No one likes that moment when you have to terminate an employee. Unfortunately, as the owner of your dental practice, there will be times when it's necessary for you to let an employee go. Whether it's due to poor performance, issues in patient care, or ethical concerns, you want to be sure that you're following the right steps in letting the employee go legally. Writing a solid severance agreement will ensure that you are protected legally if things don't go according to plan.

In some cases, you might want to offer compensation for someone who is forced to leave your practice--especially if you are forced to terminate their employment on the grounds of something like an overall decrease in business or the need to move to a location that is no longer convenient for them. The practice shutting down is also a good reason to offer a reasonable severance package. In some cases, you may choose to provide severance pay as part of the firing process for employees, especially one who has been with your practice for a long time. There are several things to consider when offering a severance package to employees that you're forced to terminate.

Reasons for Termination

Your severance agreement paperwork can include the reason the person was let go. In every state but Montana, you can fire an employee for any reason that's not illegal. This includes poor job performance, failing to meet expectations, or being a distraction to other staff members as well as causing drama throughout the workplace. Note, of course, that you cannot fire any employee in any state because of their race, religion, gender, disability (including pregnancy), or age. Note that you should also be careful in engaging in a contract, including a verbal contract, that gives employees a reason to assume that they have been promised continuing employment with your practice.

Severance Pay and Benefits

Monetary Compensation

In some cases, you may offer employees a portion of their regular paycheck in order to help them make it through the tough time between leaving your practice and finding new employment. Sometimes, it's a goodwill gesture intended to help soften the blow of unemployment; other times, it's a nod to the service that the individual has given your practice in the past. Determining monetary compensation as part of a severance package may include the number of years that an employee has been with your practice or the type of position they held, especially if they were in a trusted position for a long time.

Continuing Insurance

Acquiring a new insurance policy can be a challenge, especially when your former employee is seeking new employment options. Part of your severance agreement should include when they'll lose their insurance coverage. Does it end at the end of the month? Will you continue to pay for your portion of their health insurance for a period of time--a month or two, perhaps--while they look at their options?

Pension Programs

Consider whether or not you want to contribute to your employee's pension as part of their severance package. Whether it might not help immediately, it will certainly help later--especially for employees who may be nearing retirement age.

Note that the employee's last paycheck, which should include pay for all of the hours worked prior to their termination, is not part of the severance package and should not be considered as such. This amount, rather, is compensation for the time that the employee spent with your practice. Also keep in mind that you are not responsible for any financial arrangements for employees who are being terminated--these items are considered to be a bonus and are often offered due to a practice's inability to keep employees on, rather than when an employee has been fired due to poor behavior.

Severance Agreements and Unemployment

If an employee has been terminated for a reason that would lead them to be able to file for unemployment under normal circumstances, they will still be eligible to file for unemployment even with a severance package. Note that in some cases, the severance package may delay the time before an employee begins receiving unemployment benefits, but it doesn't stop your practice from needing to pay unemployment as needed. A legally written severance agreement doesn't decrease a former employee's rights, though it does tend to be an indication that the employee was fired fairly, and not due to any of the reasons that could cause them to seek legal action.

Firing an Employee: Some Tips

Entirely aside from the severance agreement itself, there are several things you should keep in mind when you have to terminate an employee at your practice. These simple tips will ensure that everything is legal and above-board--and therefore that it won't come back to haunt you later.

Wait until you calm down

No matter how bad an infraction, send an employee home for the day before you fire them on the spot. Take the time to think things through and allow both of you to cool off before you make a decision.

Don't do it alone

Bring another trusted individual--your partners, perhaps--into the office while you take care of the conversation that must be held. This will help ensure that you have witnesses and prevent the potential for future legal issues.

Keep it short

You do need to give a reason for the termination, but there's no reason to go on about it excessively, either.

Document everything

As with all aspects of employment law, keep track of all any disciplinary actions, conversations you've had to have with your employees, and any recurring problems that have led up to the termination. By tracking this key information, you'll have proof of the employee's actions if it's ever relevant.

Takeaways

Terminating an employee can be hard, both from an emotional standpoint and from a financial one. In order to ensure that you're taking care of it properly, make sure you're including these key steps in your severance arrangement. A strong severance agreement will help protect your practice as well as ensuring that your employee doesn't have a reason to take legal action against you.

Contact Dental & Medical Counsel for Help With Employee Termination & Severance Agreements

At Dental & Medical Counsel, we understand that terminating an employee is never easy—but handling it correctly is crucial to protecting your practice. Our experienced team can help you draft a legally sound severance agreement, navigate compliance requirements, and minimize risk. Whether you need guidance on severance pay, benefits, or legal protections, we’re here to help. Contact us today to ensure your termination process is handled smoothly and professionally.

Frequently Asked Questions

Q: What should I include in a severance agreement for my dental practice?
A: A severance agreement should include the reason for termination, any severance pay or benefits, the employee’s last paycheck, and clear details on when insurance coverage ends. It’s also important to specify whether you’ll contribute to a pension or offer other benefits during the transition period.

Q: Can I fire an employee for poor performance or behavior?
A: Yes, you can terminate an employee for poor performance or behavior as long as it's not discriminatory or in violation of any employment laws. In most states (except Montana), you can fire for any legal reason, such as poor job performance, without worrying about prior promises of continuing employment.

Q: Is severance pay required when firing an employee?
A: Severance pay is not required by law, but it can be a goodwill gesture, especially if the employee has been with your practice for a long time or if their termination is due to circumstances beyond their control (e.g., business downturn).

Q: How do I determine the amount of severance pay to offer?
A: Severance pay can be based on factors such as the number of years the employee has been with your practice, their position, and the circumstances of their termination. It’s also a good idea to offer more compensation for employees in trusted or long-term positions.

Q: How should I handle continuing insurance benefits in a severance agreement?
A: The severance agreement should outline when the employee’s health insurance coverage ends, and whether you will continue to pay your portion of the premiums for a set period of time (e.g., one or two months) to help them transition.

Q: Does severance pay affect an employee’s eligibility for unemployment?
A: Severance pay does not prevent an employee from applying for unemployment benefits, but it may delay the start of their payments. A well-written severance agreement indicates that the termination was fair and legal, which can help reduce the risk of future legal action.

Q: Should I include pension contributions in a severance agreement?
A: If the employee is nearing retirement age or has a pension plan with your practice, offering continued contributions as part of the severance package can help support their long-term financial security.

Q: What should I do before terminating an employee?
A: Before terminating an employee, make sure you calm down if emotions are involved, document everything, and consult with a trusted individual or colleague during the termination conversation. This will ensure the process is fair and legally sound.

Q: How can I ensure the termination process is legally compliant?
A: Document all actions leading to the termination, including any disciplinary measures or performance issues. Having this documentation helps demonstrate the decision was based on legitimate reasons and can protect your practice from future legal complications.

Q: What are the best practices for handling the actual termination conversation?
A: Keep the conversation brief and to the point. Avoid unnecessary details and remain professional. Make sure to have a witness present, such as a partner or HR representative, to help ensure that everything is handled appropriately.

About the Author

At Dental & Medical Counsel, we've been instrumental in realizing the practice goals of countless dentists. Whether you're looking to purchase, launch, or sell a dental practice, our expertise is your guide. Beyond the initial stages, we're committed to ensuring your dental practice remains legally compliant.

We provide comprehensive support, including employment law protections, dental contract reviews, and assistance with dental employment agreements. Additionally, we specialize in incorporating dental practices and securing trademarks. And for long-term planning, our services extend to helping dentists with succession and estate planning. Trust us to be your partner in every step of your dental practice journey.

About Ali Oromchian, Esq.

Your Dental 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

Ali Oromchian, JD, LL.M., is a leading legal authority in dental law and the founding attorney of Dental & Medical Counsel, PC, with over two decades of experience. His deep connection to dentistry comes from his wife's nearly two-decade-long career as a pediatric dentist.

This personal insight fuels his dedication to empowering dentists to navigate their legal challenges and achieve their practice goals. In doing so, Ali has helped thousands of doctors open their practices while maintaining legal compliance.

Ali is frequently quoted and contributes articles to dental publications, including the California Dental Society, Progressive Dentist, Progressive Orthodontists, Dentistry Today, Dentaltown, and The New Dentist magazines, further showcasing his commitment to the dental community.