What to Expect When You’re Expecting… a Dental Employment Contract

From May through the remainder of the summer, employment transitions in the dental industry are commonplace. Whether it’s new, fresh-faced graduates accepting their first jobs or dentists moving on from their first contract, the summer can be a busy time in the industry.

As you receive offers and contract proposals, below are a few things to keep in mind as you begin to review the agreements.

What is your commitment?

Most employment agreements stipulate a minimum time commitment to the practice that you must devote before leaving without penalty. One- to three-year commitments are common. Most are one year. If you received any bonuses, relocation support, or other incentive packages, you can expect the contract to include a minimum commitment of two years. In many cases, if you leave prior to your contractual commitment to the practice, you will incur fees, penalties, or be expected to refund bonuses or moving expenses.

Restrictive covenants can come back to haunt you.

Due to the nature of the business, it’s common for employment agreements to include a restrictive covenant, or non-compete clause. This is where you want to pay particularly close attention as you review the proposed contract, because restrictive covenants could seriously impact your employment and bottom line in the future. Be sure that all non-compete clauses are specific. Broad language leaves the contract open to interpretation, and that can lead to difficulty down the road.

Understand your independence.

Having a clear understanding of whether you are an Employee (W-2) or an Independent Contractor (1099) is important for tax implications, as well as definition of roles and responsibilities within the practice. W-2 employment means the employer controls your tax withholding and has responsibility over the daily operations of the practice. 1099 contractors are paid for services rendered. If this is your status, you are required to fulfill the entire tax obligation of your income.

Compensation variables.

There are typically two defining buckets of compensation: production versus collections-based. In basic terms, collections-based means associates are paid when the practice is paid. In most cases, anything out of the 90th percentile for collections-based is not ideal. Associates that are production-based are paid at a time of completed procedures, regardless if the practice collects patient or insurance payments. If a practice is unwilling to be transparent with the financials of the organization and allow you to see the numbers, it’s a red flag that should not be ignored.

All contracts are negotiable.

One thing to keep in mind above all else is that contracts are negotiable. It is not unheard of for a practice to put forward a contract that broadly states its terms so that it does not have to be revised for every new associate. From an employee perspective, this is not ideal. It’s best to have the terms of the contract be very specific and detailed to ensure nothing is left to interpretation.

Studying your potential employee agreement or contract closely is highly recommended. There are legal professionals who specialize in dental contracts that can help. Always turn to a legal professional if you seek specific legal advice. Experienced recruiters who are familiar with the industry can also be a trusted resource if you are looking for guidance in terms of market norms.


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