Dental Associate Non Compete vs. Non Solicit | Solicitation Concerns for Dentists
Non-solicitation clauses versus non-compete clauses for dentists. What’s the difference, the similarity? And what is typical in a dental employment agreement? Let’s start with non-solicitation clauses. Non-solicitation clauses are a promise not to 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.
Associate Dentists Can Have Restrictive Agreements
A non-solicitation clause states that for a period, typically one to two years, you are prohibited from reaching back out to the practice employees or patients you had provided services for while you were an employee. Solicitation, sometimes, is defined in the contract itself. It may say the employer prohibits you from directly soliciting or indirectly soliciting.
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 explain those terms to you. And to me, directly soliciting means reaching out to entice and encourage those employees or patients to come with you.
What Counts as a Solicitation?
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 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 that you start there first. Look at the clause itself.
But if it just says you cannot solicit, typically, general advertising is not considered a solicitation. So, that’s a billboard, social media commercials, things like that, not a solicitation. You’d 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’re sending patient lists, getting their addresses, and sending letters directly to them. Or you’re seeking them out directly. That would be a solicitation.
Consequences of Non-Solicitation
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 typically, I would say there is equitable relief. What that looks like is if the practice feels like you violate a 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 patients. That’s typically what a non-solicitation clause looks like. They’re standard.
The Non Compete Clause
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’re promising not to compete with 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. It could be miles, it could be city blocks, it could be counties, or it could be municipalities. It just 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 employers enforce it. So again, there could be a liquidated damage clause. It states that if they find you violating the non-compete clause, you could pay tens of thousands of dollars.
Also, there’s equitable relief, meaning 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 Competes Can Attach to Multiple Areas
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:
- the primary place where you provide services,
- any location where you provide services,
- or any location owned and operated by the practice.
Again, the golden rule is you always want to refer to your employment agreement to ensure you fully understand what you’re signing. It could have enormous implications after your employment terminates.
Also another similarity between non-solicitation and non-compete clauses is that one can typically find them in the same part of the contract under restrictive covenants. Restrictive covenants mean a promise not to do something. You’re promising not to compete with a practice, or you’re promising not to solicit.
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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 entirely unenforceable. However, you could count them on the one hand. It is very likely that if you’re reading this blog, the state you’re in acknowledges reasonable and enforceable non-competes. So, I’m going to talk about the states where they are enforceable and what they would consider whether it’s reasonable or enforceable. In your 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. A non-compete stops you from working in your specialty for a period within a specific geographic area.
Does the Law Favor the Practice Over Dentists?
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 multi-specialty 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 practice, and you could still do general dentistry. Perhaps 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 of what the contract lists as a specialty in the non-compete.
How Long are Non Competes for Dental Associates?
As far as how long, most non-competes for a dentist 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. 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. In a city, they may have multiple locations. In a big city, there are dozens of sites.
Suppose the non-compete states you can’t work within, 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 sure when it comes to how many locations the non-compete attaches to. It’s only the locations you’re working at and then no more than two locations, ideally.
One can consider it reasonable and enforceable if it were just 10 to 15 miles from your primary practice location. 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 practice within the geographic limited area. What can happen?
How to Enforce a Non-Compete Under an Employment Agreement?
Well, they can sue you. If your contract has an arbitration clause, the employer could go to arbitration over it. They could go to court and obtain a temporary restraining order or an injunction, which would stop you from working. They could sue you for, one, breaching the contract, and 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 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 will 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 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 have kids in school. They just absolutely cannot move, or there’s family there. For whatever reason, having a very demanding 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.
Dental Associate Contract Red Flags | Dentist Employment Contract
Dental associate contract red flags. There are dozens of red flags in a contract. However, a handful is necessary to take a solid look at, and we’ll go over those. In any employment contract, the first thing would be no without cause termination. There will be a term that states how long the contract is. Then termination, how the contract terminates. There are several ways to terminate a contract. The term could end, and it’s not renewed. It may terminate through mutual agreement. It may also terminate for cause. If one of the parties breaches the contract, it 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 time with a certain amount of notice. Normally, it takes somewhere between 30 to 90 days. This is important, and I find this especially important for dental associates for whatever reason. Without the ability to terminate the contract at any time, let’s say the dental associate has a two-year contract, and they cannot terminate without cause, you’re essentially stuck there for two years unless the other party breaches the contract.
Employment Red Flags: Net Collections and Long Notice Period
There are plenty of scenarios where a dentist associate is on net collections, volume, and compensation. The owner will generally, I’d say, overestimate what the associate will make. And so, they can get a job if they don’t receive payment on a daily rate salary. It’s more of eating what you kill and getting a percentage of whatever is collected. 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 certain there’s without cause termination at any time. Sometimes, the employer will try to say. You can’t give notice in the first year. Or you can’t give notice in the first six months or whatever. No, anytime, if you start, you give information, you do your, whatever the notice period is, move on. The second is compensation. Suppose you are a dentist and receive a salary on either net-collections. In that case, encounter some volume metric, and you are not 100% certain that the volume is there for you. It would help if you were very careful about taking that job.
Dental Associate/Contractor Compensation
A daily rate or a base salary, especially in the first year or two. Insulates the dental associate from just getting completely screwed by an employer. That is, unwilling to make an income guarantee and bring in a dentist. But in that circumstance, only pay them based upon volume metric. Like in the example I gave, if a dentist starts and their compensation is based purely on production and the production is completely out of their hands, they’re not doing the marketing. It is on the employer to drive the business. It’s a problem.
So, it’s important to have a guaranteed salary or daily rate for anyone who’s new, maybe just out of training or relatively new. And then once you’re there, maybe you’ve been there a year or two. You see that the volume is there. Maybe 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 seldom shakes out that way. Another big red flag 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.
Dental Contracts and Non-Competes
Non-competes are enforceable in almost every state. Such as California, New Mexico, and Massachusetts. Those are three of the few states where they’re completely unenforceable.
Most states, it must be a reasonable length, usually about 12 months. Sometimes they’ll try to do some reasonable geographic restrictions for two years. It is usually somewhere between 5 to 15 miles. If you have a five-year, 50-mile non-compete. You don’t want to sign something like that. You want it to be no more than a year and then no more. I 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 dental 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 locations where the dentist provided care. And even then, try to limit it to no more than two locations.
In big cities, corporate dental conglomerates obviously continue to gobble up some dentist-owned practices. And so, if someone is 10 locations in a city and it’s 10 miles from 10 locations. You’re going to leave your city. So, what’s in the non-compete is certainly important. Lastly, I’ll touch on the benefits briefly. The employer should pay for your license, DEA registration, and continuing education if a dental associate is an employee. Suppose you’re moving from out of state. In that case, reasonable moving expenses and reimbursement are normal things an employer should pay for. So, think about that as well.
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 the benefits? Are they paying for your license, DEA registration, credentialing, or continuing education, and are there signing bonuses and relocation assistance? Will you be paying them back if you leave within a certain time? Probably the two highest priorities are: who’s paying malpractice insurance? And who must be paying for tail insurance after the contract terminates if it’s a claims-made policy.
Also the non-compete. This is some people’s absolute, most important thing in the contract. If they’re tied to a community, kids in school, or family, they absolutely can’t leave. Then you need a reasonable non-compete that’s not going to make you move entirely out of the area.
Know The Average Pay in Practice
Those are the most important things to dental associates. Now, you’re coming on training, you have a position offer, they’re giving you a certain financial amount. How do you know what’s reasonable? Talking to your classmates is the best way to find that information. What offers are they getting? How much are they getting and how are they structured? Where do offers come from? That’s the best and most accurate means of finding out what the going rate is at that time. The compensation is going to vary wildly. Is it a base salary? Is it a daily rate? Or is there some net collection involved? Or is it a hybrid? And could it be half base, half net-collections.
What Are the Reasonable Outlines of a Contract for New Graduates?
Alright, those are the things that are most important to most dental associates. Now, you’re coming on training, you have a job offer, they’re giving you a certain amount. How do you know what’s reasonable and what’s not? Well, the best place to find out that information is to talk to your classmates. What are the offers they’re getting? How much are they getting? How are they structured? Where are the job offers coming from? That’s the best and most, I would say, accurate means of finding out what the going rate is at that time. The compensation is going to vary wildly. As I said before, is it a base salary? Is at a daily rate. Is there some kind of net collection involved? Or is it a hybrid? Could it be half base, half net collections?
Other Things to Consider Beyond Compensation
Often, dental compensation for a job may look great, but the benefits are inadequate. They’re not paying for your tail insurance, or the non-compete is terrible. So, you can’t just take a salary as the number one factor in determining a good opportunity. But it is undoubtedly vital. Knowing whether a non-compete is fair or not is something you probably must talk to a professional about.
Mostly, anywhere between one to two years and 5 to 15 miles from your primary practice location would be reasonable. If you’re in a non-compete that’s more than two years, or it knocks out like multiple counties. Or maybe they’ve attached the non-compete radius to 10 locations. Say, it’s a corporate practice in a big city having 10 locations. And they’re saying, well, you can’t work within 10 miles of every site we own. That’s not a reasonable non-compete.
The actual negotiation will depend on two things. One, do they give you an offer letter, or do they give you the employment agreement? If they give you an offer letter, they expect those terms will be negotiated in advance. Then incorporated into the employment agreement. And then, they’re going to give you the employment agreement. Sometimes it’s challenging coming to terms with the main parts of an offer letter without seeing the full employment agreement. If I had a perfect scenario, there would be no offer letter. They would give the employment agreement.
Then you’d completely understand what the work entails and the expectations for both parties. You could agree to a salary, the length of term, that there’s a non-compete, that’s the things they’ll pay for. But when you see the specific language in the contract, it could significantly change the way you look at its value.
You Can Negotiate The Contract Even After Signing the Offer Letter
Just because you’ve signed an offer letter doesn’t mean you can’t renegotiate if you provide proper context to the employer. Alright, I was okay with making $110,000 a year and a base salary. Not knowing the non-compete effectively knocks me out of this state. If you want me to sign this dental contract with that non-compete, I need 130,000. There are many ways of going back and forth. Some employers will just say, this is a take-it or leave-it. I would be wary of signing a contract with an organization unwilling to make any changes in the agreement.
It usually means they’re difficult to work with down the road or have a very rigid and unprofessional environment. So, if you find that someone says, take it or leave it, I would leave it and move on. And try to find a better opportunity. I’m just telling you. If they take the mindset that they’re not going to change anything in the contract, like nothing at all. No change at signing bonus, relocation assistance, benefits, anything like that. It is a bad sign moving forward.
Top Tip: Check the Without Cause Termination
One more thing to keep in mind when signing a dental contract or negotiating the terms of an agreement. Every employment contract should have what’s called without-cause termination. Either party should be able to terminate the agreement at any time with a certain amount of notice to the other. Usually, somewhere between 30 to 90 days.
If your contract doesn’t have without-cause termination. It means you must fulfill the entire initial term of the agreement somewhere between one to three years. Normally, it is an enormous red flag. You absolutely should not sign that contract for this reason. Suppose they have excluded without-cause termination, which is standard across all healthcare professions. In that case, it usually means they’ve had a ton of turnover or very dissatisfied dentists who wanted to leave. So, they’ve removed that ability and made sure they must stay there for three years, two years, etc.
Usually, it’s not in the contract because they’ve had a ton of turnover and it’s normally due to bad management. Either it’s a toxic work environment. Or the compensation is not worth the amount of period or effort you’ve, you’ve had to put into it. It makes sense that there’s always without-cause termination in the employment agreement.
Talk to Dental Associate Contract Lawyers
Don’t feel bad about asking for things. If you’re negotiating the terms of employment, most smart employers expect there will be some back and forth. Ask for a little more salary, a little more bonus, and a little less non-compete radius. Incremental things you can get changed in the agreement can make a big change in the value of an opportunity. So, don’t feel bad.
Now, if they’re offering a hundred and you ask for 300 or some crazy amount. They’ll think you have no idea what’s going on. They’ll probably move on. When you ask for something, it needs to be reasonable. How do you find out what’s reasonable or not? Once again, talk to your classmates, any mentors, or attorneys who understand what they’re doing. Those dealing with these contracts every day. That’s where you need to get in. But if you ask for these ridiculous changes to an agreement, most places will pull the offer and say no. So, that’s how you negotiate an associate contract.
Dental Contract Questions?
Contract Review, Termination Issues and more!