In a Dental Practice, is 10 Miles a Reasonable 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 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
- Is a Non-Compete Enforceable Against a Dentist?
- Is a 2-Year Non-Compete Too Long for a Dentist?
- Can You Break a Dentist Contract?
Red Flags in a Dentist Employment Contract
Dental associate contract agreements red flags. There are dozens of red flags in a dentist’s contract agreements. However, there is a handful necessary to take a solid look at, and we’ll go over those. The first thing would be no without-cause termination. In any dental associate employment contract agreement, there’s going to be a section called term, which means how long the contract is, and then termination, how people can terminate the contract.
Contracts can be terminated in several ways. The term could end, and it’s not renewed. Parties could terminate it by mutual agreement. Or for-cause. If one of the parties breaches the contract but 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. Usually, it takes somewhere between 30 to 90 days. I find this especially important for dental associates for whatever reason. Without the ability to terminate the contract agreements at any time, let’s say the dental associate has two-year contract agreements, and they cannot terminate without-cause. Unless the other party breaches the contract, you’re essentially stuck there for two years.
Employment Red Flags: Net Collections and Long Notice Period
There are plenty of scenarios where if a dentist associate is on net-collections, volume, and compensation, the owner will generally overestimate what the associate will make. And so, they can get into a job if they’re not paid a daily rate or a salary, it’s more of just eat what you kill and get a percentage of whatever is collected, and 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 ensures there’s no-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 provide notice. You do your, whatever the notice period is, move on. Absolutely necessary. Two, compensation. If you are a dentist and they’re paying you on either net-collections, encounters, or some volume metric, and you are not 100% certain that the volume is there for you, you need to be very careful about taking that job.
Dental Associate/Contractor Compensation
A daily rate or base salary, especially in the first year or two, insulates the dental associate from getting completely screwed by an employer unwilling to make an income guarantee and bring in a dentist. But in that circumstance, only pay them based upon a volume metric. Like in the example I just gave, if a dentist starts and their compensation is based purely on production and the production is entirely out of their hands, they’re not doing the marketing. It is on the employer to drive the business. It’s a problem. What amount draw they receive should also be a consideration.
So, it’s essential to have a guaranteed salary or daily rate for anyone new, maybe just out of training or relatively new. And then once you’re there, and perhaps you’ve been there a year or two, and you see that the volume is there, maybe potentially you can make more under collections model, well then, talk to the owner about switching. But at the very beginning, I find most places that try to lure dental associates in with big numbers. It rarely shakes out that way. Another big red flag is the non-compete, and this is one thing that varies from state to state. Each state has its view on what’s a reasonable non-compete.
Dental Employment Contract and Non-Competes
Non-competes are enforceable. Almost every state, California, New Mexico, and Massachusetts are three of the few states where they’re entirely unenforceable. But for 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, usually somewhere between 5 to 15 miles. If you have a five-year, 50-mile non-compete, that’s crazy! You don’t want to sign something like that. You want it to be no more than a year, and then no more than, I would 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 areas where the dentist provided care, and even then, try to limit it to no more than two locations. In big cities, corporate dental conglomerates continue to gobble up some dentist-owned practices.
If someone has 10 locations in a city and is 10 miles from 10 sites, that non-compete will knock you out of your city. So, what’s in the non-compete is certainly important. And then last, 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. If you’re moving from out of state, reasonable moving expenses and reimbursement are everyday things an employer should pay for. So, think about that as well.
How to Negotiate a Dental Associate Contract?
I will give some tips and tricks to get a better contract. Negotiating a contract with somebody just out of training is different than with someone already established in a community. You have more leverage if you are in any community and either a corporate practice or another group is bringing out your practice and wants you to join them, and you have an established patient base. Let’s first talk about those coming out of training. What do you need to do to put yourself in the best position to negotiate a contract? Well, you need to know what’s important.
For most dentists, the most important things are compensation, is it a base salary? Is it 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? Do they pay for your license, DEA registration, credentialing, and continuing education, and are they signing bonuses and relocation assistance?
Do you have to pay them back if you leave within a particular time? And then probably the two highest priorities are who pays for malpractice insurance. Who must pay for tail insurance after the contract terminates if it’s a claims-made policy and 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.
Find the Ongoing Rate in Dental Practice Competition
Those are the most important things to dental associates. Now, you’re coming to training. You have a job offer, and they’re giving you a certain amount. How do you know what’s reasonable and what’s not? Well, talking to your classmates is the best way to find that information. What are the offers they’re getting? How much are they getting, and 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. Is it a base salary or a daily rate? Is there some kind of net collection involved, or is it a hybrid? Could it be half base, half net-collections?
Often, compensation for a job may look great, but then the benefits are bad, they’re not paying for your tail insurance, or the non-compete is terrible. So, you can’t just take compensation as the number one factor in determining what a good opportunity is, but it certainly is important. Knowing whether a non-compete is fair or not is something you probably must talk to a professional about.
For the most part, anywhere between one to two years, and then maybe 5 to 15 miles from your primary practice location would be considered 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, let’s say, it’s a corporate practice in a big city, and they have 10 locations. And they’re saying, well, you can’t work within 10 miles of every location we own. That’s not a reasonable non-compete.
Compensation, Benefits, and Restrictive Practices
The actual negotiation will depend on two things. One, do they give you an offer letter, or do they just give you the employment agreement? If they give you an offer letter, they expect that those terms will be negotiated in advance and then incorporated into the employment agreement. And then, they’re going to give you the employment agreement. I find it difficult to come 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 just give the employment agreement. Then you’d have a full understanding of what the job entails and the expectations for both parties.
You could agree to a salary, you could agree to the length of the term, that there is a non-compete, that the things they’ll pay for, but when you see the specific language in the contract, it could greatly change the way you look at the value of the contract. Just because you’ve signed an offer letter doesn’t mean you can’t renegotiate those terms if you provide proper context to the employer.
Alright, I was okay with making $110,000 a year and base salary, not knowing that the non-compete effectively knocks me out of the entire state. If you want me to sign this contract with that non-compete, I need 130,000. There are many ways of going back and forth. Some employers will simply 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 contract.
Red Flags in the Dental Practice
It usually means they’re difficult to work with down the road or a very rigid and unprofessional environment. If you find that someone says, take it or leave it, I would leave it and move on and find a better opportunity. 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. And then one more thing to think about and absolutely should be top of mind when you’re signing a contract or negotiating the terms of an agreement: every employment contract should have without-cause termination. Either party should be able to terminate the agreement at any time with a certain amount of notice to the other party.
Usually, it’s somewhere between 30 to 90 days. If your contract does not have without-cause termination, meaning, 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 essentially standard across all healthcare professions. In that case, it usually means they’ve had a ton of turnover. Or they’ve had some very dissatisfied dentists that have wanted to leave.
So, they’ve removed that ability and made sure that they must stay there for a three-year or a two-year period or whatever. If it’s not in the contract, that’s why it’s normally not in there because they’ve had a ton of turnover, and the turnover is normally due to bad management. It’s either it’s a toxic work environment, or the compensation is not worth the amount of time or effort you’ve, you’ve had to put into it.
The Need for No-Cause Termination Agreements
It makes sense there’s always without-cause termination and the employment agreement. 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. The incremental things you can get changed in the agreement can significantly change 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 will think that 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. And deal with these contracts every day. That’s where you need to get in. But if you go in and ask for these ridiculous changes to an agreement, most places will pull the offer to say, no, we’re not doing any of that. So, that’s how you negotiate a dental associate contract.
Dentist Non-Compete Restricted Offices Explained
How many locations should a dental non-compete apply to? Before we get into this specific question, let’s back up and talk about what is a non-compete clause. Non-compete clauses are standard in just about any dental employment agreement. Even if you’re with private practice or a big corporate practice, there’s usually always a non-compete. Now, they might go by a couple of different names. It might specifically say a non-compete clause. However, it may say restrictive covenant, a promise not to do something. And then it will list the language that employment agreements typically include a non-compete clause. And sometimes, they don’t go by any name. They sneak them in there. So, you want to ensure that you read over your employment agreement very carefully, because this could affect your career after your employment ends with whatever practice you are signing this agreement with.
Can Management Restrict an Employee Dentist?
Let’s talk about what is in a typical non-compete clause. Normally, there are two components to a non-compete clause. One is the period that you’re restricted from the competition. Now, this can typically be anywhere from six months to two years. It rarely goes over two. And I would say most of the time I see is around two years. Sometimes, I can get negotiated down to one year, but again, usually, I would say the average is anywhere from six months to two years. Now, we have our timeframe. This is how long the non-compete restricts you from competing after terminating your employment. You might terminate it, or the practice might, but your employment has ended. And this is when the non-compete clause would then become valid.
Okay, so we’ve got the time for how long. The other component of it is where the restrictive covenant applies. Again, this depends on where you are in the country. If you’re in New York, you’re not going to use miles. Typically, New York city’s non-compete clause will stay in city blocks because if you even go one mile, you’re going to knock out most of the city. So, that’s not reasonable. If you’re in a rural area, a tiny town, sometimes the non-compete clause can go anywhere from 10 to 20 miles. And then, if you’re in just a regular city setting, such as Phoenix, the mileage typically goes a little less.
When it is an Unreasonable Restriction
It can be anywhere from 3, 5, or 10. I would say anything over 10 would likely be unreasonable. That would be something that you would want to negotiate down. So, we have our timeframe, you must know how long you’re restricted, and then you need to know where you’re restricted from. And this is where we’re talking about the specific questions today. How many locations should that restricted area apply to? This is easy. If it’s a private practice, and they only have one location you’re restricted from, let’s say three miles from the practice, which we’ll use as an example, that’s great. You know that you cannot practice dentistry within three miles of that location. That’s easy. But likely they get a little bit more complicated than that. Let’s say it’s a private practice or a small corporation, and they have multiple locations.
Sometimes, the language they’ll use in the non-compete is that you’re restricted to that mileage. So, three miles from any location that you provide services for practice ABC. The complicated part is when it uses the word “any location you provide services for”. If you cover a dentist who’s on vacation, so you work a couple of days, maybe a week at another location for the practice, well, that three-mile restriction now applies to that second location.
Red Flags in Dental Business Practices
So, you want to be careful when you’re reading your employment agreement. If you see anything that says any location that you provide services at, that should kind of be a red flag for you to really think about it. So, we talked about the language where they say any location you provide services for. A green flag will be if you see where they say you’re only restricted by the three-mile restriction from your primary place where you provide services, which is a little bit clearer. Suppose you only typically work at one location. In that case, you provide 90% of your services at one location, that’s your primary location, and therefore, you’re only restricted to three miles from one location. That’s great. It’s easy to follow, it won’t change in the future, and you’ll know if you violate it.
Another sort of red flag that you want to be aware of is whether it is a practice with multiple locations or a corporation with many locations. Sometimes, employment agreements will have a language that states you’re restricted from any location that a corporation ABC owns. So, this gets a little tricky. Again, let me restate this. If it says any location from a corporation or practice ABC, this gets tricky. You could be restricted. That three-mile restriction could attach to hundreds of locations you’ve never even been to.
New Practice Restrictions
This isn’t easy because this can knock out a huge region. Let’s use Phoenix as an example. It could knock out the whole city if they have multiple locations around the city, even if you’re not providing services for them. You want to make sure you’re reading the contract very carefully. And if the practice is expanding in the future, they could add 5, 10 locations, and you’ll have that three-mile radius attached to any of those locations too.
So, to be more concise, you want to know where you will provide services. That’s very important. Your employment agreement should outline it. Then the non-compete clause should only attach to your primary location. You should advocate for this because if it’s from any location you provide services for, you need to remember that in the future, if you cover for a dentist who’s on vacation, your non-compete clause now attaches to that office that you only worked for for a week.
And it’s going to knock out that area. The other thing is if it says any location that the corporation or practice owns. That’s a big red flag, too, because you don’t know if they’re expanding in the future. How many locations, it’s hard to tell. When you sign the agreement, you don’t see what you’re restricted from.
In conclusion, how many locations? In my opinion, it should be only from your primary location where you are providing services, where you have built up a patient base, and relationships with your patients. You just want to be stopped from going across the street and those patients going there that they would consider competing.
Dental Associate Non-Compete Length
And then two other things you need to consider regarding 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 with eight locations for your employer. You want to ensure that it explicitly says your location or maybe the two locations where you spend most of your time. You don’t want to sign a non-compete stating that it attaches to every employer-owned location, even if you never worked in those locations. 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 explicitly states your location, not all the locations. And then also, if you’re in a specialty, you don’t want to get stuck from being unable to do any 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 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 return to your normal specialty.
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