Dental Non Compete Mile Radius Explained | Non Compete for a Dentist

Is 10 miles a reasonable non-compete for a dentist? If you are an employee and have an employment contract, that contract will likely include restrictive covenants. Restrictive covenants are things the dentist can’t do either during or after the contract is terminated. Common restrictive covenants include a non-disparagement clause, a non-solicitation agreement, confidentiality provisions, and a non-compete, which is usually the most important to most dentists. A non-compete says a dentist can’t work within their specialty for a certain period, within a geographic radius of wherever they’re working.

Non-Compete in Contract Agreement for Dental Practice

Let’s kind of break that down. The non-compete will list the dentist who can’t practice as a dentist, or maybe they’re subspecialists in their subspecialty for a period. A typical period is going to be somewhere between one to two years. Ideally, it would be lower, meaning it should be no more than a year on the low end. If you see a non-compete that’s three or five years, one, it’s probably unenforceable, and two, it’s completely unreasonable. You should not accept that. No more than one to two years for the temporary restriction of any non-compete.

Regarding geographic restriction, this depends. Most non-competes will be somewhere between 5 to 15 miles from your primary practice location. The setting is important. A smaller radius will make sense if you’re in an urban environment and a big city. If you’re in a rural community, you may not have any other opportunities within 25 miles. Let’s take Phoenix, for example, where I live. Maricopa County is huge, but if it was 15 miles in the middle of Phoenix, it could knock out hundreds of opportunities. Whereas if you’re in rural Idaho, 15 miles could be that location and nothing else.

Geographic Restrictions in Non-Compete Agreements

The setting is important, especially with the current trend of all these corporate-owned practices gobbling up the dentist-owned practices. If you are in a city, you need to ensure that the non-compete doesn’t state, let’s say it’s a 10-mile geographic restriction, that it applies to your practice location or locations. Maybe if you’re at one or two of them and not every site, the practice owns.

Some corporate-owned practices own 10 to 15 locations in a city, say, it’s 10 miles from every location they own. When the dentist only worked in one location. And that’s not fair, not reasonable. Is that enforceable? I don’t know. You may have to litigate or go through arbitration to find out the answer to that. But that’s not something you want to accept in an employment contract. That kind of non-compete could essentially force you to move from a community.

For some people, that’s huge. If you’re from a town, kids go to school there, have family nearby, and have deep ties to a community. Some people cannot move when the contract ends. If they have a very demanding non-compete, it will be tough for that dentist to work for however long the non-compete is. So, if it’s 10 miles from one location, I would consider that a reasonable non-compete. If it’s 10 miles from 10 locations, that certainly is not.

The Secret to Contract Negotiation for New Employment

How to negotiate a non-compete? Well, simple. You just have to say, I would like a one-year non-compete and the geographic restriction only to be attached to the two locations where I generate most of my charges. That is if you’re working in multiple locations. If the employer is willing to change it, many of them will say, oh, well, I’m sorry, we can’t change it. Which is not true.

They can certainly change it; they don’t want to. But there is going to be a point where the dental associate will have to decide, alright, well, can I accept this, or should I move on to a different job opportunity? It’s going to depend upon your specific scenario. Still, non-competes can be a deal-breaker when we’re negotiating with an employer. To be honest, some of these corporate-owned practices will say it’s a take it or leave it to offer. Now, you can find opportunities that couldn’t meet your needs. I find smaller dentist-owned practices are much more flexible as far as the non-compete goes versus the corporate-owned practices.

So, you may have better luck negotiating in that type of environment, but ultimately, it will depend on whether it’s important to you. Some people they’ll move to a community for a job. They have no plans to stay and say, alright, after this job ends, I’m moving on somewhere else. And in that scenario, you could focus your negotiation on different things. There must be a list of what’s important to you when negotiating a contract, right? And so, if non-compete is the most important thing, you must focus on that. If the non-compete doesn’t matter to you, it’s not even worth bringing up. Anyway, that’s a bit of a primary on what’s a reasonable non-compete for a dentist.

Other Blogs of Interest

• What Should I Look for in a Dental Contract?
• How Much Paid Time Off Should a Dentist Get?
• Is a Non Compete Enforceable Against a Dentist?

Is a 2-Year Non Compete Too Long for a Dentist? | Restrictive Covenants

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 a 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, and confidentiality clause. 

What is Non-Compete for a Dentist?

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. Some states absolutely prohibit it, 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 2-Year Non-Compete Too Long for a Dentist?

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.

Two Things to Consider With Regards to Dentist Non-Compete

And then two other things you need to think about as far as the non-compete. First, the location is 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. 

Advice From a Lawyer: Non-Competes Are Enforceable

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 could 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. 

Can a Dentist Negotiate a Non-Compete?

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. 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.

Understanding the Non-Compete Clause in an Employment Contract

Competition in the dentistry field keeps getting stronger by the day. As a practitioner, you’ve undoubtedly heard about dental non-compete agreements. But have you ever sought to find out what they’re all about and how they affect you? 

Thanks to the growth of multi-location, low-cost dental facilities, smaller practices that provide procedures such as teeth whitening may find it challenging to stay profitable. For this reason, your employer may insert a non-compete clause in your employment contract to protect their business from potential competition and offset the professional benefits offered. 

If you’re a dentist about to take on a new job and the employment contract has a non-compete clause, it’s best to work with an experienced dental contract lawyer. This protects your rights once you start the new job and decide to move on afterward. 

What Are the Basics of Dental Non-Compete Agreements? 

A dental non-compete agreement is a clause in the employment contract that prohibits the restricted party (you) from providing services similar to what the non-restricted party (your employer) provides. Although these clauses are prevalent in employment contracts, they’re also common in contracts to purchase existing dental practices. 

A non-compete clause may restrict your actions by actions, clients, or location. For instance, it may prevent you from opening a practice within five miles of your employer or prohibit you from soliciting patients from your employer’s client list. 

Non-compete clauses are particularly suited for specialized dental practices. They prevent specialists from joining a dental office and working for only a short time before leaving to open a new office using the skills gained at the initial practice. It also keeps dentists from leaving a dental practice and leaving with all the current office staff and specialists. 

Who Does a Dental Non-Compete Clause Benefit? 

Dental non-compete clauses typically benefit the dentist who stays in the practice when another dentist leaves. When these agreements get enforced, the remaining dentists benefit in the following ways: 

• They won’t lose customers and income if a dentist in their office leaves and opens a facility nearby. That’s particularly true for specialty facilities that may not have many patients to serve within a locality. 
• They don’t have to worry about losing their office staff since they can’t get poached by the dentist who decides to leave and open a new facility. 
• They’ll know whoever joins their facility does so to work and enhance their skills and job experience rather than potentially stealing their staff and clients. 

How Long Do Dental Non-Compete Agreements Last? 

Although non-competition clauses in employment contracts often get considered restraints of trade, the agreements are enforced based on reason. Thus, the agreements only get enforced for as long as it’s reasonable. 

So, working with a dental contract attorney is always a good idea since it helps you determine the specific non-compete laws for your state. Generally, a non-compete agreement will be considered reasonable and enforceable if: 

• It isn’t more than what’s required to protect the employer. 
• It doesn’t inflict untold hardship on either the employer or dentist. 
• The restraint doesn’t affect the public. 

Exceptions to Non-Compete Agreements

Dental non-compete agreements are not applicable everywhere. In states such as Ohio, a dental non-compete clause doesn’t apply if a practitioner’s expertise is essential to the general public’s well-being. Nonetheless, it’s still enforceable if it partially protects the employer’s legitimate interests. 

A dental contract attorney can help you review a non-compete agreement before appending your signature. This way, you’ll avoid legal problems later on, especially when you decide to open a dental facility. There is also a need to take into account potential dental malpractice issues too.

Signing a Non-Compete Clause: Things to Consider

When reviewing your employment contract and the non-compete clause therein, you should consider the following: 

The Geographical Location Covered 

A big city can support more dental practices in smaller areas than rural towns. If you get employed in a specialty dental clinic, your employer is also likely to enforce a non-compete clause in a larger area than a general dental facility can. 

The Agreement’s Time-Frame

It’s best to evaluate how long the agreement will apply and determine its impact on your career progression. For instance, if you’ve always wanted to work in your hometown after getting employed in a dental facility operating within the same town, will the agreement bar you from pursuing your dreams? 

Circumstances that Negate the Agreement

Will the non-compete clause apply if your employer sells their practice, relocates, or closes the shop? Do such circumstances negate the non-competition clause in your employment contract? 

Working for a Competing Dental Facility

When dentists decide to leave a facility, they don’t always open their own practices. Many join forces with a competing dental facility, often within the same locality. For this reason, it’s best to ensure your non-compete agreement addresses such circumstances. 

What does the non-compete agreement stipulate if you decide to join a facility that competes directly with your employer rather than opening your own facility? Typically, employers don’t feel too happy when employees leave to join competing dental practices. Ensuring that such scenarios get captured in your employment contract’s non-compete clause helps you avoid legal issues. 

Why Do You Need a Contract Lawyer Before Signing Employment Contracts?

Contracts are an obligatory aspect of nearly all legal transactions, including employment. A well-drafted dental employment contract containing the necessary non-compete clauses can help to highlight the responsibilities of all the affected parties and protect their legal rights. Nonetheless, reviewing an employment contract is a painstaking experience, given your limited legal expertise. 

It’s a no-brainer that you should only enter a contract after it gets reviewed by a skilled dental contract lawyer. At Chelle Law, we have hands-on experience drafting and reviewing employment contracts in all medical specialties. In particular, dentists getting into employment can benefit from our thorough review of dental non-compete agreements. 

We understand just how binding a non-compete agreement is. Thus we’re committed to helping you make an informed decision before signing an employment contract that will affect your career in the long run. Contact us today for assistance in contract reviews or learn more about our services.

Is a W2 or 1099 Better for a Dentist?

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 maybe 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 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.