It doesn’t matter whether you own your own practice, are selling your practice and staying on, or are beginning your career at a new practice: setting the terms of your employment, or of an associate’s employment, is essential. Indeed, the contents of the employment agreement not only set the tone for the initial relationship between the parties, but they are also vitally important when the agreement comes to a close (whether expected or not). Our team routinely reviews, revises, and drafts associate employment agreements for both employers and associates. Read more to learn what you should be asking for, and what might be an unreasonable request.
Associate employment agreements contain many important provisions, but below are a few that both parties must fully understand before beginning any relationship:
- Compensation. How the associate will be paid is perhaps the most important provision within any employment agreement. The employer and associate must be on the same page and fully understand: 1) how the associate will be paid (and specifically how the compensation formula is calculated), and 2) on what frequency the associate will be paid. Will the associate be paid a salary, based on production, or a combination of both? It is also necessary to set forth whether any compensation may be clawed back for third-party refunds or substandard care. An attorney with a deep understanding of the market can advise you how to offer, and accept, what the current market demands.
- Benefits. Whether you are the employer providing the benefits or the associate seeking them, you want to know up front what types of benefits and related expenses are appropriate. For example, will the associate be entitled to receive health benefits, will the employer offer reimbursement for continuing education, how much vacation will be offered, and what type of professional fees will be covered, if any? These are only a handful of benefits that are on the table for negotiation.
- Noncompete. When entering into an associate agreement, employers need to understand the market where they are providing services and how to retain their patients and team members. Associates, on the other hand, want to ensure that they are not agreeing to unreasonable restrictions on future employment or current outside activities. How do you balance these interests? Based on the location and specialty of the clinic, what constitutes reasonable restrictions that may actually be enforceable varies widely. Far too often, we review contracts that set unreasonable restrictions, which do not set the stage for a strong employer-associate relationship moving forward, and may not even be enforceable, such as an overly expansive geographic limitation or time period of a restriction.
Associate Employment Agreements should be the result of an arms-length negotiation between the employer and associate, whereby both parties understand what is being offered and what the market demands. This process lays the foundation for the employer-associate relationship. Never assume that any one provision of an associate employment agreement is non-negotiable. If it is important to you, whether it is vacation time, pay, or the scope of a noncompete, you are not required to simply agree to everything presented to you.