One of the first discussions to occur when a practice hires a new associate dentist is about the parties’ expectations, understandings, and goals. Oftentimes, these verbal agreements regarding the employment relationship between a Practice and an associate dentist are not memorialized in writing. Memorializing the employment agreement is necessary to protect both parties’ interests. Four key reasons it is important to have a written employment agreement with your associate dentist(s) are as follows:

1. Issues The Parties May Not Have Considered

Drafting and preparing a written employment agreement forces the parties to focus on and address the issues they may not have considered. This is even more effective when the parties seek experienced dental attorneys, who are able to highlight legal issues that are unique to the dental field. For example, practices may not be aware of the various ways to compensate associates. Other terms or issues the parties might not discuss or address include: (i) definitions, such as the definition of net collections or production, remake, rework, etc.; (ii) required administrative duties that the associate dentist will be required to perform during their employment; (iii) fringe benefits, such as malpractice insurance, payment for continuing education, and professional associations or organizations, etc.

2. Resolves Uncertainty and Eliminates the Possibility of Confusion

In any business relationship, clearly expressing the terms in writing will eliminate ambiguity and any uncertainty the parties may have. This is especially true if the attorney drafting the written agreement has experience and knowledge regarding the particular profession. For example, the employment agreement may address the nature of the associate’s compensation, the associate’s duties and responsibilities, and any benefits the associate will receive as part of their employment. Because there is no “one-size-fits-all” employment agreement, the written agreement can and should be customized in each situation. An attorney can be an invaluable tool to ensure that your written agreement is customized, unambiguous, and detailed.

3. People Often Forget the Terms of the Agreement

It is foolish to assume that both parties will remember each and every business term and related details previously discussed and negotiated. Even if both parties do recall all terms and details discussed, the parties’ interpretation of their discussions might differ. If the parties forget the terms and details discussed and if their interpretations of such differ, it will inevitably lead to conflicts unless the agreement is in writing. For these reasons, it is important that the Practice memorializes these business terms involved in an employment relationship with an associate. Even more seriously, when parties recall the negotiated terms differently, it oftentimes leads to litigation. As a result, the parties end up spending time and money to assert their rights, both which could have been avoided had the parties put their agreement in writing.

4. Helps Parties Avoid Being Taken Advantage Of

Finally, in the unfortunate event that you are in a business relationship with someone who is attempting to take advantage of you, a written employment agreement serves to support your claim better than making the argument that there was a verbal agreement addressing it. Without a written employment agreement, your attorney is less equipped to represent your position. Further, in the event of trial, without a written agreement, a judge is forced to determine who is more credible and who is telling the truth. Additionally, a written employment agreement gives your attorney the resources to threaten litigation if the other party breaches the agreement. Written employment agreements, therefore, can also serve as a litigation tool for you and your attorney to defend against a dishonest business partner or associate.

Vince Nardone Comment: From my perspective, the three most important provisions of an employment agreement are: (i) the compensation, (ii) restrictive covenants, including non-compete and non-solicitation, and (iii) the term and exit strategy, both for the employing Practice and the associate dentist. If you do not have a written agreement documenting the compensation, issues will arise. If it is not clear how long the relationship will last, or how one may end the relationship, issues will arise. Most importantly, if the parties do not protect their interest as it relates to a non-compete or non-solicitation, that Practice or that associate, at some point, will incur much more significant expenses than the initial expenses of having a well-drafted employment agreement negotiated and finalized. Take the time and make the investment on the front side. Or, risk taking more time and incurring much more expense on the back side.

Contact Nardone Limited

If you have any concerns about employment or business matters at your dental practice, specifically regarding written employment agreements, you should contact one of the dental attorneys at Nardone Limited. Nardone Limited represents dental practices in many different areas such as: (i) employment contracts; (ii) labor and employment representation; (iii) buying and selling dental practices; and (iv) human resource representation. If you would like more information regarding your dental practice, contact Nardone Limited.