3 employment contract head-scratchers for veterinary associates

3 employment contract head-scratchers for veterinary associates

They may sound good, but certain clauses in your employment agreement might have zero legal enforceability.
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Nov 01, 2016

Shutterstock.comWithout a doubt, the most common questions I hear when I’m helping veterinary associates with their employment contracts begin with the words, “Can they really enforce this clause that says … ?”

Sometimes they’re asking about a fairly innocuous provision such as a dress code and at other times it’s a more substantive matter such as a noncompete agreement or a negative accrual term in a production-salary compensation formula. Regardless, they always want to know if the employer can legally hold them to the clause in question.

The surprising thing to me, though, is how rarely associates ask questions that start with the words, “Will I be able to enforce … ?” Young veterinarians seem particularly trusting, confident that their prospective employers will see through their end of the bargain and honor the words in their employment contracts.

It’s good to be trusting and it’s honorable to assume employers will be true to their word. But in the real world, not every employer intends to fulfill every obligation he or she has signed on for, and that includes corporate employers. Additionally, not every term in a contract that appears to be enforceable is.

On this point, my advice to associate veterinarians is always the same: If there is a provision in an employment contract that is not entirely clear but is important to you, look at it closely and make sure you can in fact enforce it. Never assume enforceability. Depending on the way it’s drafted, a legal document can contain language that sounds very specific but has no legal impact whatsoever and does not obligate anyone to do anything. Take a look at this simple example:

Your widower millionaire neighbor dies and his will is probated. It says, “I bequeath a fair and equitable share of my estate to my daughter and half of my estate to be split among my sons.” OK, that seems clear enough—the daughter gets half, right? Or would it be fair and equitable that she get less because she’s already wealthy, having married a rich veterinarian?

The correct answer is that the deceased inadvertently left his daughter nothing. And if the old fellow named a residuary beneficiary (the party who would get whatever is not specifically bequeathed), the daughter’s share could go to the Red Cross, the humane society or some old girlfriend named by the dead millionaire.

But why?

The reason is that the expression “fair and equitable” in this context has absolutely no legal significance. The term is surplusage—language that sounds legal-like but doesn’t impact interpretation of the document. Surplusage can be misleading and confusing. It imparts a sense that legal rights or obligations exist where there are in fact none.

So with that as background, let’s take a peek at a few veterinary employment contracts that almost got signed until they were spotted as having meaningless, unenforceable language.

1. The amazing disappearing partnership offer

Consider this language, taken verbatim from a Texas large animal associate contract I reviewed last year: “This is a two-year commitment by both parties starting on August 1; employee buy-in options will be available after two years.”

Sounds generous! But what the heck does that mean? Are we saying Dr. A works for two years, after which the boss turns over half the business to him at a sweet discount from its market value? Or maybe it means that after two years the owner will offer “options” to Dr. A, such as “buy into a third of the practice at 200 percent of its market value or go find yourself another job”? Either way, the words that look like a partnership offer are in truth nothing more than a waste of printer ink.

2. Profit-sharing without the profit

And consider this gem that popped up just yesterday in a contract for which I was consulted by a young veterinarian in New England: “Within six months of the effective date of this agreement, employer intends to institute a profit-sharing plan and associate will be entitled to participate in such a plan.”

My client told me that due to the “fact” that there was going to be a profit-sharing plan, he was willing to accept the salary offered (which was about 15 percent lower than a competing offer).

“Whoa!” says I. While the contract term regarding “profit sharing” seemed enticing, the language stated only the clinic owner’s intention, not that he was in any way committed to start such an arrangement.

Further, even if there were a legal commitment such as “Employer agrees that he will establish a profit-sharing plan … ,” the lack of specificity makes the legal obligation of no value to an associate lured into signing the contract. For example, the owner might institute the plan and decide to share with the associate “10 percent of after-tax profit generated by the business.” All the boss would have to do to eliminate any profit distribution would be to raise his own salary. After-tax profit to the business drops to a pittance, and so does the profit-sharing amount.

3. Surplusage from a practice consolidator

Finally, here’s a beautifully crafted sentence from a contract I looked at some time ago, which originated from the desk of a corporate veterinary practice (also coincidentally from Texas): “Dr. Jones will have the opportunity to buy up to 20 percent of [this corporate-owned practice] from the company and/or from Dr. Bill Smith over the next two years.”

I especially like this one because in terms of unenforceability, it has it all:

> Dr. Jones can buy up to 20 percent! Well, 1 percent is less than 20 percent; maybe that’s how much of the practice the company will be willing to sell two years from now.

> Even if the company eventually does offer a 20 percent buy-in, I wonder what the price will be. One hundred percent of what the company spent a couple of years ago to buy the whole place?

> Who in the world is Dr. Smith? He may be a part owner of the practice but he might not be. Either way, you have to wonder whether the company bothered to ask Dr. Smith if it could sell some of his ownership to an associate.

> Since this is a contract between the company and Dr. Jones (and Dr. Smith is not a party or a signatory to it), do you think this “option” is enforceable against Dr. Smith? Not.

The lessons to be learned from these examples, then, are two in number. And they are equally important for a veterinary associate who hopes to actually receive the pay and benefits described in her employment agreement. First, ask, “Is the provision in the contract something I can enforce?” The second: “Is the language of the pay arrangement or benefit specific enough that successfully enforcing it against the drafter is likely to yield a meaningful, positive result?”

Christopher J. Allen, DVM, JD, is president of the Associates in Veterinary Law PC, which provides legal and consulting services exclusively to veterinarians. He can be reached via e-mail at [email protected]