Top 10 Questions to Ask Before Signing an Associate Agreement

You may wonder why you would want to talk with a lawyer about your career when you haven’t even graduated from dental school.   Excellent question.

While the legal issues a new graduate needs to consider are typically very different than those faced by a dentist in mid-career who is buying or selling a practice, or a dentist who is considering retirement, there are nevertheless legal issues to recognize. This is particularly true with respect to dental associate agreements.

Here are ten questions to ask before signing.

1. Compensation
Will you be paid on a per-diem basis or as a percentage of collections (or production)? If based upon collections or production:
  1. Will the employer guarantee a minimum salary? If not permanently, at least during the initial few months? Alternatively, will the employer provide you a "draw"?
  2. How is "collections" defined? Reduction for lab costs? Reduction for other costs? As applicable, how will the production amount be adjusted?
  3. Will you be eligible for a bonus?
  4. Annual increase?
  5. Will you be paid following the end of your employment term (e.g., to the extent collections relate to pre-termination services)?
2. Status
Are you an employee or an independent contractor? The former is more favorable for you. If you’re the latter, consult a CPA for tax planning.

3. Schedule
Do you have to work a minimum amount of days per week? Will you, as the employee, participate in making the schedule? How many hours do you work per day? On-call coverage? Administrative duties? Marketing expectations?

4. Full time/Part time
Will you be permitted to moonlight or work at other practices?

5. Benefits
Who pays for malpractice insurance? Is there a requirement to buy a tail? Will the employer reimburse you for dues, licenses or continuing-education classes? Travel expenses related CE? How many vacation days? Unused days carried over?

6. Term
How will you or the employer terminate the agreement? Are early terminations permitted? How much prior notice is required? If you fail to provide adequate prior notice, is there a penalty? (Note: If and when you are ready to purchase a practice it may be challenging to provide more than a few weeks of prior notice). Upon a breach, will you have the opportunity to cure the breach?

7. Non-competition
Is the geographic area too broad? Look at a map! Is the duration too long (more than approximately 12-18 months)? Is there a grace period (e.g., if the employment agreement is terminated during initial [three months], the non-compete is not applicable)? If the employer had multiple locations, ensure the restricted area only applies to offices in which you have a constant presence. Are there fixed penalties upon a breach?

8. Non-solicitation
Following your employment term, are general (non-targeted) solicitations permitted? Are all patients/referral sources covered—or only active patients and parties with whom you had a relationship while employed. Is the duration too long (more than approximately 12-18 months)?

9. Indemnification
Are you required to indemnify the employer? Try to avoid these provisions.

10. Ownership
Do you have the opportunity to become a partner? When and how will the price be determined? What are the payment terms? If you are satisfied with the answers to these questions, you can avoid unnecessary expenses and frustration during your tenure as an employee.

Please note, the above list should not be considered legal advice and does not create a client-lawyer relationship.

Phil Bogart, a frequent online Townie contributor and a partner at Whiteford, Taylor and Preston LLP, represents dentists in business transactions and situations encountered during the life of their practices. Services include structuring/documenting employee arrangements, partnerships, acquisitions and other exit strategies.


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