Dental and Medical Counsel Blog

As you approach graduation from optometry school, it's crucial to familiarize yourself with associate agreements and employment contracts. These legal documents will shape your early career, defining your responsibilities, compensation, benefits, and even your ability to work in certain geographic areas after your employment ends. Understanding the details of these agreements can prevent future disputes, protect your interests, and help you start your career on the right foot. Navigating the legal language may seem overwhelming, but knowing what to look for and how to negotiate key terms is essential for securing a contract that aligns with your goals. Here's what you need to know to set yourself up for success as you enter your optometry career.

When it comes to optometry practice agreements, there are some key differences between employment contracts and associate agreements that optometrists should be aware of before entering into any professional arrangement. These differences impact everything from compensation and benefits to liability and autonomy. Here’s a closer look at each:

Employment Contracts

Employment contracts are typically used when an optometrist is hired as a traditional employee of a practice. These agreements offer more structure and predictability in terms of compensation and benefits, but they also come with certain obligations and restrictions.

Key aspects of employment contracts include:

• - W-2 Employee Status: The optometrist is classified as a W-2 employee, meaning the practice handles tax withholdings for the employee's income, such as federal, state, and social security taxes.
• - Control and Supervision: The practice has greater control over the optometrist’s work schedule, job duties, and how services are performed. Optometrists typically follow set policies, procedures, and hours of operation.
• - Employee Benefits: Employment contracts often include benefits like health insurance, paid time off (PTO), retirement savings plans (such as a 401(k)), and sometimes professional development stipends. These benefits can significantly add to overall compensation.
• - Patient Ownership: The practice owns all patient records, and there are often clauses that govern patient relationships, especially post-termination, which may include non-compete or non-solicitation clauses.

Associate Agreements

In contrast, associate agreements are generally used for optometrists working as independent contractors. These agreements provide more freedom but also come with added personal responsibility, especially in terms of finances and liability.

Key differences in associate agreements include:

• - 1099 Independent Contractor Status: The optometrist is considered an independent contractor, which means the practice does not withhold taxes. The optometrist is responsible for managing and paying their own taxes, including self-employment tax.
• - Autonomy: Independent contractors have more flexibility and control over their work. They often have the freedom to set their own schedules, determine how they perform their services, and may work with multiple practices.
• - No Employee Benefits: Since independent contractors are not employees, they are responsible for securing their own health insurance, retirement savings, and other benefits. This requires careful financial planning.
• - Tax Responsibility: Independent contractors must track and pay their own taxes, often making quarterly tax payments. Deductions for business expenses such as equipment and mileage may be available, but contractors must handle this themselves.
• - Patient Records: Depending on the terms of the agreement, an independent contractor may have more flexibility in managing patient relationships and even in negotiating ownership of patient records.

• - Compensation Structure: Employment contracts generally offer a base salary with the potential for bonuses based on performance or production. In contrast, associate agreements often provide compensation based on a percentage of the optometrist's production or collections, which can lead to greater income variability.
• - Non-compete Clauses: Employment contracts are more likely to include non-compete clauses, which restrict optometrists from working within a certain geographic area or with specific types of patients after leaving the practice. While less common in associate agreements, non-compete clauses may still be present and enforceable.
• - Liability and Risk: Employees generally have greater protection from liability since the practice typically covers malpractice insurance and other legal concerns. Independent contractors, however, may bear more personal liability and may need to secure their own professional liability insurance.
• - Duration of Agreement: Employment contracts tend to cover longer periods, sometimes with renewal options or termination provisions. Associate agreements, on the other hand, may be more project-based or short-term, allowing more flexibility for both parties to end the relationship.
• - Provision of Equipment and Supplies: In an employment contract, the practice usually provides all necessary equipment, supplies, and even administrative support. Independent contractors, however, may be required to supply their own tools or equipment depending on the terms of the agreement.

When reviewing any optometry practice agreement, it’s essential to understand the nature of the professional relationship being established. Optometrists should ensure all key terms—compensation, duties, liabilities, and restrictions—are clearly defined in writing. Having an experienced attorney review the contract can protect your interests and help you avoid potential issues that could arise down the road, ensuring that you enter into an agreement that aligns with your long-term career goals.

Key Components of Optometry Contracts

When entering into an optometry contract, it’s important to carefully review key sections that will directly impact your day-to-day work and long-term career satisfaction. Below are some critical components you should pay close attention to:

Compensation Structure

One of the most important aspects of any contract is how you will be compensated. Your contract should clearly outline your compensation package, which typically includes:

• - Base Salary: This is the guaranteed amount you’ll be paid, regardless of your production. It provides financial stability, especially in the early stages of your employment.
• - Production-Based Bonuses: Often, optometrists receive a percentage of the net revenue they generate for the practice, typically ranging from 13-18%. It’s important to clarify if this is based on collections (money received) or production (services billed), as this can affect how and when you receive bonuses.
• - Per Diem Rates: If you’re working on a part-time or fill-in basis, your compensation may be calculated daily rather than as a base salary. Ensure the rate is clearly defined and agreed upon.
• - Performance Bonuses: Some contracts include additional bonuses based on quarterly or yearly performance targets. These might be tied to metrics like patient satisfaction, revenue growth, or meeting certain administrative goals.

Understanding the compensation structure in detail is essential for both financial planning and evaluating the overall competitiveness of job offers. Ensure there’s transparency around how bonuses are calculated, when they are paid, and any conditions that could impact them.

Benefits Package

A comprehensive benefits package can significantly enhance your overall compensation and provide long-term financial security. Be sure to check for:

• - Malpractice Insurance: The contract should state whether malpractice insurance is provided, and if so, what type—claims-made or occurrence-based. If it’s claims-made insurance, determine who covers the cost of tail coverage after you leave the practice.
• - Licensure Fee Reimbursement: Many practices offer to reimburse costs for maintaining state licensure, DEA registration, and other professional fees.
• - Continuing Education (CE) Allowances: Staying current in optometry requires ongoing education, and many employers provide allowances for attending conferences, seminars, or other CE activities. Check if the contract includes stipends or reimbursements for these costs.
• - Paid Time Off (PTO) and Holidays: Confirm the number of vacation days, sick leave, and whether you’ll have paid holidays. Understanding the practice’s policy on PTO and how it accrues is crucial for maintaining a work-life balance.
• - Health Insurance: Health benefits are often a major component of compensation. Look for details on coverage options, cost-sharing between you and the practice, and whether dependents are included.
• - Retirement Plans: Ensure the contract includes retirement savings options, such as a 401(k) with employer matching. The presence of a solid retirement plan can greatly enhance the long-term value of your compensation package.

A well-rounded benefits package not only provides financial security but also demonstrates the practice's commitment to your personal and professional well-being.

Job Responsibilities and Expectations

Clear job expectations can help avoid future misunderstandings and prevent conflicts. Your contract should outline:

• - Work Schedule: Make sure your schedule is defined, including the number of days per week, weekend shifts, and whether you’ll be required to be on-call. If flexibility is important to you, ensure the contract reflects that.
• - Patient Load Expectations: The contract should define how many patients you are expected to see daily or weekly. Knowing this upfront can help you manage your workload and ensure you can meet production-based bonus targets if applicable.
• - Administrative Duties: In addition to patient care, many optometrists are responsible for administrative tasks like documentation, billing, and compliance with state and federal regulations such as HIPAA. Ensure the contract clarifies these responsibilities, as they can affect your overall workload.
• - Compliance with Regulations: Make sure the contract includes expectations for adherence to optometry laws, healthcare regulations, and practice policies, such as record-keeping and patient confidentiality.

Red Flags to Watch For

While reviewing your optometry contract, it’s essential to look out for certain red flags that could negatively impact your career. Being proactive and identifying these issues early on will help you negotiate better terms and avoid potential pitfalls down the road.

1. Overly Restrictive Non-Compete Clauses

Non-compete clauses are common in healthcare, but they shouldn’t be too restrictive. Be cautious if you see:

• - Unreasonable Geographic Limitations: In urban areas, the non-compete radius should be within a few miles or blocks, while rural areas may extend up to 30 miles. A broad restriction could severely limit your future employment options.
• - Excessive Time Limits: A typical non-compete lasts 1-3 years. Anything longer could unfairly prevent you from working in your chosen field for an extended period

Don’t hesitate to negotiate these terms if they seem excessive. Optometry is a profession where relationships with patients are important, so it’s crucial to find a fair balance between protecting the practice and allowing you the freedom to continue your career.

2. Verbal Agreements

Always insist that any promises or agreements made during negotiations are included in the written contract. Whether it’s about bonuses, raises, partnership opportunities, or work hours, verbal agreements carry little legal weight and can lead to misunderstandings or disappointment later on. A handshake deal may sound appealing in the moment, but if it’s not in writing, it doesn’t hold up in court.

3. Vague Termination Clauses

Understand exactly under what circumstances your employment can be terminated. The contract should clearly define:

• - Notice Periods: How much notice must be given by either party? Typical notice periods range from 30-90 days, but it should be reasonable based on the position and location.
• - Causes for Termination: Ensure that “for cause” termination is specific and clearly outlined. Ambiguous language could allow for arbitrary firing without appropriate notice or severance.

A well-defined termination clause protects you from sudden job loss and ensures you can plan your next steps if the employment relationship comes to an end.

Negotiation Tips

When negotiating your contract, it’s important to think beyond just the base salary. Here are a few things to keep in mind:

• - Consider the Entire Compensation Package: Look at all aspects of the offer, including bonuses, benefits, work-life balance, and future growth opportunities. A high salary with poor benefits or lack of support may not be as appealing as a slightly lower salary with a comprehensive package.
• - Research Industry Standards: Knowing the typical salary, bonus structures, and benefits offered in your area will help you assess if the offer is competitive. This gives you leverage when negotiating.
• - Seek Legal Advice: An experienced attorney can spot potential issues or areas for improvement in your contract. Don’t hesitate to have someone review it before you sign.

Intangible Factors to Consider

While these aspects may not be explicitly stated in the contract, they are crucial for your long-term job satisfaction:

• - Workplace Culture and Team Dynamics: A supportive and positive work environment can make a huge difference in your daily experience. Consider how well you fit with the practice’s culture and team.
• - Mentorship Opportunities: Early in your career, having access to mentorship and guidance can be invaluable. Look for a practice that offers professional development and learning opportunities.
• - Work-Life Balance: It’s important to understand the demands of the job and how they align with your personal life. Optometry can offer a good work-life balance, but make sure your contract supports this with reasonable hours and time off.
• - Potential for Growth: Does the practice offer opportunities for you to grow professionally, either through continuing education, partnerships, or leadership roles? Make sure your long-term career goals align with what the practice offers.

Thoroughly understanding and negotiating your employment contract is a critical step toward ensuring a successful and fulfilling optometry career. Take your time to review the contract, ask questions, and seek legal counsel if necessary. Remember, the goal is to create a contract that benefits both you and your employer by setting clear expectations and fostering a positive and productive working relationship. By becoming familiar with these concepts before graduation, you’ll be better equipped to navigate the job market, secure a position that aligns with your professional goals, and start your optometry career on a solid foundation.

Contact Dental & Medical Counsel Before You Sign

Dental & Medical Counsel specializes in providing expert legal support to optometrists and other healthcare professionals. With years of experience in the industry, our team helps navigate the complexities of employment contracts, associate agreements, and practice transitions. We are committed to protecting your interests and ensuring a successful and secure professional future. Contact us today for personalized legal guidance tailored to your needs

Frequently Asked Questions

Q: What’s the difference between an employment contract and an associate agreement?
A: An employment contract is for W-2 employees, where the optometrist works under the practice’s control, with set hours and tasks, and typically receives benefits such as health insurance and retirement plans. An associate agreement is for independent contractors (1099), allowing more autonomy, but the optometrist is responsible for their own taxes, benefits, and often some equipment or supplies.

Q: What should I look for in the compensation structure of my contract?
A: Look for details on base salary, production-based bonuses (typically 13-18% of net revenue collected), per diem rates, and performance bonuses. Understanding how you’ll be compensated is essential for managing your finances and comparing job offers.

Q: What key benefits should be included in my optometry contract?
A: Key benefits may include malpractice insurance, licensure fee reimbursement, continuing education allowances, paid time off, health insurance, and retirement plans. A strong benefits package can significantly boost your overall compensation.

Q: What are the most important job responsibilities that should be outlined in the contract?
A: The contract should clearly state your work schedule (including weekends or on-call duties), patient load expectations, any administrative duties, and compliance with regulations like HIPAA. Clear expectations prevent future conflicts.

Q: What red flags should I watch for when reviewing an optometry contract?
A: Be wary of overly restrictive non-compete clauses, vague termination clauses, and any verbal promises that aren’t included in the written contract. Always ensure that important terms are clearly outlined in writing.

Q: What’s a reasonable non-compete clause in an optometry contract?
A: A reasonable non-compete should have clear geographic limitations (e.g., a few blocks in a city or up to 30 miles in rural areas) and a time limit of 1-3 years. If these restrictions seem excessive, negotiate them before signing.

Q: Why is it important to get verbal agreements in writing?
A: Verbal agreements are not legally binding and may lead to misunderstandings. Any promises about salary, bonuses, or future opportunities should be explicitly stated in the written contract to protect your rights.

Q: What should I look for in a termination clause?
A: The contract should clearly define the notice period (usually 30-90 days) and the specific causes for termination. Avoid vague language, as this can lead to sudden job loss or disputes over how the contract ends.

Q: What intangible factors should I consider when evaluating an optometry contract?
A: Consider the workplace culture, mentorship opportunities, work-life balance, and potential for growth. These factors may not be written in the contract but can greatly impact your long-term job satisfaction and career development.

Q: Should I have an attorney review my optometry contract before signing?
A: Yes, it’s highly advisable to have an experienced attorney review your contract. They can help identify potential issues, negotiate better terms, and ensure that your interests are protected before you commit to the job.

About the Author

At Dental & Medical Counsel, PC, we understand navigating the legal process can be tricky. We believe every optometrist deserves the best advice and service so optometrists can do what they do best, treat their patients. We make their lives easier by providing expert guidance, so they can focus on their personal and professional aspirations. We are optometry attorneys.

About Ali Oromchian, Esq.

Your Optometry Lawyer

Ali Oromchian, JD, LL.M. is the founding attorney of the Dental & Medical Counsel, PC law firm and is renowned for his expertise in legal matters

In addition to being a optometry lawyer for almost 20 years, Ali is also a renowned speaker, throughout North America, on topics such as practice transitions, employment law, negotiation strategies, estate planning, and more! Ali has helped hundreds of optometrists realize their professional goals and looks forward to aiding you in navigating the legal landscape.