Saturday, October 01, 1994
by Richard D. Weber, J.D.
MDA Legal Counsel
Published in the October 1994 issue of the Journal
EDITOR'S NOTE: the answer to the following question was excerpted from Dentist's Guide to Michigan Law, a legal reference book published by the Michigan Dental Association. The question was written by a member of the MDA staff.
Question: I'm a new graduate and am wondering if I should make a formal employment contract with the dentist with whom I'm considering an associateship. What can you tell me about employment contracts?
Answer: Generally, employment relationships are not expressed in writing and are terminable at will, which means that either the employer or employee may terminate the relationship at any time, without advance notice, and without cause. If an employer and employee agree otherwise or agree to certain special terms and conditions of employment, such agreements should be expressed in writing.
The following includes issues that should be reviewed when health care providers, including dentists, make employment agreements.
- Dentists obligations. The contractual language should clearly define and limit the nature, duration and extent of the dentist's obligations. Issues that should be addressed include a description of all professional services to be provided, whether participation in utilization and quality assurance activities is required, and whether additional services are to be provided, such as administrative, educational or other activities. If appropriate, the location and time of day during which services are to be provided should also be defined, as well as the party responsible for providing equipment or supplies.
- Employer's obligations. The employer's obligations should similarly be enumerated. These obligations include the payment of compensation for the provision of professional services, the performance of administrative, claims processing, accounting, and other functions necessary for the administration of the agreement. If the employer agrees to provide malpractice insurance coverage, this obligation should likewise be expressed.
- Covenant not-to-compete. A covenant not-to-compete limits an employee's ability to work in a specified geographical area for a certain period of time following the employee's separation from employment. Covenants not-to-compete are enforceable under Michigan law to the extent that they are reasonable. Whether a given covenant not-to-compete is reasonable turns on facts of a particular situation. Factors relevant to determine reasonableness include the covenant's duration, geographic area affected and employment or business line protected. Non-compete covenants are objectionable from a non-employer dentist's perspective.
- Autonomy of professional judgment. Employment agreements should contain a provision providing that there shall be no interference with a dentist's exercise of professional judgment.
- Term, termination and renewal. A written contract should state its effective date, the length of its term, and whether it is subject to renewal, either automatically or by some other means. The contract should also state the manner in which it may be terminated, which may be for cause or no cause; whether termination requires advance written notice, and if so, the applicable period of time; what acts or omissions constitute a default or breach of the agreement; and whether there are applicable remedies, such as a cure provision or an agreement to arbitrate.
- Miscellaneous. Various other issues are also implicated in contracting arrangements for dentists and other health care professionals. These issues include fraud and abuse and taxation. It is always advisable that dentists consult with knowledgeable legal counsel before making such an agreement.