Employment Contracts: Know What You're Signing

Whether you have a job, you’re seeking a job, or you're selling your practice, an Employment Contract, or Independent Contractor Agreement, will likely be involved.  While an employee and an independent contractor are legally different, for purposes of this post I will treat them the same.

Employment contracts can vary in length from a single paragraph to over fifty pages.  A lawsuit seeking to enforce an employment contract could easily cost you over $100,000.00 in attorney’s fees, and could take over two years.  Compare that cost to paying for a few hours of an attorney’s time to review the contract so that you have a better idea of what you’re getting into.  After representing many dentists, here are a few tips. 

1) Have an attorney review your contract. 

You should seek out an attorney that is familiar with business transactions, employment contracts, and, preferably, one who has worked with dentists.  While paying an attorney may not fit in your budget, force it into your budget because your future employment and future financial position could be dramatically altered by an unfavorable contract.

And do not be swayed by an attorney who says they specialize in "dental law” or that they are a "dental lawyer." Texas does not recognize a specialty in “dental law” (www.tbls.org). 

2) Review your contract before both parties sign the contract.

Both parties should understand that all of the transaction documents are important and take time to review.  After all, if the documents are not important, then why do they exist at all?  So take the time to review your contract before you sign and return it; don't sign the contract the same day it is presented to you.  Asking me to review a contract that has already been signed is like a patient asking you if they needed a root canal after its already been done.  

3) Know what to look for in the contract.

While what you're being paid is important, the compensation section of the contract likely has the least ability to affect your future.  The entire contract is important, but three sections that should command your attention are the i) non-competition; ii) records and diagnosing; and iii) termination sections.   

i) Non-Competition: In Texas, properly drafted non-competition provisions can be enforceable after your job is over.  I’ve seen geographic areas for non-competes ranging from a 3 mile radius to a 50 mile radius. I’ve also seen non-competes that are tied to multiple practice locations.  For example, if ABC Dental has 15 offices around Texas and you work in one of those 15 offices, ABC Dental’s contract may say that you can’t work within 5 miles of any of ABC’s 15 locations.  It is critical to understand your after-employment rights in case this job does not work out.

ii) Records and Diagnosing: Many contracts say that the practice owns the patient files.  While this could be true if the proper procedures are followed, the default rule in Texas is that the diagnosing dentist owns the patient files.  You want to ensure that if you’re fired, or the office closes, that you can still access patient files to avoid patient abandonment claims.  Finally, make sure you’re in charge of diagnosing.  As a licensed dentist, you’re the only person who has legal authority to prescribe dental procedures.  Do not let a “treatment coordinator” or “patient facilitator” create your treatment plan.

iii) Termination: Most employment contracts require you to take, or refrain from taking, certain actions before you can quit.  Your contract might require you to provide the other party with written notice 30 days before quitting.  The contract also might prevent you from telling patients before you leave.  I have seen various obligations imposed on both parties, so make sure you know what your contract requires.  And remember, once you do quit, the non-competition section is going to guide where you can work next.

The contract has a lot of moving parts that do a lot more than simply pay you.  But, remember, the contract is business and, in business, all things are negotiable.