Employment Agreements/Contracts

By Tim Marshall, DDS, MBA

You’ve successfully graduated and passed your boards – what’s next? For many of you, it’s getting that first job out of dental school. Almost all those jobs will involve an employment agreement of some kind. The first question that should come to mind is – “What should I expect?” In truth, most employment contracts are 90% boilerplate – meaning it is standard wording that will appear in every contract. The major elements are as follows:

Restrictive Covenant – Basically this will have two elements: time and distance. The typical time is two years, the distance will vary depending on the practice location. If you are in a high-density urban area, it could be one to three miles; if you are in a suburban area, it could be three to five miles. This is something that you may be able to negotiate a bit, but you will have something in place.

Non-Solicitation – This is an absolute. No negotiation here. Basically, it says that you cannot solicit staff nor patients directly if you leave the practice.

Benefits – Things like insurance (health, malpractice, life, disability), continuing education, paid rime off, etc. Keep in mind that if your employer is supplying malpractice, when you leave, you will be responsible for purchasing “tail” insurance. Although you may be tempted to try to negotiate here, many of the benefits are covered by federal regulations (ERISA) and, as such, must be the same for everyone. Doesn’t hurt to ask, but don’t be disappointed if there is no room here for negotiation

Compensation – This is the most important part. Usually, it is a percentage of collection calculated on a monthly basis. Many also include a deduction for lab fees incurred. An example would be 30% collection, less 30% lab fees. The reason for the lab fees is to ensure that you have some skin in the game and won’t be unreasonable about to whom you send you lab cases. Many times, there will be a daily minimum guarantee as well. Sometimes that guarantee go es away after 90 days. You may be able to negotiate this, but keep in mind that you will have to be able to earn your keep and if you are consistently producing less than your minimum, you will probably be looking for another job.

Notice – Usually the contracts require a 30-day notice. Trying to negotiate a lesser time frame will raise alarm bells for the employer. Remember that if you decide to leave, the employer will need time to find a replacement and you should allow time to finish your cases.

Attorneys – Many of you will want an attorney to look over the contract before signing. There are two important things to note. One is that the contract will be weighted in favor of the employer. The reason for this is that all you have to lose is your job; your employer could, in theory, lose the practice. So, please remember that when your attorney tells you that the contract is not in your favor. Second, it is important that if you use an attorney you choose someone who has experience in health care employment agreements. An attorney that does real estate closings and wills is not a good choice. Ask the FDA for help and guidance with this.

In order to have a good experience after signing on, it is vitally important to keep the lines of communication open. Be sure to ask whom you speak with if you have any questions and/or problems. Everyone involved wants the experience to be a positive one, so open and constructive communication is vital. Almost all problems are the result of misunderstandings or miscommunication. Being aware of that will make your first employment experience a positive one.

Bryan T. Marshall, DDS, MBA is currently the CEO of Pioneer Dental Services based in Denver, CO. He has served as Chief Dental Officer for several Regional DSO’s throughout the United States. Dr. Marshall also served as a past FDA treasure. He can be reached at btmarshall@msn.com.