If you own a dental practice and are thinking about hiring an associate dentist, there are many important things to consider as you structure the employment agreement. A well-crafted associate agreement can set expectations, provide clarity, and help prevent disputes down the road.
Conversely, an agreement that leaves out key details or includes unfair terms can lead to problems. Let’s review the essential elements every employer should consider when drafting a dental associate employment contract. Always have a dental business attorney draft these agreements for you.
Scope of Duties and Responsibilities
One of the most fundamental things the agreement needs to spell out is the duties and responsibilities of the associate dentist. Will they be expected to perform all types of dental procedures or focus on certain specialties? How many patients will they be required to see per day or week? Will they have any administrative or management duties in addition to clinical work?
The more specific you can be about the job responsibilities, the better. This gives the associate a clear understanding of what’s expected of them and protects you as the employer if there are ever disagreements about whether the associate is fulfilling their obligations.
Be sure to also include language allowing job duties to be modified as needed. As the practice owner, you need flexibility to adjust roles based on the practice’s changing needs. The contract can require the associate to perform “other duties as assigned” or something similar.
Compensation and Benefits
Of course, compensation is one of the most important parts of any employment agreement. Most dental associate pay structures use some combination of base salary, monthly/daily rate, and production bonuses.
Here are a few common compensation models:
- Straight base salary (e.g., $120,000 per year)
- Base salary plus percentage of production/collections (e.g., $80,000 base plus 30 percent of production over $40,000 per month)
- Daily or monthly rate (e.g., $500 per day or $10,000 per month)
- Pure production/collections (e.g., 35 percent of production or collections)
Each model has pros and cons from both the employer and employee perspective. A straight salary provides consistency for the associate but doesn’t incentivize production. A production-based model motivates the associate to be productive, but income can fluctuate greatly, especially in the beginning.
Many agreements use a hybrid model, such as a base salary plus a production bonus, to get the best of both worlds. The base provides some security and consistency for the associate, while the production incentive encourages them to work hard and grow their skills.
If using a production bonus, clarify what counts as “production.” Does it include all work billed under the associate’s provider number? Is it calculated based on net production or collections?
On top of salary, the contract should spell out any benefits the associate will receive, such as:
- Health, dental, vision, life, and disability insurance
- Paid time off (vacation, sick days, holidays, etc.)
- Continuing education allowance
- Professional liability insurance
- Retirement plan eligibility and contributions
- Reimbursement for licenses, dues, and subscriptions
Offering a competitive benefits package can help with recruiting and retaining top talent. But it’s a significant cost for the practice, so you’ll need to carefully consider what you can afford to provide.
The agreement should also address payment terms and timing. When and how often will the associate be paid? Monthly, twice a month, every two weeks? Will it be by direct deposit or paper check? Setting clear expectations around pay periods and methods can prevent misunderstandings.
Work Schedule and Call Coverage
The employment agreement must specify the associate’s expected work schedule, including days and hours. How many days per week and hours per day will they work? Will the schedule be fixed or variable? If variable, how much advance notice will be provided of schedule changes?
In addition to regular work hours, the agreement should address after-hours call coverage responsibilities, if applicable. Will the associate be expected to take the call? If so, how often? What is the protocol for handling emergency patients? Call coverage is an important issue that’s often overlooked in associate contracts. Spelling it out clearly can avoid confusion and resentment down the line.
Many associate agreements include language requiring the associate to work additional hours as needed based on patient demand and the needs of the practice. As the employer, you’ll want some flexibility to adjust schedules. However, the associate may want the agreement to set some limits, such as a maximum number of hours or days per week.
Term and Termination
Every employment agreement should specify the length of the contract term and grounds for termination.
Here are a few common structures for dental associate contract terms:
- One-year initial term with automatic renewal for successive one-year periods
- Two or three-year initial term with option to renew by mutual consent
- “At-will” employment with no set term and ability for either party to terminate at any time
There are benefits and risks to each option. A set initial term (e.g., one to three years) provides stability and security for both parties. But it also locks you in, even if the relationship isn’t working. An at-will arrangement preserves maximum flexibility to end the arrangement if needed, but it provides less predictability.
Many contracts use a set initial term followed by at-will. For example, there may be an initial guaranteed term of 12 months, followed by employment at will after that. This gives some security for the first year while preserving flexibility after that.
The agreement must address termination rights and procedures regardless of the term structure. Under what circumstances can the employer terminate the associate? Common grounds include loss of license, misconduct, criminal activity, breach of contract, disability, and practice sale/closure. The agreement may give the employer broad discretion to terminate for any reason or no reason (subject to any illegal discrimination).
The contract should address required notice periods (e.g., 30 or 60 days) and whether the notice must be in writing. It should also specify the associate’s compensation and benefits upon termination. Will they continue to receive base pay or production pay through the last day? Will they get a pro-rata share of any bonus they were on track to earn? Will health insurance and other benefits continue through the end of the month?
The associate may want the right to terminate the agreement, not just the employer. The same termination notice periods would typically apply, such as 30 or 60 days.
Customizing the Agreement
A dental associate employment agreement is a complex legal document with many important provisions to consider. We’ve covered many key issues, but this list is not exhaustive.
Every dental practice is unique, so a one-size-fits-all contract won’t work. It’s important to think through your practice’s specific needs and goals to craft an agreement that fits.
An experienced business lawyer who understands the dental industry can be a valuable resource in this process. A dental business attorney can identify potential risks and opportunities, negotiate favorable terms, and create a clear and enforceable contract.
Don’t leave your practice vulnerable with an incomplete or poorly drafted associate agreement. Take the time to work with a skilled dental practice attorney and put a strong contract in place. The investment can pay off by preventing costly disputes and protecting your hard-earned practice assets.
If you need help with a dental associate employment agreement or any other legal issue related to your practice, contact a knowledgeable dental attorneys today to discuss your options.