Key Questions (+Answers)

The Associate Agreement protects the rights and obligations of both parties. The agreement outlines the terms of the contractual obligations and rights for both the principal and associate dentist. It will help clarify items or situations that can lead to disagreements before they arise.

The contract will also help to clearly identify the principal dentist in the event that there are other people and/or corporations involved in the practice.

If for some reason the working relationship takes a turn for the worse, a lawyer will always ask if a written contract exists. If the contract was poorly written, it may lead to legal disputes which are costly in terms of time, money and energy.

The associate agreement provides a framework for both the principal and associate to follow and to understand their rights and obligations. It also helps to reduce or resolve any disputes that may arise upon termination of the relationship.

The Associate Agreement sets out boundaries for both parties. At times, they may be skewed in favour of the owner dentist.

“Consideration”

It is a basic principle of contract law that for a contract to be enforceable, there must be an offer, a corresponding acceptance, and “consideration” (i.e., something of tangible value) flowing to each of the contracting parties.

Where an associate is being engaged for the first time by a principal, it is important to ensure that the parties’ contract for services is signed before the associate commences work in the principal’s practice. Where this occurs, the consideration flowing to the associate is the opportunity to provide services within the practice, in return for the agreed fee.

The situation is different, however, if a principal wants to introduce a written contract after the associate has already begun to provide services within the practice. If the principal wants the contract to be enforceable in this type of situation, the principal must ensure that the contract provides the associate with some sort of fresh consideration (e.g., a fee increase, a signing bonus, etc.) in return for agreeing to the terms set out in the written contract. If this does not happen, then even if the associate signs the new contract, the principal may later find that a court will not enforce it because the associate did not receive any consideration in return for signing.

With respect to consideration, the relationship will always be more fruitful if both parties are in a “win-win” situation. At times, monetary compensation such as increasing the associate fee from 40 to 42% or an in-kind amount like increased vacation time may be helpful. (Since vacation is unpaid personal leave for the independent contractor, this may not be adequate consideration as a signing bonus.)

Nature of Relationship – Employee vs. Independent Contractor

Associate dentists are typically considered to be independent contractors rather than employees by principal dentists. The employee vs. independent contractor relationship has significant legal and tax implications. As such, legal counsel is advised before making a decision one way or the other. Although the independent contractor relationship affords both parties certain advantages, the relationship must be outlined, documented and meet certain legal tests to meet the status of independent contractor.

Generally speaking, employees enjoy more legal protection than independent contractors. The law provides employees with significantly more rights than independent contractors. Independent contractors are self-employed and their rights are outlined by their contract with the principal. Additionally, any income from the work they provide is considered business income, not employment income.

To be deemed an independent contractor or consultant, a written contract is not enough. Courts will examine the actual working relationship and its consistency with the definition of an independent contractor or consultant. Some of the factors that are considered in determining the nature of the relationship include:

• How much control does the principal have over the treatment and activities of the associate?
• Is there any opportunity for the associate to profit through performing the work?
• Is there a risk of loss by the associate?
• Does the associate have the ability to hire/terminate his/her own staff?
• Does the associate have the ability to work in other practices?
• Does the associate pay his/her own expenses?
• How is the associate remunerated?
• Who provides the tools, equipment and supplies for the work?

Usually independent contractors cover the cost of their equipment, supplies and expenses. If these are provided by the principal dentist, it may indicate an employee–employer relationship. Furthermore, if there is no financial risk to the associate and the work is controlled by the principal and the compensation is not dependent on his/her work performance, this also may be indicative of an employee relationship.

Any expenses that will be the responsibility of the associate should be outlined clearly and specifically in the associate agreement. These expenses usually include: dental registration and licensing, lab fees, continuing education and other professional courses, insurance, special or different instruments, business license, marketing, automobile and accounting fees. The payment of these expenses will strengthen the associate’s status as an independent contractor.

The contract should also state that the associate is free to provide services to other clients and dental practices, as long as there isn’t a conflict with the terms of the current agreement and aren’t provided on the principal’s premises.

Interestingly, in Quebec, the treating dentist (whether it is the owner or the associate) is ultimately responsible and “owns” the patient’s chart. In this situation, the treating dentist has the obligation to keep the patient’s chart. As such, the associate would have to take his/her patients’ charts when moving to a different practice.

This information should be explicitly outlined in the Associate Agreement. Any equipment or materials purchased by the associate should be noted in the contract and provisions made which allow the associate to take the equipment/materials when the contract is terminated.

It is not unreasonable that the associate be provided with the equipment that will allow him/her to provide care appropriately or in a manner that is comfortable for them. But associates must also understand that there is a balance between treatment and the business side of dentistry.

This should be discussed with the owner dentist and outlined in the contract.

It is common for the Associate Agreement to state that supplies and equipment will be provided by the principal dentist in exchange for a portion of the billings of the associate. This will vary from practice to practice but, may not be an accepted arrangement.

The Associate Agreement should stipulate the services to be provided by the associate and any other expectations regarding treatment including:

• Range of dental treatments to be provided by the associate
• Expectations with respect to production, revenue and patient volume
• Allocation of patients to the associate
• Responsibility of patient care – only the associate or shared responsibility
• Responsibility for creation and/or changing patient’s treatment plan
• Restrictions on associate regarding referral to specialists external to practice

Restrictions placed on associates should be based on experience and expertise. If any dentist is not comfortable with a certain procedure, it is best for the patient to be seen by someone who is proficient in that procedure.

When an associate is paid a salary or a flat rate, he/she receives compensation whether patients are treated or not. However, when compensation is tied to the production or amount of treatment that is provided within the practice, there must be a suitable patient flow for the associate. This can be accomplished by moving some patients from the principal to the associate to help fill this new schedule or by allocating new patients to the associate, unless the patient specifies otherwise.

This will depend on each office and the practice philosophy. It should be discussed ahead of time with the principal dentist.

This is also something that should be discussed in advance with the principal dentist. No two dentists or dental offices are the same. Some will want patients to have continuity of care and prefer the patient to stay with the same dentist throughout. However, the patient’s comfort level with a dentist is the main consideration.

From a patient care perspective, the amount of time should be the time that will allow the dentist to complete the procedure with care and in the best interest of the patient.

This will depend upon the level of expertise and comfort of the treating dentist and the individual patient needs (e.g., strong gag reflex, anxiety, etc.). Time to complete patient care will vary from dentist to dentist. However, it may be helpful to ask for some specific guidelines on how many units to book to complete procedures, to help you use your time efficiently.

There may be a degree of professional courtesy that applies to specific situations. This should be discussed openly with the owner and details outlined in the contract.

Examples may include:

• Replacing a crown if it was done within the last 3 years
• Providing care at a reduced cost for a patient who is in need and unable to afford treatment

No judgement should be passed on the work of another dentist because it’s hard to know the circumstances under which it was completed or how the patient has cared for it. If there is a complaint made, this will be a regulatory issue not a contractual issue.

There should be a written protocol for this specific type of situation within the office. It is professional courtesy to allow the first treating dentist to speak with the patient and find out the issues the patient is having.

This should be discussed with the dentist ahead of time. The treatment plan changes should be discussed with the other dentist(s) professionally before discussion takes place with the patient. The patient’s best interest should always come first.

The length of the contract can be fixed or indefinite. In either case, the start and expiration date should be clearly outlined in the Associate Agreement. If the agreement is fixed, it should also have provisions stating how it may be extended and/or renegotiated upon expiration.

Usually, it is reasonable to have a contract for one year which is renewable up to a maximum two years.

Ideally, for the associate–principal relationship to work, both parties must be compatible. This is not always easy to assess at the outset. For this reason, the parties may wish to include a specified period of time as a trial or probationary period, in the contract during which either the principal or the associate can terminate the agreement on short notice if there is a poor “fit” between them. The trial period can be also used as a transition period for the associate to become accustomed to the way the practice is run and become comfortable with the staff and vice versa.

Once the trial period has ended, both parties may wish to review the Associate Agreement to ensure or discuss terms that were not met. In this way, any adjustments can be made to the satisfaction of both the principal and associate dentists. The trial period is typically three months.

If a contract is nearing the end of its term, it is advisable to renegotiate or renew it prior to its expiry. It is not recommended for the relationship to continue beyond the end date without a new contract in place.

The contract should warrant that the associate is registered and in good standing with his/her College and/or as a specialist, that he/she holds the appropriate specialty registration. Additionally, the agreement should require the associate to maintain his/her professional memberships and licenses and provide proof of these on an annual basis. The Associate Agreement may also include a clause whereby the associate must notify the principal dentist if there are any claims or complaints filed against the associate, suspensions or restriction of his/her license.

Generally speaking, the principal dentist provides the associate with the right to use the facility, equipment and administration of the practice and this should be specified in the contract. If the principal wishes to restrict the use of any of these provisions, this should also be outlined in the agreement.

The Associate Agreement should also state whether advertising will be a shared responsibility or be solely under the control of the principal.

The Associate Agreement should outline who is responsible for expenses related to staff compensation, hiring, firing, disciplining and managing the staff. In some instances, this responsibility may be shared with both principal and associate dentist jointly employing staff.

If the associate is responsible for paying his/her own staff, it would be reasonable to be consulted on the hiring/firing process.

This will vary from office to office. Typically, the lab or specialists selected will be the ones that the principal uses. It may be that the associate already has an established relationship with a lab or specialists which may serve his/her patients well. However, this can be discussed ahead of time with the principal dentist.

The Associate Agreement should also specify the number of weeks per year that the associate can take as unpaid vacation time. As an independent contractor, the associate should have the right to decide how much vacation time he/she uses. The contract should also state whether the associate is required to cover any vacation time taken by the principal dentist and any further responsibilities the associate may have during that time.

Ideally, associates and owner dentists may want to offset their vacation times to ensure that patient care is available. However, during some traditional holiday periods, offices may shut down completely and therefore, the associate may be forced to take time off during this time.

The contract should also outline any specific provisions regarding continuing education time, unpaid sick leave and any other types of leave.

It is fair to negotiate vacation leave that is separate from CE time. Depending on the scheduling activities of the practice, it may be necessary to negotiate that the associate can give reasonable notice for vacation time rather than giving several months. Allowance for emergency time off is also advised.

This information may not be available or may not be shared with you as an associate.

As a new associate, 1 assistant and 1 chair would be reasonable. Having an extra spillover chair can be useful at times for emergencies or if you are running late.

The contract may include language indicating that, when the associate leaves the practice, his/her patients will be notified and given the associate’s new contact information and the option to have their records transferred to his/her new practice location. Generally, this would apply to patients that are identified as the associate’s patients.

Alternatively, the associate and principal may decide to send a joint letter to the associate’s patients informing them of the associate’s departure and asking the patients to let the office know if they would like to remain in the current practice or have their records transferred to the associate’s new location.

Typically, the associate is not allowed to inform patients of the practice that he/she is leaving as this is considered to be solicitation. However, if patients inquire about the associate’s whereabouts, the practice must give the patient his/her new practice information.

Usually, associates are paid a set percentage of their collections (or production) with laboratory fees deducted from their pay. At times, they may be paid a flat salary. In either situation, the contract should clearly specify how the associate will be paid and how his/her fees will be calculated as well as when the fees will be paid to the associate (1st or 15th of the month, biweekly etc.).

If the compensation is based on productivity, the associate should consider whether the productivity requirements are reasonable and attainable, and how they may affect the way he/she practices. Similarly, if the compensation is based on billings, it should be determined if the billings are gross or net and how unpaid accounts will affect the associate’s compensation.

Associates may also be incentivized with a bonus structure. If this is the case, the details of the bonus structure should also be specifically outlined in the associate agreement.

The associate fee is generally 40% of collected fees, after laboratory charges. Sometimes, the cost of implants and grafting materials is also deducted. Additionally, in some practices the associate may be entitled to reimbursement for interpreting and diagnosing radiographs taken by the hygienists. However, depending on the location of the practice, the fees may be lower (35%) in an urban centre where there is an abundance of associates or higher in under-serviced areas (as high 50%). A more experienced associate with the ability to perform more complex procedures may garner a higher fee (50%). A sliding scale may also be used to determine associate remuneration where a set baseline production will be paid a certain percentage, and the percentage will increase with increments of production as determined by the owner dentist.

As part of the contract, any expenses that are deducted from the associate’s billings will be outlined. The agreement should clearly outline the manner in which the associate’s fees are calculated specifically, the percentage of the production or collections (minus deductions such as laboratory fees) and the date or schedule of payments.

This should be discussed with the principal dentist. It is reasonable to request reports detailing outstanding collections that remain on the associate’s account and this should be specified in the agreement.

The Associate Agreement should stipulate clearly how the associate’s billings will be collected after termination of the agreement and who will be responsible for collections. Generally, it is the responsibility of the principal dentist’s staff to collect outstanding fees and remit the fees to the associate.

This should be discussed with the principal dentist.

In some cases, the associates may also be entitled to compensation for reviewing and diagnosing radiographs. This should be discussed with the owner and written into the contract.

It is reasonable to request, with notice, a time to examine the books or practice financials as they relate to the associate’s account and this should be outlined in the agreement. It is in the associate’s best interest to understand the office’s practice management software. Most well-run practices will provide the associate with daily, weekly and monthly reports to help the associate track his/her billings and accounts receivable. It should be the responsibility of the associate to ensure that his/her financial records are in order.

This requires a discussion with the owner dentist and/or office manager. This may be outlined in the agreement. By keeping up to date with his/her own financials and accounts receivable, the associate and principal can minimize errors in the long run.

This will vary from practice to practice and should be discussed with the owner/principal dentist. Some practices may give associates some freedom but, this is not typically the case. Treatment at no cost should be done on the associate’s time not during the practice hours. The cost of the assistant is the responsibility of the associate.

This will depend on the particular office and should be discussed openly with the owner/principal dentist. At times, dentist owners after a sale who are transitioning to an associate role may be given a billing quota. But remembers that all treatment should be based on patient need and not on the need to make a certain quota for a month.

At times, the principal dentist may wish to hold back monies that are owed to the associate once he/she leaves the practice to offset costs that may be borne by the principal if some of the work provided by the associate needs to be redone. This must be outlined explicitly in the associate agreement and to ensure that the hold back amount is reasonable. The unused portion of the hold back pay must be returned to the associate within a reasonable period of time to the associate and should likewise be stipulated in the contract.

The hold back pay period may vary from office to office. The usual time frame is approximately 3 months (90 days) and anything beyond that may be considered unreasonable.

If a claim is filed against you, it is still your responsibility and this will be a regulatory matter not an office matter. Unfortunately, the practice is also involved in this situation as the patient chart usually resides with the practice even after the patient has left.

This will need to be discussed and/or negotiated with the owner and potentially the regulatory authority.

The restrictive covenant, or non-competition clause, prevents the associate from practising within a prescribed geographic radius for a specified period of time from the termination of the associate agreement. The purpose of this clause is to protect the principal dentist’s goodwill, patient base and referral network.

At times, the restrictive covenant may be prohibitive to the associate finding other work after the end of the agreement. As such, the associate should consider the impact in the short- and long-term of the restricted covenant before signing the contract.

These non-competition clauses are usually scrutinized closely by courts so that the legitimate interests of the principal are balanced with the legitimate interests of the associate who must earn a livelihood as well as the public’s interest of accessing dental services. The radius and time of the restrictive covenant are influenced by the community including the population base.

A non-competition clause can be difficult to enforce and must meet certain tests.

• The principal’s proprietary interests are protected
• The restriction is reasonable with respect to time frame, geographic scope and the activities it restricts
• The associate is not restricted in earning a living
• The clause’s terms are clear and certain; and
• The clause is reasonable with respect to the public’s interest.

A non-solicitation clause, however, is often more enforceable in a contract as it only prevents the associate from soliciting the principal’s patients and employees for a reasonable amount of time after termination.

Patients and staff are free to leave and follow the associate. However, as long as the associate has not solicited either, he/she would not be in breach of contract.

The Associate Agreement should include language that allows either party to end the contract before its term ends by providing the other party with written notice. The amount of time to give notice should also be outlined in the contract. If there is a longer period of notice, it allows the patient to transition from different providers and allow for the continuity of care.

If the associate is engaged in serious misconduct or materially breaches a provision of the contract, the principal should have the right to terminate the agreement without any payment in lieu of notice or notice.

The agreement should also state that upon termination, all of the files, computer disks, confidential information, patient charts and files, and documents pertaining to the practice remain the property of the principal and must be returned by the associate to the principal.

Because the associate is usually an independent contractor, it is his/her responsibility to remit payments for service and income taxes and any other amounts related to provision of contracted services. If the associate employs any staff, the associate will also be responsible for statutory deductions and remittances on behalf of the staff.

The language of the associate agreement should specify that the associate must make his/her statutory payments and remittances and should indemnify the principal from any assessments or penalties that are the responsibility of the associate.

In the event that the associate is employed by the practice, the principal dentist will be responsible for his/her payroll and tax deductions.

At the outset of the working relationship, the principal and associate may outline the details if the principal decides to sell the practice. This may include:

• Option to buy the practice or have right of first refusal
• Special provisions or termination entitlements if the associate agreement is automatically terminated upon sale of the practice
• Assignment of the associate agreement to the purchaser

This clause allows the associate to buy the practice if the principal receives a bona fide offer from another purchaser. In this way, if the associate does not match or exceed this offer, the principal may sell to the other purchaser.

As an associate, it may be better to own a more equal share of the practice rather than 25% as a starting point to help equalize and set up a better relationship. Unfortunately, at times, many early career dentists neglect buy-in relationships and they do not work over the long-term. However, if there is a serious discussion and it seems feasible, both parties should seek legal and accounting advice to set up appropriate contractual and financial structures for themselves.

It is reasonable to request that a limited number of friends or relatives be treated by the associate on his/her own time. This list of patients should be included in the contract for transparency.