What Should I Look for in a Dental Contract? | Dentist Agreements
There are many things to talk about here. Still, one identifies whether you will be given an employment or an independent contractor agreement. Both contracts are different, and some things should be included in one, not the other. Today, I’m just going to talk about employment agreements because that’s, by far, the most common type of contract between a dental associate and a practice. Within an employment agreement, it will go through all the essential terms of the employment relationship. Things to look for would include the contract’s length, term, and how to terminate an agreement.
Dentist Employment Agreement Red Flag
And I’m going to spend a little time talking about this. I see this a lot in dental associate contracts. I’m not sure why it’s just in this profession, but every contract you sign needs to have without-cause termination. There will be a clause that states each party can terminate the agreement for any reason, with a certain amount of notice to the other party. If without-cause termination is missing, it’s an enormous red flag! And the reason why it needs to be in there is the employer makes almost every job sound terrific.
Volume is excellent, with good people, proper staffing, and a good work environment. And then, the associate gets into the actual job, which is not what they were expecting. In that situation, if you had a two-year contract and there was no way of terminating the contract without-cause, you’re stuck there for two years unless they breach the contract.
You Want to Be Able to Get Out of Contracts
You always want the opportunity to get out of the contract with a certain amount of notice. Usually, the notice period would be between 30 to 90 days in most dental associate contracts. The reason it’s a huge red flag beyond just not having the flexibility of leaving when you want is that if a practice does not include the without-cause termination in the contract. It usually means they’ve had difficulty holding on to dental associates.
Most people would leave without-cause termination, so they’ve removed that option to lock in the dentist. You do not want that to happen. If you see an employment contract without a without-cause termination, do not sign that contract. Other things that are undoubtedly important to be in the dental agreement would be compensation. Are you paid a base salary? Are you paid a daily rate, which is common? Or are you paid just on collections? I would recommend not signing a contract that’s based purely on net-collections. You may be offered a new contract if you haven’t been with that practice previously.
You understand what the volume at that practice will be. Still, suppose you’re paid purely on net-collections, whatever the course collects from your specific services. In that case, you are at the mercy of the volume and the mercy of the scheduling. And the employer may prioritize moving the clients to them versus the dental associate simply because it’s more profitable for them to see the patients than the dental associate. So, identify what type of compensation it is and ensure it’s fair. Talk to colleagues, go to the association websites, and try to see what’s the average amount and identify that.
Look for the Bonuses and Restrictive Covenants in Your Contract
Are there any signing bonuses or relocation assistance? Do you have to pay it back if you leave early? That should be in the contract. Restrictive covenants are a considerable part of every dental contract as well. The non-solicitation and non-compete agreements are included, which is very important. You need to look at the terms of the non-compete. Any non-compete will state that the dentist can’t work within a geographic radius of the practice for a period.
Usually, one to two years is standard. And then anywhere between 5 to 20 miles, depending upon the state, is also considered reasonable. What you don’t want there to be, especially all these big dental conglomerates continue to gobble up all the smaller, dentist-owned practices. Many of these non-competes state that you can’t compete within 5 to 10 miles of every location. Even the places where you don’t work. And you don’t want that, because there are five or six office locations in a city. It’s 10 miles around six different areas. It could effectively knock you out of the town.
You want to make sure that the non-compete is fair. And then benefits. Usually, those won’t be listed explicitly in a contract. Sometimes, they are. But they’ll usually be like an associated benefit summary. You should obtain a copy. And then lastly, what are the things they will cover? So, dental, license, DEA registration, professional associations, and continuing education. Those should be listed in contracts, and the employer should pay for those. Let’s briefly explain what you should look for in a rental agreement. There are many other things you can look at as well. Those are usually the most important things to most dentists.
Other Blogs of Interest
- What You Need to Know about a Dental Associate Employment Agreement?
- How Do you Terminate a Dental Associate Contract Without Cause? | Agreement Termination
- How Dental Associates are Paid in Productivity Model | Dental Production Models
Dentist Employment and Dental Negotiations | How to Negotiate a Dental Associate Contract
How should you negotiate an associate contract? I’ll give some tips and tricks to get a better contract. There is a difference between negotiating a contract with someone just out of training and someone already established in a community. You have more leverage if a corporate practice or another group brings out your practice or wants you to join them. And you have an established patient base. Suppose you’re coming out of training. What do you need to do to put yourself in the best position to negotiate a contract?
For most dentists, the most important things are salary. Is it a base salary? 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? Are they paying for your license, DEA registration, credentialing, or continuing education, and are there signing bonuses and relocation assistance? Will you be paying them back if you leave within a particular time? Probably the two highest priorities are: who’s paying malpractice insurance? And who must pay for tail insurance after the contract terminates if it’s a claims-made policy?
Also, the non-compete 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 it would help if you had a reasonable non-compete that would not make you move entirely out of the area.
Know The Average Pay in Practice
Those are the essential things to dental associates. Now, you’re coming on training. You have a position offer. They’re giving you an inevitable financial amount. How do you know what’s reasonable? Talking to your classmates is the best way to find that information. What offers are they getting? How much are they getting, and how are they structured? Where do offers originate? That’s the best and most accurate means of determining the going rate at that time. The compensation is going to vary wildly. Is it a base salary? Is it a daily rate? Or is there some net collection involved? Or is it a hybrid? And could it be half base, half net-collections?
Other Things to Consider Beyond Compensation
Dental compensation for a job may look great, but the benefits are inadequate. They’re not paying for your tail insurance, or the non-compete is terrible. So, you can’t just take a salary as the number one factor in determining a good opportunity. But it is undoubtedly vital. Knowing whether a non-compete is fair or not is something you should probably consult with a professional about this.
Mostly, anywhere between one to two years and 5 to 15 miles from your primary practice location would be reasonable. If you’re in a non-compete that’s more than two years, it knocks out like multiple counties. Or maybe they’ve attached the non-compete radius to 10 locations. Say it’s a corporate practice in a big city having 10 locations. And they’re saying, well, you can’t work within 10 miles of every site we own. That’s not a reasonable non-compete.
The actual negotiation will depend on two things. One, do they give you an offer letter, or do they give you the employment agreement? They expect those terms to be negotiated in advance if they give you an offer letter. They were then incorporated into the employment agreement. And then, they’re going to provide you with the employment agreement. Sometimes it’s challenging to come to terms with the main parts of an offer letter without seeing the complete employment agreement. If I had a perfect scenario, there would be no offer letter. They would give the employment agreement.
Then you’d completely understand what the work entails and the expectations for both parties. You could agree to a salary, the length of term, that there’s a non-compete, that’s the things they’ll purchase. But seeing the specific language in the contract could significantly change the way you look at its value.
You Can Negotiate The Contract Even After Signing the Offer Letter
Just because you’ve signed an offer letter doesn’t mean you can’t renegotiate if you provide proper context to the employer. I was okay with making $110,000 a year and a base salary. Not knowing the non-compete effectively knocks me out of this state. If you want me to sign this dental contract with that non-compete, I need 130,000. There are many ways of going back and forth. Some employers will 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 agreement.
It usually means they’re difficult to work with down the road or have a very rigid and unprofessional environment. So, if you find that someone says, take it or leave it, I would leave it and move on. And try to find a better opportunity. I’m just telling you. If they take the mindset, they’re not going to change anything in the contract, like nothing at all. There will be no change in signing bonuses, relocation assistance, benefits, or anything. It is a lousy sign moving forward.
Top Tip: Check the Without Cause Termination
One more thing to remember when signing a dental contract or negotiating the terms of an agreement. Every employment contract should have what’s called without-cause termination. Either party should be able to terminate the agreement at any time with a certain amount of notice to the other—usually, somewhere between 30 to 90 days.
Suppose your contract doesn’t have without-cause termination. It means you must fulfill the entire initial term of the agreement somewhere between one to three years. Usually, 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 standard across all healthcare professions. In that case, it usually means they’ve had a ton of turnover or very dissatisfied dentists who wanted to leave. So, they’ve removed that ability and ensured they must stay there for three years, two years, etc.
Usually, it’s not in the contract because they’ve had a ton of turnover, and it’s generally due to bad management. Either it’s a toxic work environment. Or the compensation is not worth the amount of period or effort you’ve made. You’ve had to put into it. It makes sense that there’s always without-cause termination in the employment agreement.
Talk to Dental Associate Contract Lawyers
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. Incremental things you can change in the agreement can make a significant change in 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’ll think 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 appropriate or not? Once again, talk to your classmates, any mentors, or attorneys who understand what they’re doing and those dealing with these contracts every day. That’s where you need to get in. But if you ask for these ridiculous changes to an agreement, most places will pull the offer and say no. So, that’s how you negotiate an associate contract.
Can an Employee Terminate an Employment Contract?
The short answer is, obviously, yes. However, it will be determined based on the terms of the contract. In any employment contract, there will be a section that deals with the times, the contract’s length, and then termination, so how that contract ends. Let’s first talk about the terms of the agreement.
Most contracts will have a date, meaning it’s a year-long, two-year, or three-year contract. Then if the agreement doesn’t terminate, it will state a language. It will automatically renew for successive one-year terms. In that case, if a contract isn’t closed in another way after the initial period ends, it’ll just continue forever until terminated.
I would say there is a rarely fixed term with no language about automatic termination. If it’s just a two-year fixed term with no automatic renewal, it would just end at the end of two years, and that would be it. The parties can go their ways.
What Are the Reasons for Contract Termination?
Now, regarding terminating the contract, the first part is that if there is no renewal, it ends, and the contract ends. Second, by mutual agreement. Suppose the employer and the employee agree that the relationship isn’t working. In that case, they can always, by contract, decide to move on, and then that’s it, you can move on. Next would be with-cause termination. In this case, if someone breaches the contract, there’ll be language that states why the employer can fire the employee. If you need a license to perform the activity and lose your license, or if insurance is required and you’re uninsurable. There are, I guess, vague behavioral clauses.
If you’re disabled, you die, I mean, ordinary things, but there should also be a part called a cure. And so, in that case, if one of the parties believes the other party is in breach of contract, the most common reason is just payment concerns. Either someone is unpaid, they were promised an amount in the associate employment agreement, or maybe the timing. Also, the bonus payment is involved, and there is disagreement over the professional owed amount. That’s always a big, I guess, reason why there would be an allegation of breach of contract.
What Happens if Breach of Contract Is Committed?
If you believe the employer was in breach of contract, you’d have to provide them with written notice. And then the cure period means the employer would have a period to fix whatever the breach of associate contract is. Typically, that’s somewhere between 15 to 30 days. And the same can go for an employee.
If the employer thinks the employee is in breach of contract, they give them written notice, and then the employee has 15 to 30 days to fix the breach. If the breach is unfixed, the other party still believes the other party is in breach. Usually, that party has the option to terminate the dental associate agreements immediately. The last and most common way in most employment contracts is without-cause termination. There’ll be language that states that either party can terminate the employment agreement at any time, for any reason, with a certain amount of notice to the other party.
Typically, it would be somewhere between 30 to 90 days. Suppose the professional is unhappy and wants to move on. In that case, they give written notice saying I’m utilizing the without-cause termination notice in the contract. Then they must work out 30, 60, or 90 days, and then at the end of that period, they can move on without any concerns regarding terminating the contract. Yes, an employee can terminate an employment contract, but they must follow the terms of the agreement.
Employment Contract Termination and Non-Compete Law
Just because an employee terminates the contract doesn’t mean it necessarily ultimately ends at that point. They could be required of the employee if they terminate the contract. Many times, if given a signing bonus or relocation assistance, The employee would have to pay back a prorated portion of that if they left within the initial term of the employment agreement. Others could have non-compete associated with it.
So, just because an employee terminates the contract doesn’t mean that the non-compete doesn’t apply. It does, or at least it does in most circumstances if you’re in a state where non-competes are enforceable. How long will that last if there is a geographic restriction and then some temporary condition? That will continue even if the employee terminates the contract. If some malpractice insurance is involved and tail insurance is needed, it will say who must pay for that in the contract. Employees may also be responsible for that if they terminate the agreement. Although the employee can terminate the employment agreement, it doesn’t mean that there aren’t at least some strings attached.
One of the highest priority things I look at in the contract when I’m going over it with a professional. How do you get out of the agreement? And then what do you have to do if it ends within a certain period? In that way, the employee can know that I need to set aside this amount of money if I must pay for tail insurance or if I must pay back the signing bonus. So, they’re essential discussions, and things employees could negotiate before signing any employment agreement. Hopefully, that was helpful—kind of an overview of termination of an employment contract.
How You Can Terminate an Agreement
You probably shouldn’t, and your employment contract probably prohibits it. In any agreement, it’s going to state how you can terminate an agreement. It could be for-cause, without-cause, mutual termination, or maybe the initial term ends. But in most cases, I mean most contracts are terminated without-cause termination. Without-cause termination, either party can terminate the contract with a certain amount of notice to the other. Typically, around 30 to 90 days is a standard amount for most employment agreements. Suppose you are an employee, and for whatever reason, you don’t want to work for the employer anymore. In that case, you must follow those terms written on the without-cause termination notice.
And it always needs to be written. It’s going to state that you must write a letter. And then, it will also say if it’s a 60-day without-cause termination. The employee has to provide it 60 days prior, work it out, and after the 60 days are over. The employees are free to go once the contract terminates, and the employees are free to move on. They want to go where they want to go after that—considering if there’s a non-compete or a non-solicit. Still, we’re not going to get into that today.
How Do Employees Communicate a Notice?
The most crucial part as far as this goes is that it will be called “notice” or “notices.” It’s toward the back of the employment agreement initially provided by the company. And this will state who, then how you need to provide notice if there is communication.
An employee could provide in writing a certified letter or overnight hand delivery of whatever termination notice you’re going to provide. And that would then be considered adequate notice. Very few contracts allow email as an effective notice medium. If you gave, let’s say, you wrote an email telling your employer. I’m giving you without-cause termination notice, and I have 60 days. X will be my last day of work. I appreciate the opportunity. Well, if the email is not an effective communication medium within that notice section, that’s not considered effective notice. And then, the employer could make you work for another 60 days until you provide adequate notice. So, that’s the essential part. You need to look in the notices section and determine if the proper way to terminate the employment agreement includes email.
I can tell you if I review a hundred contracts, 98 of them will not include email or fax. And you certainly can’t just verbally tell your employer you’re leaving. It must be in writing. And most often, it has to be sent either by certified mail or hand-delivered. It depends on whether you work for a small practice or a vast conglomerate with locations in every state. It’ll be impossible to hand-deliver the notice if you must provide notice to the headquarters, and that’s halfway across the country.
The Consequence of Notice Not Received
To be safe for the most part, you need to write a letter. You’ll have to print it out and send it via certified mail that the employer is using. Usually, it’s one or two. You must send it to the owner if it’s a smaller practice. If it’s a big conglomerate, you have to send it to probably your boss plus the legal apartment of the company as well. If you look through, how much notice do I have to provide? And then how do I have to provide effective notice? You’ll be safe.
I have a couple of scenarios, and people have called me after the fact. And they’ll say I sent a letter to my employer’s email. I told them I was going to terminate the contract, and they didn’t say anything. I assumed that my contract would end on a specific date. The employer was mad about the employee leaving the company. The employer ticked off that they were leaving. So, what they did was they just sat on it for 45 days. And then, 15 days before the physician thought he was going to leave, they said, you didn’t provide us with effective notice. Email isn’t an effective form of communication to provide notice. You owe us another 60 days until you give us adequate notice, meaning a written letter sent via certified mail.
And so, the physician had already lined up another job, he had a start date in mind, and then he had to return to the new employer. He would say, I apologize; I will have to delay my start date by almost two months. That was a tough pill to swallow for the physician. If you follow the terms of the notice section, then you should be okay.
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