How can a veterinarian associate get out of a contract? So, you’re working for an employer, you’re unhappy, you want to leave. How do you get out of the contract? Your employment contract should contain four ways of terminating the contract.
Four Ways of Terminating a Contract
One, if there’s a fixed term, meaning, it’s a set amount of time and there’s no language that states it automatically renews for successive terms, let’s say it’s two years, you finish those two years, it doesn’t renew, the contract terminates, you can move on. That’s the first way.
The second way is mutual agreement. At any point, either party can say this isn’t working. Let’s wash our hands of this relationship and move on. That does not happen very often, but that’s another way.
The third way would be with-cause. If one party is in breach of contract, the other party can provide them with written notice. And then, normally, they’d have a short period to fix whatever the alleged breach is. That’s usually somewhere between 15 to 30 days. And at the end of that period, if they did fix the breach, they couldn’t terminate the contract immediately. If let’s say the vet has bonus productivity calculated quarterly, the employer just either refuses to pay or has been slow to pay or whatever, the veterinarian provides them a written notice. And then they have 15 days to fix it. If they don’t fix it within those 15 days, then the vet can terminate the contract immediately at their option.
And then the last and most common way to terminate a contract is without-cause termination. Without-cause termination means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. For most vets, it’s somewhere between 30 to 90 days. And that’s just the most common way. Probably 9 out of 10 contracts are terminated that way if you’re a vet.
Repercussions of Terminating Contract Terms
There are plenty of ways to get out of a contract. Now, what are the repercussions if you do end up leaving and terminating the agreement? Well, as I said before, many contracts for the initial term, let’s say you have an initial two-year term. Receive a signing bonus, relocation assistance, probably licensure, malpractice, or some benefits. There may be language in the contract that states that if you leave within that initial term, you must pay back a portion of that signing bonus or relocation assistance, or maybe you’re not eligible for productivity bonuses.
So, investigate the language of your contract and see, if I terminate the contract early, what are the repercussions? What do I have to pay? What do I have to pay back to them? Or what am I losing out on compensation? Many vet clinics use the ProSal method. In that model, they pay you on your production. And so, you need to be very careful that if you terminate the agreement, there’s language in the contract that states you will be compensated for any services you’ve rendered that haven’t been collected. In veterinary medicine, you don’t have, at least generally don’t have kind of the same log time as a physician would have where maybe they do services.
And the vast majority wouldn’t be paid out for 60 to 90 days. Based on the cash nature of veterinary medicine, the outstanding collections percentage is much less than other specialties, but you still don’t want to miss out on that. I’d say veterinary insurance for individuals is becoming more popular. And so, the average count’s receivable cycle is between 30 to 90 days.
Think about this: if you earn on productivity on just what your net-collections are, and then you terminate the agreement and you have a bunch of net-collections outstanding, and the contract states you’ll only get paid up to the date of the contract terminates, well, you just work for free for a month or two, so nobody wants to do that.
Important to Know About Compensation
If you decide to terminate the agreement, make sure that before you sign the contract, it states that you’ll be paid any of the collected services for anything you did while you’re there, even after you terminate the contract. Having to get out of a contract is honestly just a kind of standard part of doing business.
With all these enormous conglomerates gobbling up the vet-owned practices, I’d say there’s a lot of unease and unhappiness for many veterinarians. And they may be in a practice that they’ve loved for 10 years, and then the corporation sweeps in, buys it out and things change immediately. And then they have to decide, am I going to sign this new contract? Am I going to terminate the old one to leave?
There’s just a lot of turnover in that field right now. And figuring out the most effective way of getting out of your contract is very beneficial. Hopefully, that helps and gives you the little basics on how to get out of an employment agreement.
Other Blogs of Interest
- Difference Between a Veterinary Associate Offer Letter and a Contract
- How Much Time Off Should a Veterinarian Get?
Red Flags in a Veterinary Associate Contract
What are veterinarian employment contract red flags? Say you’re just out of training or even switching jobs. You have a new employment agreement. What are some things you need to consider? What could make a contract not such a great opportunity?
Compensation is usually the number one thing in most people’s minds. Many veterinarians will use the ProSal method. It involves a percentage of the net-collections the practice receives based upon your personally produced services. Or usually a hybrid of base plus a percentage of the net-collections. But negative balances in that situation can be moved forward.
Let’s dive into that quickly. First, if you’re a veterinarian associate moving into practice, you must think if it’s not just a straight-based salary. Many times it is. In that scenario, you get paid a base amount, a hundred thousand a year, you work your normal hours. That’s that. If it’s a collections-based method, your volume and how much you do per day will directly affect how much you’ll make annually. Especially lately, with vet staffing at difficult levels for nearly anyone in the industry. Vet techs and front office staff are difficult to find at this point.
Plenty of vets are struggling with volumes because they’re having to do vet tech things. In addition to seeing all the normal patients. Monetarily, looking at whether the practice staffs appropriately, allowing you to be as efficient and productive as possible. Ask those hard questions. Have you had any problems with staffing lately? If yes, what are you doing to correct those problems? What’s the average volume for the current veterinarians in practice? Those are important. Even ask hard numbers. What’s the average net collection for a veterinarian in my specialty in this practice? That way, you can gauge what your ultimate compensation will be.
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 that 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. The first red flag is ensuring they have proper staffing which will make you more efficient. And ultimately lead to more money for you.
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. That means either party can terminate the agreement at any time with a certain amount of notice to the other. If there is no without-cause termination, say a vet has a three-year contract, there’s no way to terminate contracts early.
I find contracts that cannot terminate the agreement without-cause usually mean the employer has had a very difficult time staffing. And wants to lock in vets under any circumstances. If they have high turnover, they have trouble holding onto vets, it usually means they’re kind of, bad business people. Or maybe treat the vets inappropriately or not with the professionalism they deserve. So, you need without-cause termination in the associate veterinarians’ contracts. Usually, 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. 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
The last major red flag would be restrictive covenants. The non-solicit and non-compete more importantly. The non-competition clause is enforceable in most states. There are few where it’s not, but mostly, non-competes are enforceable. 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. Lastly, the geographic restriction varies wildly amongst locations 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. That means you want it only from one or your primary location for the smallest radius possible. That way, you don’t have to necessarily move. If you get a non-compete, it’s five years long and knocks you out of the five contiguous counties you’re in. That’s not a reasonable non-compete and you shouldn’t sign that. Some people may move for a job and have no intention of staying there if the contract ends. For them, the non-compete doesn’t matter at all. But if you have ties to an area, you have family in there, 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. Those are three major red flags. Doesn’t have cause termination; staffed appropriately so that your compensation isn’t affected. Is the non-compete fair? There are several other red flags too, but I’ll focus on those three in this blog.
Know Your Services, Negotiate Your Contract
How should you negotiate a veterinary associate contract? There are many things to consider when negotiating your contract or an employment agreement. The first thing you want to understand is how much leverage you have. 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 less leverage if you’re just out of school for general veterinary practice. If you’ve been practicing, have a substantial client base and many years of experience, you may have more leverage.
Once you understand your leverage, you know what you should be asking for. The first thing I always see our clients want to negotiate is their base salary. Base salary is just the flat you’ll get every month upon continuing your employment. The problem is that veterinarians are normally compensated not just through their base compensation. You’re also normally paid through collections. That’s the typical layout of compensation for any veterinarian. Even if you’re specialized, it’s normally base compensation, and a part of collections.
Yes, the base compensation is important, but there are other aspects to an employment agreement. Your percentage of collections can be huge. You want to fight for a larger collection percentage over just a base salary. The base salary will never change unless you renegotiate in the future. Suppose you have a substantial client base and know you’re going to be bringing them in. You’ll want a higher collection percentage which you can make well over your base salary. Base salary is a significant number on an employment agreement. Still, you also want to consider the collection percentage. You can make more money with a higher collection percentage if you know you’ll bring in those clients.
Other Contract Terms Found Better Than Compensation Alone
Now, if you’re out of school and don’t 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, 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 attach to many locations or just many miles from one practice. So, you want to consider that. If you are establishing a client base, working hard, bringing in clients, then you decide to leave the practice or they decide to terminate your employment. You could have a serious problem. You might not be able to practice in the area. Or you could even have to up and move your family. Non-compete clauses are critical 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.
Negotiate Non-Compete and Non-Solicit
Non-competes are those sneaky clauses in employment agreements that can hurt you in the future. More than anything, a non-compete agreement is something you should always negotiate. They’re usually a mileage from specific locations that you can negotiate. 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 negotiating how many miles, also consider, can you find work outside that restricted area without having to move? And then you also want to know what’s restricted. Sometimes the non-compete clauses specifically for veterinarians may 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, negotiate non-compete clauses.
Non-solicitation clauses mean you can’t solicit clients or employees coming with you. Sometimes you can negotiate down that period to six months or a year before reaching out to clients or employees. Then you have your sort of ancillary benefits. In continuing education, typically you’re given an allowance every year. Anywhere from 2,000 to 4,000 typically within a veterinary practice. You can negotiate that money because if you don’t, you must pay for your continuing education to keep your license. That’s something I would negotiate as well. And then any dues, fees, licensing, all those costs add up. We don’t think about that when we’re just looking at the base salary and how much money you will make. But you can negotiate these sorts of costs at the beginning. It will save you a lot of money and headaches in the end.
What Needs to Be in a Termination Letter for a Veterinarian?
What needs to be in a termination letter for a veterinarian employed at a veterinary practice? The short answer is that it needs to be direct and doesn’t need to include too much. First, you need to know if you can terminate your contract. If it has to be for-cause or without-cause, looking at your employment agreement. Normally, 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, a notice provision states you must give the employer anywhere from 60 to 90 days’ notice you’ll end the contract.
How to Give Proper Notice
There’s also going to be a clause in your employment agreement that usually 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 and 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 to send it, and 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. It would help if you read this before you write your termination letter. There, it should state that you are terminating your employment, giving you proper notice, and your last day will be. And then you can fill that in. If you want to thank them for 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 let them know that you’ll assist them with transitioning to a new veterinarian. Still, all situations are different, depending on your relationship with them.
Veterinary Contract Questions?
Contract Review, Termination Issues and more!