that, or the employer is as well. This is certainly something you can negotiate. Most employers are going to say to you, well, we just can’t, we’re unable to change that, or no, I’m sorry, we can’t do that. There’s a difference between they don’t want to do it and they can’t do it.
Do Associates Have to Sign a Non Solicitation Agreement?
It would depend upon how much leverage the dentist has. Are you coming into a job opportunity that’s difficult to recruit to, or maybe in an undesirable location or maybe not as desirable for the general population? You have more leverage if you’re going into a big city and there’s a ton of applicants for a job and someone else doesn’t care at all about the non-compete. Well, then you have a decision to make whether you’re willing to accept it or not. If you have non-competes that are 50 miles from your location or even will knock out like contiguous counties, that’s something I would try to avoid. You really shouldn’t have more than 10 to 15 miles from your primary location. Or as I said before, maybe you split your time in those two locations. So, that’s a little primer on non-competes for dentists.
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