What is the difference between an offer letter and an employment contract for a dental associate? If you are looking for a new position, it’s very possible that the employer will ask you to sign an offer letter, and then they’ll follow up with an employment agreement after that. That’s standard. Several issues arise when you’re asked to sign an offer letter. The first issue is, well, should I negotiate before I sign the offer letter or before I sign the employment agreement? Well, let’s talk about what’s in a normal offer letter. Normally, in an offer letter, I’ll state the terms of the contract, so how long does it last, the locations where the dental associate will practice, the compensation, is it just salary? Is it a daily rate? Is it net collection? Also, professional liability insurance and tail insurance, the non-compete, and maybe some basic benefits.
It’ll just be like bullet point terms of these are the things that you’re going to receive, and these are the terms that we’ve agreed to. So, you want to negotiate those terms in advance of signing the offer letter if you’re not happy with the offered daily rate or the base salary, or the non-compete. I mean, the offer letter isn’t going to go into much detail about the, the same language in the employment agreement is going to be much different than what’s in the offer letter. It may just say, there’s a one-year non-compete and not even mention what locations it applies to or what the geographic restriction is. Or as far as compensation goes, there won’t be any kind discussion about, alright, well, if I’m on like a net collections agreement, like I only get paid a percentage of whatever the practice brings in for my services, if the contract terminates, do I still get all those collections that are outstanding at the time that the contract is terminated?
These are like the details that aren’t going to be in the offer letter but are going to be in the employment agreement. The first question is if I sign the offer letter, is it binding? Well, for the most part, no. Unless it explicitly states this is a binding document, it’s not binding at all. And I would strongly urge anyone if there was language in an offer letter that states the terms are binding, don’t take that position for this reason: the kind of shallow terms of the basic comp, benefits, restrictive covenants in the offer letter may look okay, but when you get into the minutia of the employment agreement, it may change substantially. Other blogs of interest include:
For instance, the offer letter may say there’s a non-compete like a one year or that lasts for one year, then it’s maybe a five-mile strict. Well, if they’re a corporate practice and they have 10 locations in a city and it doesn’t state if it applies to all 10 locations, you may just be thinking, well, it just applies to my location. Well, that’s a problem if you need to stay in a city and then there’s a ten, five-mile restriction instead of one. That’s kind of a detail out where it may look okay in the offer letter, but then when you get into the details of the actual agreement, it completely changes things.
Or the agreement may state they’ll pay for your professional liability insurance, but there’s absolutely no mention of tail insurance and who pays for it. Then you get into the agreement, and it states you’re responsible to pay for your tail. And that might not be something that you are okay with. At the surface level, it may look great. And then when you get into the language of the agreement, it may change. What do you do in that situation? If you’ve signed an offer letter, then you get into the agreement and the details changed, whether it’s a great opportunity, you need to negotiate. And even if you’ve negotiated the terms in advance of signing the offer letter, you can still negotiate those same terms after you’ve been provided with the employment agreement. And you need to provide context to the employer about why it was okay at this point but after looking at the details of the contract, this position at that compensation is no longer a good deal.
You need to explicitly tell them these are the reasons why I was okay with it at the beginning, but now, I’m not okay with it at all. I think any kind of smart employer will understand that the offer letter or is, you want to agree to the terms of that, but it’s still open to negotiation after the fact. If you just come back and say, I want 20,000 more and not explain why or not explain the terms in the agreement that you’re not comfortable with, they’re going to think that you’re unprofessional and potentially greedy. So, you want to just be certain that if you’re asking for more, you say, I know I agreed to the terms before, but I’m asking for this additional amount because of these reasons and list them out. If the employer states you are not allowed to renegotiate after you sign the offer letter, that’s not true. They’re just not being truthful with you. They just don’t want to renegotiate the terms, obviously. If you have an offer letter that you’ve signed and then you get into the agreement and they’re pressuring you, they’re saying, these terms are binding, you can’t make any changes now, we need you to sign the employment agreement, then you need to think hard about whether this is a job that you want to pursue.
It’s telling the way that an employer acts during the negotiation process. If they’re just iron fist, we’re not negotiating anything, this is take-it or leave-it, you’re stuck to the terms of the offer letter. It usually means they’re going to be difficult to work with down the road. Whereas if they’re a little more open-minded or maybe willing to make some changes to the agreement, I find those types of people are easier to work with and they’ll likely be a good working relationship as you move forward. So, you really need to be careful about people that are giving hard deadlines, strong-arm tactics, they’re trying to press you into signing.
There’s usually a reason for that. Meaning, it’s hard for them to maybe keep dental associates or there are a lot of turnovers. You must use the leverage that you have. And if it’s a position that’s hard to fill, there have been a lot of turnovers, then you do have leverage because they need someone in there. And obviously, they want you to get in there as soon as possible. So, you must use the leverage that you have. That’s kind of a rundown of the difference between an offer letter and an employment agreement.
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