Given the push toward a more corporate model of practice management, new dentists are receiving surprising requests from their employers. Here are some complaints shared by new dentists:
-
"After the first week, I was assigned to a different office that has a longer commute."
-
"The practice manager asked me to post about the practice on my own Instagram page so we can get new patients."
-
"My collections seem off, but my employer still has not given me any documents showing my actual collections."
These situations often prompt a new dentist to read their contract for the first time-which should be negotiated before signing. When negotiating, however, it's important to keep an eye out for the following common issues.
Compensation
When initially hired, you will generally be paid the greater of a "base pay" (e.g., daily or monthly minimum) and a percentage of collections on the procedures that you perform. Practices earn income from collections, so most want to pay you based on what they collect. Since many dentists need time to adjust to a new position, you should receive a "base pay" to account for the time it takes to become more efficient (and, if also required, to build a patient base).
Often, a contract will limit base pay to the first few months of your employment. Before signing the contract, ask for the practice's collections for the past two years as well as what your employer expects you to earn in collections in your first year. Your contract should define "Collections" as the amount the practice collects from individual payors and insurance companies for the procedures you perform. What is excluded from "Collections" is usually under "Adjusted Collections" or "Modified Collections," and may include:
-
Hygiene procedures
-
Radiology
-
No-show or cancellation fees
-
Whitening procedures
-
Dental products sold by the practice
It's fine for your contract to exclude write-offs made to insurance companies, but "collections" should not exclude exams in hygiene, Invisalign, or other procedures that you are likely to spend time performing. Lab fees are generally paid by the employer; however, your contract may require you to pay certain lab fees for aligners, Invisalign, or other types of treatment.
1099 form
Your contract should state if you will be classified as an "independent contractor" rather than an employee. If you are an independent contractor, you will be responsible for making quarterly tax payments to the IRS. Hire an accountant shortly after you start to help determine the amount that you need to pay the IRS each quarter (a new graduate's first payment may be as soon as September 15th).1
Benefits
Full-time employees should expect benefits, which may include:
-
Health and vision insurance
-
Health Savings Account (HSA) or Flexible Spending Account (FSA) contributions
-
Retirement compensation (401(k) match, SEP-IRA contribution, etc.)
-
Vacation and sick leave
-
Mileage reimbursement (if travel is required)
-
Complimentary dental care
-
CE reimbursement
Your contract should list what benefits your employer will provide. Employers typically have multiple health insurance plans available. If your plan has a high deductible, you should ask your employer to fund an HSA, a tax-free savings account that you can use over your life to pay for qualified health expenses. Even if your employer will not agree to fund an HSA, you can fund one directly from your paycheck if you have a high-deductible plan.
If your employer offers a retirement plan, your contract should state whether it will contribute directly or "match" any funds that you contribute. If your employer is a small- business, your contract may ask you to set up an SEP-IRA to contribute directly to your retirement account. You should strongly consider purchasing disability insurance after graduation; if purchased by your employer, your benefits will be taxed as income.2
Renegotiating salary
Many dentists who are paid on collections find their incomes rising over time since they become more efficient-and inflation causes the dollar value of collections to rise. Even still, employers should expect to renegotiate salary after the first full calendar year of employment (usually in December the year after you graduate). Regardless of when your contract is renewed, you should feel comfortable asking for a raise at the 18-month mark.
Noncompetes and other agreements
The Federal Trade Commission (FTC) is currently trying to ban many types of noncompete agreements.3 However, a court recently struck down the ban, and that decision is likely to soon be reviewed on appeal.4 But for now, assume you will be held to whatever you sign. Your contract's noncompete will likely be limited in geography (e.g., a 25-mile radius from the practice) and time (e.g., two years from the first date of employment). If you are working for an employer with multiple offices, make sure your noncompete is limited to the office you physically work out of.
Your contract will also likely prevent you from asking patients or staff to come with you if you leave. Ensure that you can retrieve patient files if a patient decides to follow you to another practice.
You may also not be allowed to say or post negative statements about the practice; even true statements can fall under a nondisparagement agreement (e.g., "My patients told me they weren't happy there"). Be especially careful if you work in a small area-word gets around.
Job duties
Other than performing dentistry, your contract may require more from you, including:
-
Marketing the practice online, in-person, or on social media
-
Training new assistants or hygienists
-
Speaking with insurance companies about your procedures
-
Checking-in patients that come to the practice
Given the push toward a more corporate model, many new dentists find themselves working more than expected. Your contract should clarify when you will work and when (or if) you will be on-call for emergencies. If you want to work as much as possible to earn extra income, make sure you are compensated for this, especially since many of your peers may be unwilling to work these extra hours. Ideally, your contract will only require you to perform "professional duties," which refers to the duties that only a dentist performs.
Liabilities and insurance
New dentists are often responsible for obtaining their own malpractice insurance. Some companies have a lower rate for your first year of practice. Shop around. Your contract should state the amount of coverage that your employer needs you to carry. If your contract requires that you "indemnify" your employer for any claims against you, it means that your employer wants you to pay them back if they are held financially responsible for something that you are found responsible for doing. Ideally, your contract should limit this amount to what is available under your existing malpractice insurance. Consider adding that your employer will "indemnify and defend" you for any "independent acts and/or omissions" so that their insurance is more likely to cover you if you are wrongly accused when someone else at the practice makes a mistake.
Quitting
A 60-day notice is often required in the contract. While your employer cannot force you to stay, there may be a financial penalty if you leave early. Your employer may simply take the financial penalty out of your last paycheck.
Equipment
Your employer should agree in writing to provide you with proper facilities and equipment. This is especially important if you are paid on collections by an employer with outdated or worn-out equipment. Downtime may cost you significant pay and you may want the option of taking another job if the equipment does not work.
Closing thoughts
Carefully read any materials that you are given by your employer. Your contract will likely be the final authority on any issues that arise during your employment. However, written policies, handbooks, or procedures can, at times, change terms in the contract and be used to enforce terms in your contract. If any of these written policies conflict with your contract, confirm with your employer in writing that the contract still applies.
References:
1. IRS reminds gig workers, self-employed and others of Sept. 15 third quarter estimated tax payment deadline. IRS. September 6, 2023. https://www.irs.gov/newsroom/irs-reminds-gig-workers-self-employed-and-others-of-sept-15-third-quarter-estimated-tax-payment-deadline 2. Interactive tax assistant. IRS. Page last reviewed or updated August 5, 2024. https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insurance-proceeds/life-insurance-disability-insurance-proceeds-1
3. FTC announces rule banning noncompetes. Federal Trade Commission. April 23, 2024. https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes
4. Michaels D. Judge tosses FTC ban on noncompete agreements. The Wall Street Journal. Updated August 20, 2024. https://www.wsj.com/us-news/law/judge-tosses-ftc-ban-on-noncompete-agreements-ae517b48
