4 tips for associate contracts

By Matt LaMaster, Esq., DrBicuspid.com contributing writer

May 19, 2015 -- Graduating dental school is a great accomplishment. With graduation comes excitement, new beginnings, and the potential for making your own money. Yet, graduation also comes with anxiety, large student loans, and the realization that you will be working for someone else.

If you're going to be working for another doctor when you graduate, your associate agreement will be of great importance. As you probably already know, this is the contract that you will likely be asked to sign by your new employer. It's a major milestone in your new dental career, but it can be a complex and intimidating process for those without specific legal training.

This article focuses on four key components of your associate agreement for your first and other jobs out of school.

Know your status

First, you need to know whether you are an employee or independent contractor. The problem is that in the dental industry these two terms are often represented as having the same meaning by the employer. However, they are not the same, and each has significant legal and financial implications.

Matt LaMaster, Esq.
Matt LaMaster, Esq., is the founder and principal attorney of the LaMaster Law Firm.

Here's a high level breakdown of the differences. Generally, employees are subject to the control of the employer and the terms of an employment contract with restrictive covenants. As an employee, you are paid as an employee and entitled to the benefits offered to other employees of the practice.

An independent contractor, on the other hand, is when the associate dentist subcontracts their services to a practice. Independent contractors have greater freedom to practice as they wish and can take some liberties on when, how, and where they practice.

If a dental practice is controlling your hours and your work product, telling you what materials and supplies to use, requiring you to abide by the practice philosophy, and restricting you from working at other practices, there's a really good chance that you are an employee.

Regardless of your status, what's most important is that you have an employment agreement for an employment relationship, and an independent contractor's agreement for a contract relationship. If you have questions about your status, you should seek professional advice before signing on the dotted line.

Compensation

It's common -- and understandable -- for new grads to fixate on the percentage of pay. However, it must be understood that not all percentages are created equal. Some questions you should consider include the following:

“Don't just let hiring doctors tell you they're paying 25% of your work”
  • Is your percentage based on production or collections?
  • Will you receive bonuses? If so, for what; how will they be calculated; and when will they be paid?
  • Are you penalized for write-offs or discounts given to patients by the practice?
  • Are you compensated for hygiene or x-rays?
  • Are you allowed to give discounts for work?
  • Are supplies or lab fees deducted?
  • Will you be given an accounting of the practice's collections or deductions on a periodic basis?

These are all questions that are much more important than the baseline percentage or salary that's promised by the employer. Don't just let hiring doctors tell you they're paying 25% of your work.

The terminator

Often overlooked, termination provisions are one of the most important and litigated areas of employment contracts. Most contracts provide for termination for serious issues, which is to be expected; if you are stealing from the practice, doing drugs in the back room, or breaching patient confidentiality, you should be fired.

But most contracts are extremely vague with legally undefinable phrasing, such as "breach of moral turpitude" or "actions injurious to the reputation of the practice." Any decent lawyer can fit anything you do into phrases like that, which essentially renders your new associate agreement terminable at will. Having represented employers myself, broad and ambiguous phrases like those above give employers margin to terminate you. The bottom line, just make sure that the termination provisions are clear and unambiguous.

Noncompetes and nonsolicits

Most employers will ask associates to sign noncompete and nonsolicit clauses. Yes, they are different. First, a noncompete restricts you from a particular activity (practicing dentistry) within a specified distance from the practice for a specified length of time. A nonsolicit is different because it prohibits your from direct or indirect solicitation (communication) of patients or employees of the employer.

Here are a couple of things to keep in mind: Enforceability of a noncompete generally depends on the reasonableness of the scope, duration, and geography that it covers; for the nonsolicitation provision, make sure that the contract is clear on what constitutes a patient and what constitutes direct and indirect solicitation.

A word of advice, don't just ignore a noncompete or nonsolicit in your contract based on your interpretation that it will not be enforceable. Instead, it's best to negotiate the best terms possible, abide by them, and seek legal counsel if you have questions.

Conclusion

This list is a good start of the key components for your first associate agreement, but it's not exhaustive. Each dental agreement presents its own unique issues and, therefore, must be read in its unique context. Because there are so many issues to be addressed, professional advice from an attorney versed in dental associate agreements is necessary to develop a thorough, reasonable and legally enforceable contract best for your unique circumstance.

Matt LaMaster, Esq., is the founder and principal attorney of the LaMaster Law Firm, which is committed to delivering legal services to dental professionals and their practices. For more information about dental-specific legal services, visit www.lamasterlaw.com.

The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.


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