Difference Between a Veterinary Associate Offer Letter and a Contract | Veterinary Contracts
What is the difference between a veterinary associate’s offer letters and employment agreements? Often, if a vet is either coming out of training or switching jobs, the organization they’re looking at may say, well, we want you to sign this offer letter before we present you with an employment contract. That’s standard.
Should You Negotiate the Terms of the Offer Letter?
Now, a couple of things to think about: do you or should you negotiate before signing the offer letter? The answer is yes. I mean, an offer letter contains basic terms. So, compensation bonus structure, the length of the agreement, probably some basic information about a non-compete and benefits. It will not be detailed. It’s usually one to two pages at the most that just kind of goes over basic terms. If they offer you a hundred thousand dollars and you want 120, you should say that in advance and get that amended into the offer letter.
Are Offer Letters Binding?
Now, an offer letter is not binding. It could potentially say in the offer letter that it is binding. In that case, then I guess, yes, it could be, but I can’t recall a time where an offer letter ever had any language that states it’s binding. If you sign an offer letter, agree to terms, and then they present you with an employment contract. It doesn’t mean you can’t renegotiate the terms you’ve already come to an agreement on.
Why? Well, if you just see the basic terms of an agreement, it may look great at the time. And then when you get into the language of the contract and the specific details, it could change things. For instance, let’s say the offer letter stated there is a non-compete, but it had no details about how long it lasts or the geographic restriction. Then in the contract, it states you can’t work as a vet for two years within 50 miles of your clinic, which would then force you to move if you wanted to get a new job.
It might have looked great at the time, but once you see there’s some insane non-compete, it completely changes whether the agreed-upon salary is worth it. Maybe they might say, well, it was worth it for a hundred thousand with a normal non-compete. But with this very restrictive non-compete, I want 140, or I’m not going to sign. So, don’t feel like you’re locked into the terms you’ve agreed upon if the contract has changed, or at least once you see the details, it changes how you think about it.
Should You Negotiate the Terms of the Employment Contract?
Now, how to approach the employer in that situation? It’s delicate. You do need to go back to the employer and just say, these are the reasons why I was okay accepting this salary before, but now I’m not. I think most savvy business people are going to understand. They might be ticked off or act like, well, we’re not changing anything, and that’s fine. But then it’s your decision whether to sign the employment agreement or not.
Providing them details and reasons why you were okay with the initial terms but now you’re not after reading the contract’s language is important to reduce the amount of, I guess, potential bad blood between the new employer and yourself. Once you sign the employment agreement, those terms are set. There’s no wiggling out of the terms reached once you sign the employment agreement. So you need to make certain prior to signing the employment agreement everything that you are concerned about is in the document, it’s been negotiated.
Any employer states to you, oh, we’ll work out the details after you sign, or I’ll work out the details after you start, that is a bad idea. It’s a big red flag as far as an employer goes as well. Any good professional employer is not going to take that tact. They’re going to say; we want to have all the details. We want all the cards on the table, everyone knows their roles. And everyone knows what they can, can’t do, and what’s required. Starting there and working out the details is a bad idea.
Other Employment Contract Terms You Can Negotiate
As far as an employment agreement goes, I’ll just break down in the most basic way the things that most vets need to think about. The length of the term and how to terminate the contract.
You want to have a reasonable without-cause termination. You want to make certain that the employer is paying for your license, DEA if needed, malpractice, some kind of ancillary benefits. The non-compete needs to be reasonable. There shouldn’t be any kind of penalties or liquidated damages if you terminate the agreement, the compensation structure needs to be clear, it needs to state when bonuses are paid out, when the salary is paid out, and how it’s calculated.
I find that vet contracts generally list specific things for which the vet will be paid. You want to make certain that what is on that list is everything that you value and plan on doing. And that they’re not excluding things that normal vets would be paid for.
Summary of the Differences Between Offer Letters and Contracts
The main difference between an offer letter and an employment agreement is the offer letter is just kind of an entree that you may agree to terms. It is 99% of the time not binding. And you can still renegotiate terms once you’ve seen the language of the employment agreement. Negotiate the terms before signing the employment agreement. Because once you sign it and it’s, in fact, binding, you need to follow the terms of that.
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Red Flags in a Veterinary Associate Contract
What are some veterinarian employment contract red flags? Let’s say you are just coming out of training, or maybe you’re even switching jobs, and you have a new employment agreement. What things do you need to consider regarding what could make an agreement, maybe not such a great opportunity?
Compensation clearly is usually the number one thing in most people’s minds. Many veterinarians will use the ProSal method, which involves a percentage of the net collections that the practice receives based upon your personally produced services. There’s usually some kind of hybrid where you’ll get a base plus a percentage of the net collections. But negative balances in that situation can be moved forward. Let’s kind of dive into that quickly.
If you’re a veterinarian associate and you’re moving into practice, you need to think if it’s not just a straight-based salary, which is often. In that scenario, you get paid a base amount, a hundred thousand a year, you work your normal hours, and that’s that. If it’s a collections-based method, your volume, how many clients you see, and how much you do per day will directly affect how much money you make annually.
Lack of Staff
And especially lately with kind of vet staffing at difficult levels for nearly anyone in the industry. Vet techs and front office staff are difficult to find at this point. I know plenty of vets are struggling with volumes simply because they’re having to do things that a vet tech would do in addition to seeing all the normal patients that they would. So, monetarily, looking at whether the practices staff appropriately and as efficiently, which will allow you to be as efficient as possible and then be as productive as possible, is important.
You need to ask those hard questions. Have you had any problems with staffing lately? If you have, what are you doing to correct those problems? What’s the average volume for the current veterinarians in the practice? Those questions are important and even ask hard numbers. What is the average net collection for a veterinarian in my specialty in this practice? That way, you can kind of gauge what your ultimate compensation is going to be.
Unwillingness to Provide Data
If you’re looking at an employer and they’re unwilling even to give you moderate data as far as that’s concerned, it’s a huge red flag. Because normally, it means, either they’re so disorganized, they don’t know what the numbers are. Or, they’re so bad, they don’t want the vet to know about them. So, the first red flag is ensuring they’re staffed appropriately. Which will make you more efficient and ultimately lead to more money for you.
No Without-Cause Termination in the Agreement
The second huge red flag is if there’s no without-cause termination in the agreement. In almost any provider agreement across any industry, physicians, dentists, veterinarians, or whoever, there needs to be without-cause termination. And that means that either party can terminate the agreement at any time with a certain amount of notice to the other party. If there is no without-cause termination, let’s say a vet has a three-year contract, and then there’s no way to terminate contracts early.
Well, I find that the contracts that cannot terminate the agreement without-cause usually mean that that employer has had a very difficult time staffing and wants to lock in vets under any circumstances. And if they have high turnover, they have trouble holding onto vets. It usually means they’re kind of. I would say, bad business people, or maybe they treat the vets inappropriately or not with the professionalism that they deserve.
So, you need without-cause termination in the associate veterinarians’ contracts. Normally, it would be somewhere between 30 to 90 days. If it’s 180 days a whole year’s notice, you can’t accept that. It needs to be shorter just for that situation. And especially if you’re being paid purely on production and you have no way of getting out of the agreement, and your compensation is just completely nose-dived, you are stuck. Unless you find some way that they’ve breached the contract, you need the ability to get out.
Terms of the Restrictive Covenants
And then the last major red flag would be the restrictive covenants. The non-solicit and then the non-compete more importantly. The non-competition clause is enforceable in most states. There are few where it’s not, but for the most part, non-competes are enforceable. And that says the vet can’t act in their specialty for a period within a certain geographic radius. Normally, a non-compete would be one to two years, somewhere around there. One would be more favorable. And then as far as the geographic restriction kind of varies wildly amongst location and a rural environment.
It might knock the vet completely out of the town. Whereas if you’re in a big metropolitan area, it could be five miles up to 20. You want to ensure those are as tight as possible. Meaning you want it only from one location or your primary location for the smallest radius possible. That way, you don’t have to necessarily move.
Now, if you get a non-compete, it’s five years long and knocks you out of the five contiguous counties that you’re in, that is not a reasonable non-compete, and you absolutely should not sign that. Now, some people may move for a job and then have absolutely no intention of staying there if the contract ends. So, for them, the non-compete doesn’t matter at all. But if you have ties to an area, you have family in the area. Your kids are going to school. There’s like 0% chance you can move if the contract ends.
You need to ensure that you have a reasonable non-compete, so it doesn’t completely affect your lifestyle for a year or two or however long it is. So, those are three major red flags. Doesn’t have cause termination, are they staffed appropriately so that your compensation isn’t affected? And is the non-compete fair? There are several other red flags too, but I’m just going to focus on those three in this blog.
How Should You Negotiate a Veterinary Associate Contract?
How should you negotiate a veterinary associate contract? There are many things to consider when you want to negotiate your contract or an employment agreement. First, you want to understand how much leverage you have and what I mean by leverage. I mean, are you just out of your schooling? Do you have any experience? Are you specialized? If you’re specialized and very few are in the veterinary industry, you have more leverage.
But you might have a little less leverage if you’re just out of school for general veterinary practice. And then also, if you’ve been practicing and you have a substantial client base and lots of years of experience, you may have more leverage in relation to that. Once you understand how much leverage you have, then you need to understand what you should be asking for.
Negotiating Base Salary
The first thing I always see our clients want to negotiate is their base salary. Base salary or base compensation is just the flat you’ll get every month upon continuing your employment. The problem is that veterinarians are normally compensated, not just through base compensation. You’re also normally compensated through collections. That’s the typical sort of layout of compensation for really any type of veterinarian. Even if you’re specialized, it’s normally base compensation, and then there’s a part of collections. So yes, the base compensation is important, but there are so many other aspects to an employment agreement.
Your percentage of collections can be huge. You want to fight probably for a larger percentage of collections over just a base salary because the base salary will never change unless you renegotiate in the future. But if you have a substantial client base and you know that you’re going to be bringing those clients in, you will want a higher percentage of your collections which you can make well over your base salary. It’s something to consider. I know base salary is the big number on an employment agreement, but you also want to think about collection percentage as well, because you can make a lot more money with a higher collection percentage if you know that you are going to be bringing in those clients.
Other Contract Terms Found Better Than Compensation Alone
Now, if you are out of school and do not have an established client base, and maybe you’re not replacing someone at a veterinary practice or clinic, they’re just expanding. It will take a while to build up that client base. Then you, in that situation, might want to fight for a higher base compensation or salary for a year or two so that you can establish, as I said, that nice client base.
Other things that can be more detrimental to you than even the compensation are those restrictive covenants. And what I mean by restrictive covenants are non-compete clauses and non-solicitation clauses, but specifically the non-compete. Right now, the veterinary industry is booming, and practices bringing on and employing veterinarians are protecting their interests. And so, sometimes, these non-competes can be unreasonable and can attach to many locations or just many miles from one practice.
So, you want to consider that because if you are establishing a client base, you’re working hard, you’re bringing in clients, and then you decide to leave the practice, or they decide to terminate their employment with you, you could have a serious problem. You might not be able to practice in the area. You could even have to up and move your family. Non-compete clauses are extremely important that you want to negotiate in your initial employment agreement. And often, it’s overlooked because it’s something way in the future. And you’re excited about this prospective future employer, or you’re right out of school and want to start earning money.
A Word of Caution About Non-Competes
And so, that’s what you’re focused on, but non-competes are those sneaky clauses in employment agreements that can hurt you in the future. I would say more than anything. A non-compete agreement is something that you should always negotiate. Now, they’re normally a mileage from specific locations that you can negotiate. And then also, for a specific period, they can be anywhere from six months to three years.
And I would always try to negotiate that amount of time down and then always the miles down. When you’re negotiating how many miles, you also need to consider, can you find work outside of that restricted area without having to up and move? And then you also want to know what’s restricted. Sometimes the non-compete clauses specifically for veterinarians may just say that the practice of veterinary medicine is very general. If you’re specialized, I would negotiate that it’s only within your specialty.
So, you want to negotiate non-compete clauses. Those are most important. Non-solicitation clauses just mean you can’t solicit clients or employees coming with you. And sometimes, that period can be negotiated down to six months or a year before you can reach out directly to those clients or to those employees. Then you have your sort of ancillary benefits. In your continuing education, you’re typically given an allowance yearly, anywhere from 2,000 to 4,000, typically within a veterinary practice.
You can negotiate that money because if you don’t, then you must pay for your continuing education to keep your license. So, that’s something I would negotiate as well. And then also any dues, fees, licensing, all those costs add up. And we don’t think about that when we’re just looking at the base salary and how much money you’re going to make, but these sorts of costs can be negotiated at the beginning. Then it will save you a lot of money in the end and a lot of headaches as well.
What Needs to Be in a Termination Letter for a Veterinarian?
What needs to be in a termination letter for a veterinarian who’s employed at a veterinary practice? The short answer is that it needs to be direct and doesn’t need to include too much. To start, though, first, you need to know if you can terminate your contract if it has to be for-cause or without-cause, and you’re going to start with your employment agreement.
There’s normally, or there should be, and you should always look for this before you sign an employment agreement, a without-cause termination. And what that means is you can have a cause, or you can have no cause at all. And you don’t have to disclose that when you terminate your employment with the veterinary practice. Normally, there is a notice provision in there that states that you must give the employer anywhere from 60 to 90 days’ notice that you will be ending your employment agreement.
How to Give the Proper Notice of Termination?
There’s also going to be a clause in your employment agreement itself that normally states how to give proper notice. So, where are you going to be turning that termination letter into? Is it a person? Do you have to mail it, hand-deliver it, or email it? Every contract should have a notice clause. However, they’re all vastly different. So again, read that employment agreement. It will tell you how to turn in that letter.
Now, most of the time, I would say that it has to be in writing. Sometimes you can email it. Sometimes you can hand deliver it. You also want to be careful if it states that you must mail your termination letter. Normally, there’s an address where to send it, and even sometimes, there’s more than one address. So, you want to be careful. Also, it will explain to you if your notice starts the day you mail your letter or if you have to count anywhere from one to three days before your notice starts.
This is important. You should read this before you write your termination letter because, in the termination letter, it should state that you are terminating your employment, giving you proper notice and that your last day will be, and then you can fill that in. If you want to thank them for all of their support and opportunities, you can, but only what’s required is that it’s in writing that you are notifying them that you’re going to terminate this agreement. It’s also helpful sometimes if you want to let them know that you will assist them with the transition to a new veterinarian, but all situations are kind of different, depending on your relationship with them.
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