Associate Agreements
By: Chris Bentson
President of Bentson Clark
Unless you are starting a solo orthodontic practice, you will want to become familiar with the widely-used term associate. Understanding the role of an associate and having an associate agreement in place prior to the first day of practicing is highly recommended. Regardless of whether you are buying in, buying out or just working as an employee, understanding the idea of an associate is a critical step in launching an orthodontic career.
What exactly is an associate? Webster’s Universal College Dictionary defines an associate as “a person who shares actively in an enterprise, and is usually viewed as having subordinate status without the full rights and privileges.” This definition will serve well as we examine associate agreements. The first step of becoming an associate is to have a prepared associate agreement. This legal document will outline the associate’s responsibilities in a given practice, as well as the employer’s responsibilities.
It is important to recognize that the seller or employer has the right to make the decisions about associate length and compensation. However, as a buyer or an employee, it is acceptable to let your needs and expectations be known and this can and may influence how the associate agreement is developed. It is equally important to recognize that every associateship has its own unique characteristics. The needs and desires of both the established practice and the potential associate form the framework around which the associate package is created.
There are three distinct orthodontics scenarios through which you may enter into an associate agreement. They are: (1) buying into an existing practice, (2) buying out an existing practice and (3) creating an employer/employee relationship. Regardless of which scenario you may fall into, the typical elements contained in a well written Associateship Employment Agreement are as follows:
- Employment and Term. In an Associate Employment Agreement, wording should clearly
state that the associate will be rendering professional orthodontic services for the employer and it
should provide the dates of the term. Some agreements will have a provision whereby the term is automatically
extended beyond the initial term.
- Compensation. The agreement should also state how much and how often the associate
will be paid.
- Employee Benefit Programs. Any benefits that may be offered to the associate during the associateship
period need to be outlined in this document. This section may specifically include benefits such as
retirement plan participation and insurance coverage.
- Employee Business Expenses. These expenses need to be itemized as to what the employer agrees to
pay and what the associate will be required to pay. Theses may include any payroll taxes (federal,
state and local) applicable to the earnings of the associate, worker’s compensation coverage, malpractice
insurance, dues and subscriptions, dental license, travel and entertainment (usually an annual allowance
must be approved), disability and life insurance premium costs, automobile insurance, and other similar
items.
- Working Facilities and Conditions. Also included in this agreement should be a list of resources and
services that will be supplied for the associate to adequately perform his duties (i.e., secretarial and
clinical personnel, office supplies, use of phone, etc.).
- Duties of the Employee. This section of the agreement describes in detail your
responsibilities to the practice as an associate. Generally, the associate will be required to devote
full time to the practice, participate in staff meetings, maintain accurate clinical records, consent to have
work done by the associate reviewed and maintain the specified hours of practice.
- Sole Employment. The associate will typically agree to work solely for the employer with respect to
performing orthodontic services unless the employer shall consent otherwise.
- Fees. The employer sets the fees for services rendered. This section may discuss the approval of the
employer to offer any free or reduced fee arrangement provided by the associate.
- Designation of Assignments and Patient Priority. Standard protocol is that the associate will usually
give no assurance to a patient that he will be the sole provider of services. This section of the document
may additionally ask that the associate agree to make a good faith effort to increase the number of new
patients to the practice by delivering quality orthodontic care.
- Vacation, Continuing Education, Holidays, and Sickness. The policy for each of the
aforementioned should be clearly stated within the agreement for both parties.
- Status. During the associateship period, both parties will refrain from any actions that would
imply or convey a partnership between the two. The associate is merely an employee at this stage.
- Assignment. A simple statement recognizing that neither party can assign their rites under the
agreement without consent of the other is usually included here.
- Indemnification. Usually a unilateral agreement whereby both parties indemnify the other for
any action or omission during the term of the agreement for any claims, damages, expenses, liens,
judgments or encumbrances is added to the agreement as a precautionary measure.
- Termination. Details of how the associate agreement may be terminated including but not limited
to death and disability of the associate, loss of licensure, inability of associate to perform fully
his duties, fraud, refusal to faithfully and diligently perform duties, material breach of the
agreement and a provision for voluntary termination of the agreement by either party are added
as well. An outline for a forfeiture of compensation should the associate terminate the agreement
under the provision given may additionally be included.
- Restrictive Covenants. Items included here are he restrictions agreed upon, including time frame
and distance from each office that the associate is restricted from practicing orthodontics in states
that allow for this provision. A non-solicitation of employees and patients and other assets of the
practice may be included.
- Disclosure of information. Not to be omitted is an agreement by both parties not to disclose
certain information concerning financial information. The doctors are bound by the agreement not
to reveal patient information and practice data for a specified period of time unless required to
do so by any court, law or regulation governing or related to the practice.
- Contemplated Buy In or Buy Out. The intent of both parties to proceed in good faith and use best
efforts to arrive at and agree upon terms for the associate to purchase certain assets of the employer
is another necessary component of the Associate Agreement. It is suggested that these terms be defined
prior entering into the associate agreement with the documents for such an agreement already having
been prepared.
- Definitions. Certain standard and customary legal language should be itemized with headings such
as, but not limited to: Notice, Legal Effect, Entire Agreement, Amendment, Waiver of Breach, Governing,
Severability, Counterparts and Mediation/Arbitration. Your attorney or advisor will be familiar with
these items and should review them on your behalf.
While the above information is meant for illustrative purposes only, it contains much of the information
needed to protect both parties when entering into an associate agreement. Associate agreements can be many
pages in length, and care should be given to review each item listed by the associate and the associate’s
advisors. Take care to understand the agreement before agreeing to and thus executing it. The process of
negotiating an associate agreement is time consuming, but in the end this document will only make your job
as an associate easier.
Click here to go back to the list of articles of the Third Quarter 2006
|
Good links:
