Hi, I’m attorney Renee Osipov with Chelle Law in Scottsdale, Arizona. We draft employment agreements, policies, and client letters for veterinarians within their practice.
How to Leave the Veterinary Practice
If you’re reading this blog, then multiple veterinarians are likely within your practice. One either decided to retire or leave the geographical area. The best way to communicate this information to your clients is via letter. It’s essential to give the clients at least 30 days’ notice before this change. In the letter itself, you will want to explain and notify the clients of the change. Equally important is reassuring them of the continuity of care within your veterinary clinic.
Inform People in Your Current Practice of the News That You’re Leaving
You can also let them know they can obtain veterinary records for their pet upon request. or even include a veterinary record consent form. You’d also want to have a brief apology and assure them that there will be continuity of care for their pets. In some situations, it may be essential to let the clients know the contact information for the veterinary associate that has decided to leave. But again, that’s optional and depends on each situation. We understand that each situation is unique, so if you’d like further information, please visit our website at Chelle Law. C H E L L E. law.com. Our contact information is also on there. We would be happy to set up a consultation with you in order to discuss the unique needs of your veterinary practice or clinic. Thank you.
Other Blogs of Interest
- Veterinary Independent Contractor Agreements
- Must a Veterinarian Repay a Bonus if They Terminate the Contract?
- Associate Veterinary Employment Contract
Can You Break a Veterinarian Contract?
Can a veterinary associate break their employment contract? The short answer is yes. They can. However, if this means they’re breaching the contract and not adhering to the contract terms. Then they would likely open themselves up to liability, including litigation costs and arbitration. The employer can ask for damages, including recruitment costs for a new veterinary associate for the practice. They may ask for administrative and credentialing fees, and the list goes on. So, it’s never a good idea. We never advise our clients to breach their contract. The best way to break or terminate the contract is by doing it exactly how it’s outlined. Typically, there is a termination clause, and there are three ways to terminate a veterinary associate contract.
The first way is that both parties, the employer and employee, mutually agree to terminate the contract and go their separate ways. However, this is rare, and we don’t see it happen often. The second way is for-cause termination. And this is typically weighted more towards the employer. The employer can terminate the contract without notice if any egregious acts happen. Typically, you can find it on the contract. This might be being convicted of a felony and losing your license to practice. And again, the list goes on from there. Then the last way to terminate a veterinary contract would be for no cause. The employment agreement typically outlines the no-cause termination. It would help if you gave the other party 60 to 90 days’ notice, and then the contract terminates. You can go your separate ways.
Achieving Smooth Contract Termination
The veterinary contract also typically outlines how to provide that proper notice. It normally has an address, and you would either mail in a letter or hand-deliver it. In some rare instances, you’re allowed to send it through email. We also like to encourage our clients to provide notice in multiple ways. That is the proper way to save yourself from liability to terminate a contract properly.
But when you decide to do this or break a contract, you also want to keep in mind, are there any repercussions? Do you have to pay back any signing bonuses or relocation expenses? Typically, those have a payback provision or a forgiveness period. And if you are to break or terminate the contract within that time, you must repay those. So, you want to look at that in your contract. Keep that in mind whenever you decide to break or terminate the veterinary contract.
And then lastly, most veterinary employment contracts have a provision with restrictive covenants. Restrictive covenants include your non-compete clause and non-solicit to clients and employees. In the non-compete clause, you want to ensure you’re not practicing within the restricted area or during your restricted time. Typically, you’re not allowed to solicit clients, so you can’t ask them or entice them to come with you. And the same for veterinary employees at your clinic or practice. In summary, you never want to breach a contract. If you would like out of it, you need to terminate it properly and provide proper notice. And then you also need to remember, are there any repercussions to look for? Sort anything you’ll need to pay back. Like signing or relocation bonuses, look at those restrictive covenants to ensure you’re not violating them.
Can an Employer Make a Veterinarian Pay Back a Signing Bonus?
One common question is, can we make a veterinary associate pay their signing bonus? And the short answer is yes. Signing bonuses are a great way to entice veterinarians to join your practice. Suppose they’re straight out of school or moving from a different community. Then, include this in an employment agreement through a payback provision.
There are typically one of three ways that we would address it. The first way is stating. Suppose the veterinarian leaves or terminates their agreement within 12 to 24 months. They would pay back the entire signing bonus. The second way to include this into the agreement is to, say. The veterinary associate was to terminate the contract within 12 to 24 months. They would pay their signing bonus at a prorated share. That is considering their employment length with the practice.
How Long are Most Veterinarian Contracts?
How long are most veterinarian associate contracts? First, you need to know two things to determine the average length of a contract. One is how to terminate the agreement, and two, does the contract automatically renew? Let’s kind of hit all of those.
There’s usually an initial term to the veterinary contract. An initial term means the length of the contract before it ends. Or, if there’s a language, it could automatically renew for successive terms after the initial period ends. The average length for an initial term is somewhere between two to three years. And so, in most contracts, after that two or three-year period ends. As I said before, there’d be language that states it automatically renews for one-year terms after that. And then it just continuously renews unless terminated by the vet. That’s a normal amount of time. If you have a five-year contract, it’s abnormal.
Employee or Employer Can Terminate Employment Agreements
Now, does it ultimately matter? Not really, because of this: every contract will have ways that the vet or the employer can terminate the agreement. There will be a without-cause termination clause. And this means either party can terminate agreements any time with a certain amount of notice to the other party.
You could be one month into your job. You hate it, maybe especially lately, the lack of staffing makes your job impossible. Or perhaps you’re being paid on pure productivity, and the volume is terrible. And you’re like, this is not for me. In the contract, if you have without-cause termination, usually, it’s somewhere between 30 to 90 days for most veterinary associates. And so, you would say, I’m giving you my notice, and then, let’s say it’s a 60-day time. You’d work out those 60 days, and you could leave at the end of the 60 days. If you can terminate the contract at any time and reason, the contract length doesn’t matter in some ways.
If you had a five-year term but could terminate the contract with 60 days’ notice, it’s only a 60-day contract. You can think of it that way. Now, when is a good time to renegotiate the agreements? Well, usually, it would be at the end of whatever year period. Let’s say you’re just on a straight-based salary. You may approach the employer, and say, I’ve been this productive, and I believe I deserve an increase to this amount. Some people are concerned that if it just automatically renews forever, the job will stick them with the same salary forever.
Veterinarians Can Negotiate their Employment Agreements
You can renegotiate at any time. Go to the employer and say, look, I’m generating $600,000 a year, and only making a hundred thousand. I want an increase. For most veterinarians, it would be between 18 to 22% of their net-collections. In that scenario, you’ll say, if you don’t raise my salary, I’m going to give you notice and then leave. And obviously, they may call your bluff if you’re not willing to leave. But that’s a good stopping point to say to them, look, I’m worth more than what. And it’s time to renegotiate.
The average contract length doesn’t matter if you can terminate the contract at any point. Is there one length that’s better than another? Not really, not taking that into account. Now, there is one other type of length of term, it’s called an evergreen contract. And this is being used more and more lately for whatever reason. There is no initial term set. So the contract should continue forever until one of the parties terminates agreements per the contract terms. Once again, that’s fine if you can terminate the contract without-cause at any point. If it’s a contract that goes on forever still is just if the notice period is required. So, that’s a little primer on the average length of a veterinary employee contract agreement.
Veterinarian Contract Red Flags
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?
Check the Compensation Package
First, 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 a 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.
Red Flags To Look Out For In Your New Practice
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 that 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.
Include This In Veterinary Contract Negotiations
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. Hence, they try 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 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.
Lastly, 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.
Veterinary Contract Questions?
Contract Review, Termination Issues and more!