Disclaimer: ​[00:00:00] ForCast is a podcast intended to provide information only on certain risk management topics, and is not to be construed as providing legal, medical, or professional advice of any form whatsoever. Because federal, state and local laws vary by location, nothing in this podcast is intended to serve as legal advice or to establish any standard of care. Legal advice, if desired, should be sought from competent counsel in your state. The views or opinions expressed by the guest do not necessarily represent the views or opinions of OMSNIC or its subsidiaries

Bill Klaproth (Host): Hello, and welcome to ForCast, a podcast brought to you by Fortress, a malpractice insurance company owned and operated by dentists. The name ForCast reflects Fortress's commitment to protection in their investment in reducing risk by forecasting future outcomes through past experiences and expert insight.

I'm your host, Bill Klaproth. And [00:01:00] today, very pleased to welcome Cody Short who will be joining me today. Cody is an attorney with Pennington Law Firm and works as defense counsel with Fortress Insurance.

Bill Klaproth (Host): And we're going to be talking about the nuances of employment agreements and their implications on your dental practice. Cody, welcome.

Cody Short: Hey, Bill. Thanks so much for having me. I think the first thing to mention here at the outset is that while I am a lawyer, I'm not your lawyer. So, the advice that I'm giving here today is not necessarily legal advice directed for any of our listeners. I would recommend that anybody who needs legal advice for any particular issue, go get their own counsel and help them deal with the issues that they're facing. But we're here to give some, hopefully, useful advice on employment contracts today.

Host: Yeah. Great to talk with you. So today, we're going to be talking about employment contracts. Can you give us a brief overview of the topics and issues that we'll be talking about

Cody Short: one of the most important things that we're going to be talking about is the importance of understanding employment [00:02:00] contracts before entering into them. And most simply, contracts are about defining relationships. They set forth what is expected of the parties, both the dentist in this case and their employer. I think a lot of new dentists, younger dentists are hesitant to negotiate contracts. And they think, "Well, the practice has done this before and they know how to handle these business type issues, and I'll just go ahead and sign, and I'm sure it'll be fine." This podcast hopefully will give you some things to be on the lookout for so that you're not just signing without having knowledge as to what you're entering into.

I think it also hopefully will highlight the importance of bringing in outside help if you need it and will give you kind of a roadmap to look for when you are in that situation of signing a new employment contract.

Host: Cody, thank you for that overview. I really appreciate it, and we're looking forward to hearing your insight on this podcast today. So, let's start with the basics. [00:03:00] You're fresh out of dental school, tell us why is it really important you really need to dig into that first job contract. And aren't most of them pretty standard?

Cody Short: Yeah, a lot of them are standard. There's obviously a lot of boilerplate language. We've all seen contracts before. But I think really the most important thing is that dentists understand that there's going to be expectations placed on them as part of a practice. And you need to know going in what those things are going to be over top of your standard practice of dentistry. And there are a lot of things that come along with that.

Host: Yeah. So, let's talk about those things. There are things that somebody might come in and go, "I didn't know I had to do that," right? "Oh, I've got to worry about medical records and call schedules and all of these things." So, what are things that we need to look out for, some important things that you want to point out that might be in that first contract that people might not be expecting?

Cody Short: I think scope of practice, so understanding what the practice is bringing you in for. It is understanding the administrative roles. I [00:04:00] think that is something that is routinely underestimated by newer providers as they come in, and they think they're just practicing, and they don't realize quite how much time is going to be taken up out of their day dealing with administrative issues, office management, oversight of other employees, hiring new staff members, things like that.

And so, I think it's good for providers to go in kind of eyes wide open and understand, "Okay, am I going to be handling all of those administrative functions or is that something that my practice has taken care of? Do they have an office manager, a management group who's going to deal with all those things so I can just practice dentistry?"

Host: Absolutely. So, those are things that somebody might not be aware of or might not have thought of fully through. Are there any common clauses that tend to surprise new dentists?

Cody Short: Yeah, I think non-competes are sort of the first one that kind of jumps off the page of everybody. Non-competes are often called restrictive covenants. That's just the legal [00:05:00] jargon for a non-compete. It is essentially going to restrict your ability to practice after you leave an employment situation. And so, maybe the standard non-compete would say you can't practice in a particular geographic area for a year or sometimes three years, sometimes five years.

I think employers are generally of the mindset, "Well, we're going to put as restrictive a non-compete as we can get away with and we'll deal with it later." They want kind of scare you-- for lack of a better term-- into thinking that you are tied to them via this contract. And so, you want to know what those details of that non-compete are if there is one in the contract, because you don't want to go leave your first job to go start your own practice in, you know, a couple years and realize, "Oh my goodness, I've signed a contract that says that I can't practice in my city for three or [00:06:00] five years," and you're left without some of the options that you thought you had before.

Host: This is kind of a weird question just thinking about this, maybe you get the question a lot. Can a dentist help out at a friend's practice on the side if he's shorthanded and wants to go in on a Saturday and do some work? Are there rules around moonlighting in dentistry?

Cody Short: Yeah. Again, you're going to need to understand what your employment contract looks like, right? Let's say you're working for a practice and you're approached by a friend, like you said, or another practice in your area and they say, "Hey, we really could use somebody to come in on Saturday or come in from 5:00 to 7:00 at night and do procedures for us and see patients who aren't available during the day." Well, are you allowed to do that under your employment contract with your practice? Some practices will have what's often called an exclusivity provision, which means, "Hey, I'm only going to work for my practice, my employer, and I'm not going to go outside and work [00:07:00] for others." Some contracts are silent on that issue.

Generally, if your contract is silent and doesn't talk about whether you can or can't, then there's generally the ability to go do that. But if you are going to do that, I'd make sure that you're going to have a conversation with your employer and make sure that they know kind of what you're doing and make sure that everything is on the up and up, because you don't want to upset your employer when they find out through some other third party or some other source that you're doing work for another practice.

Host: Right. I would think you would want to be very transparent with that. And another thing to consider since we're speaking of contracts and what it spells out, let's talk about compensation. I'm sure everybody is interested in that. There's different salary structures, bonuses, all those types of things. Can you talk about compensation a little bit?

Cody Short: Yeah, of course. Salary is the one that jumps us off the page to everybody, right? Everybody wants to know how much they're going to make coming out. But you want to understand, am I going to gain some benefit [00:08:00] out of the practice doing well? Is there going to be performance-based bonuses or revenue-based bonuses? A lot of times those things are in there, especially with smaller practices. Those tend to be more common. Obviously, you want to know about health insurance and 401(k).

One of the things for younger dentists who are signing maybe that first or second employment contract that I often see they want to know about is: what does my ownership or partnership track look like? Those things can be set out in a million different ways. They often become issues a couple years into an employment relationship if they're not set out from the beginning. So, I always tell dentists that I'm working with in this situation, "See if you can get your ownership and partnership structure in writing in the contract. That way, you know I get X percentage ownership after this amount of time," or "I'll have the option to buy in after this amount of time." And you'll understand, and there really won't be any [00:09:00] disagreement or problem, when you say, "Hey, I'd like to become an owner or a partner in this practice." It's very easy to kind of be strung along on those things if they're not set out in a contract.

Host: Is malpractice insurance typically included in an employment contract, or is that something a dentist has to get on their own?

Cody Short: Yeah, it's oftentimes something that a dentist has to get on their own. Some of the larger practice groups will have, you know, bigger group policies that they're able to add their newer dentists to as an additional insured. Those are, again, kind of just dependent on the situation. You want to make sure that there is absolutely no equivocation about who is responsible for obtaining coverage.

 Who's responsible for paying for your malpractice insurance? Not all coverage is good coverage, and you need to understand who your insurer is and how much your coverage is going to be. And I think in a lot of cases you want to have the [00:10:00] opportunity to select your insurer.

 I've had multiple situations as a defense lawyer where the dentist thought that the practice was going to get their policy or was going to add them as an additional insured on the practice's policy. And the practice thought, "Well, the dentist is going to get their own policy," and then we end up in a position where nobody has coverage for an issue that's arisen, because nobody was very clear early on. And that ends up becoming a very, very expensive proposition for everyone and a situation that everybody's going to want to avoid. So, again, not necessarily one way to do it, but you want to make sure that it's an issue that is absolutely clear when you're starting somewhere.

Host: For sure. And what about coverage? How does a new dentist know what is good coverage? I would imagine not all coverage is good coverage. How do they navigate that?

Cody Short: Yeah. Not all coverage is good coverage. You want to do significant research on the company that is providing your policy, right? Some carriers [00:11:00] are very hands-on with their insureds. A lot of them provide a lot of resources to their insureds, both from a growth and practice standpoint and a risk mitigation standpoint. Some are more just, "Hey, we'll help you if you get sued, but until then, you're on your own." So, there are differences in carriers.

And this is sort of a plug for Fortress. Fortress does an excellent job of defending their insureds and giving them the ability to make decisions throughout litigation, should there ever be litigation. And that's not necessarily the case with every insurance company. And so, you want to know that you're going to have coverage, and it's going to be coverage that is going to actually provide you help should you ever run into a situation like that.

There are also significant differences in the amount of coverage, right? Some states will allow you to get away with having very low coverage limits. So, you'll want to make sure that you're not [00:12:00] just checking the box to say that you have insurance without knowing how much it is for, who it is with and having some understanding that it's going to be enough coverage should an issue arise.

Host: Yeah. Really good thoughts, Cody, and really, really important. What about term and termination? I know you said that you talked about the length of these contracts. What if somebody wants to fire you and you've been doing a good job? What about termination of the contract? What do we need to know about that?

Cody Short: Yeah, termination of the contract. You want to make sure that you know how you can get out, but what sort of things that you can do that will allow your employer to get out. Is that you had a claim brought against you for malpractice? Is that they just don't like the way that you're interacting with them or the staff? Is it for some sort of a criminal type thing? What is it that is going to allow them to terminate the contract? And you want to make sure, obviously, that you're [00:13:00] avoiding those things to the extent that you can.

Host: Yeah, good to pay attention to that as well. You mentioned first or second contract. Generally, how long are these employment contracts?

Cody Short: it varies significantly state by state. A lot of them are what is called at will, meaning that the employer has the ability to terminate the contract at their will, basically whenever they would like. Some of them are for a given period of time. It might be three years, it might be five years. Some of them are renewable every year. And so, you want to make sure that you understand the term, and you also want to make sure that you understand what triggers a renewal of the contract. Do you have to send a letter to the practice saying, "Hey, it's the end of the year and I want to renew my contract for next year"? Or does it automatically renew? So, these are things that, again, vary significantly state by state, but you want to make sure that you understand going in what you need to do to be able to put [00:14:00] yourself in the best position.

Host: Let's talk about duties and expectations a little bit. So, I think there's a perception that dentists have real strict nine-to-five schedules, if you will. Is that actually true in most practices?

Cody Short: Yeah. I think it depends on a number of factors. You know, life stage and how far into your career you are obviously play big roles, whether or not you're an owner in a practice or not. Those things significantly impact what your hours are going to look like. This kind of dovetails into the discussion we had earlier about administrative expectations, how much of your time is going to be dealing with payroll or employee complaints or whatever it may be. So, I would say it's variable. It's probably more of a nine-to-five situation for a younger dentist coming into a first or second employment contract. There's probably somebody at the practice already who is dealing with a lot of those administrative issues, but you don't [00:15:00] want to be surprised and find out the hard way that you're going to have nights and weekends working on those things.

Host: Well, it's good to have all that spelled out right up front, right? I mean, that's kind of what all this is for, to really lay everything out so you really understand everything that's expected of you. That's why these contracts are so important. Would that be right?

Cody Short: Absolutely. It's just knowing what you have to do to comply and what your employer is going to do to comply with their end as well.

Host: So if you're a dentist, you're a first time dentist at a well-established practice, and you go through your first or second, maybe your third contract and you're thinking, "Okay, it's time. I'm going to do my own practice." If a dentist decides it's time to move on to another practice, what's the right way to handle that?

Cody Short: Just generally speaking, in general, business advice would be you don't ever want to burn a bridge. So, you want to make sure that you're maintaining the relationships there. Oftentimes, those dentists, older dentists that you work with in your first [00:16:00] job, your second job, those are mentors for you. So, you want to make sure that you keep those relationships intact and as healthy as possible. But this kind of goes into the non-compete and the renewal of the contracts. You know, "Hey, I'm looking to get out of my current contract and I want to go start my own practice. All right, what do I have to do to get out?" I need to look at the contract. I need to know what the contract says. I have to give 30 days' notice. I have to give 90 days' notice. I have to pay a certain amount to get out of my contract early. I have to deal with a non-compete and think about how I'm going to schedule the opening of my new practice based on my non-compete. So, there's not a concrete cookie-cutter answer for exactly how to do it. But you need to have looked at your contract the first time and made sure that you set yourself up in a position to be able to leave in the way that you want to.

Host: So, you said you know, if you're a [00:17:00] new dentist and a lot of times the older dentists will become mentors, which is absolutely true. If you think, "Someday I want to open my own practice," it seems to me like it would make sense to let those people know ahead of time what you're thinking. Is that a right way to do it? Like, "Hey, in three, four years, I think I want to start my own practice," so they know as well. Is it good to let the people you work for know that ahead of time? Does that help with contract negotiations especially, which might be in that last contract where you may want to leave to make sure you can get out easily or it's fully understood how to get out? Is it good to communicate that to your current practice?

Cody Short: Depending on the setup of the practice, I think it's good to be upfront and honest about what your wants are, what your goals are. In that situation that you're talking about where you perhaps are entering into new contract or renewing a contract with the idea of, "Hey, maybe this is my last one or last one here," it might be something that, you know, you say, "Hey, I'm looking at [00:18:00] potentially opening up my own practice soon." And your current practice says, "Well, hold on. We would love to have you, we would love to keep you. How can we do that?" And maybe you're able to get some favorable contract terms, maybe you're able to get some ownership or some situation at your current practice where you say, "Hey, this is actually better than if I was going to go out on my own and do it that way."

Host: So, Cody, if a dentist does leave to start his own practice or go to another practice, are there any specific rules or obligations dentists need to follow after they leave a practice?

Cody Short: Yeah, I'm going to sound like a broken record here, Bill, but it does, again, depend. obviously some things to think about are: Do you have ongoing record-keeping obligations? Do you have confidentiality obligations? Do you have non-solicitation obligations? That's something that we see fairly frequently, meaning I'm going to start my own practice. And I've been at my prior practice for five years and I've developed some great patient [00:19:00] relationships. Well, does my contract with my prior employer say that I'm not allowed to go reach out to any of their patients for their business to try to take them to my new practice? Sometimes contracts talk about that. Sometimes they're silent on that. So, you want to make sure that you're well aware of that if you're trying to leave, so that you don't go violate your contract and end up in a dispute.

Host: Yeah. And that's, I think, the last thing you want is to leave on that and then have a dispute and have it go bad, if you will.

 And since we're speaking about clauses, I just wanted to ask about other standard clauses such as arbitration versus litigation and attorney's fees and indemnity clauses. What do we need to know about those, Cody?

Cody Short: Yeah. These are the kind of things that nobody wants to think that something bad is going to happen or there's going to be a dispute between employee and employer, but they do happen. And these are the things that sort of dictate how that process goes if something does come up as a dispute. So, arbitration versus litigation. If you [00:20:00] have a dispute about the contract with your employer, and it ultimately is going to reach the level of, "Hey, I'm going to need to sue somebody," or the practice wants to sue the employee over some dispute in the contract, well, contracts will often talk about how that process goes. There is arbitration, which is generally a more informal process that happens in front of a neutral either individual or panel. And it's a more streamlined process and it moves quicker and is easier to deal with and is often preferable for everybody.

The other alternative would be litigation, which involves filing a lawsuit and going through the discovery process and depositions and trial and the whole nine yards. So, you want to make sure that your contract sets forth, which of those is going to apply, should there be an issue? I generally would tell you that most people prefer arbitration, but obviously there's differences for every [00:21:00] situation.

The other is attorney's fees and indemnity clauses. What happens if there is a dispute? Are you on the hook for the practice's attorney's fees? Is the practice on the hook for your attorney's fees or the prevailing party, meaning whoever wins gets their fees paid by the other party? You just need to understand that, because it might be a relatively small monetary dispute. But you don't necessarily think about the fact that you might be on the hook for tens of thousands of dollars of legal fees that come along with it. So, that's something that you want to make sure you know.

And then, indemnity is another issue that only comes up when something's gone wrong. Generally, it comes up in the situation where there is a dental malpractice lawsuit. So if either you as the dentist are sued or the practice is sued, sometimes there are situations where both the dentist and the practice will be named. And you need to understand whether or not [00:22:00] you are going to have to indemnify the practice, or the practice is going to have to indemnify you for any losses or damages that come out of that suit. And indemnify just means that you would be responsible for paying for the obligations or damages that arise out of a lawsuit.

Host: Well, this just illustrates the point why it's so important to really understand the contract. Cody, thank you for going over that with us. We've talked about a lot of stuff here and there's a lot of legal stuff. So, does it make sense for every practicing dentist to have their own lawyer?

Cody Short: Yeah, I think certainly at the outset of an employment relationship when you're dealing with contracts and negotiation, I think that's definitely a good idea to have someone come in who's familiar with contracts and business relationships and have them help you through that process. I think that's definitely a good idea. And then, yeah, it can't hurt to have somebody on standby for if you do have an issue come up. You need to understand, just like [00:23:00] dentists have specialties, there are, you know, a million specialties within dentistry, that is very similar for lawyers. Not every lawyer is a lawyer who should be helping you with a contract, and not every lawyer is somebody who should be helping you, you know, defend a medical malpractice claim. So, we're all a little different. But yeah, it is a good idea to have someone that you can go to, to bounce issues off of, and really can get you to the right type of lawyer for the situation that you have. Most lawyers know people in other specialties and they can kind of direct you for whatever issue you might be having.

Host: Yeah, it just seems make sense to have your own lawyer with all of the different legalities and the things that we talked about. It seems to be a smart move.

 Well, Cody, I want to thank you so much for your time. This has really been informative. There is a lot of ground to cover when we're talking about contracts. Is there anything we missed? Anything else you want to add that's important that we cover on this podcast? The floor is yours. Give us your final thoughts.

Cody Short: Yeah. I think it's really just making sure that you [00:24:00] understand what you're looking at before you sign it. I've said that multiple times here today, but I really can't tell you how important it is, making sure that you understand that contract is going to make your life a lot easier. It's going to guide your decisions moving forward throughout your practice and your career.

And it's going to keep you away from some of the pitfalls that get people in trouble, right? You don't understand the contract, you don't know the contract, you might inadvertently violate and that's certainly not a situation that you want to be in. So yeah, I think it's very, very important to make sure that you know what's in there, and it'll be better for you and for your employer that way.

Host: Make sure you understand before you sign. That's a good rule of thumb to live by. I like it.

Cody, thank you so much for your time. This has really been great.

Cody Short: Yeah, Bill, thanks so much. I really appreciate it.

Host: You bet. Once again, that is Cody Short, an attorney with Pennington Law Firm and works as defense counsel with Fortress Insurance. And if you enjoyed this podcast, please share it on your social channels and check out the entire podcast library for topics of interest to [00:25:00] you. I'm Bill Klaproth, and this is ForCast. Thanks for listening.

Disclaimer: Not familiar with Fortress yet? Fortress offers unmatched protection and defense exclusively for dentists. Visit our website, dds4dds.com That's DDS, the number 4, DDS to learn more. Policy holders have access to exclusive complementary risk management resources, such as informed consent forms and on-demand CE courses.