2. Guaranteed compensation.
Particularly in the current economic environment, it's becoming increasingly common for financial aspects of an employment
contract to change. Practice owners and associates operate on the theory that when employment starts, there will be a base
salary. In later years, however, compensation will be determined as a percentage of gross revenue.
The problems arise when practice revenue drops in a difficult economy and neither the practice nor its owner is making the
kind of money historically seen on the annual balance sheet. The boss is happy knowing that after the associate's incentive-based
compensation formula kicks in, the employed doc won't cost more than he or she is worth—that associate will only be paid a
percentage of his generated revenue.
On the other hand, the associate is happy assuming that the incentive compensation language in the employment document is
only a contingency for his benefit. Surely, if the caseload doesn't support enough revenue to allow the incentive amount to
exceed his initially agreed-to base salary, the base will be there to protect him.
Well, they can't both be happy, can they? Production-based compensation is either obligatory or optional. Associates are often
extremely disappointed to learn that if office appointments aren't being scheduled, their salary will take a corresponding
hit. And when that first smaller paystub emerges from its envelope, that's when I get the call to interpret compensation language
in the employment contract that wasn't fully grasped by the parties (or at least one of them) at the beginning of the work
3. Professional commitment
I see this problem in veterinary employment contracts when the associate is relatively experienced or has his or her board
certification in a specialty.
For one of many possible reasons—inadequate compensation, poor advancement potential, etc.—a well-credentialed veterinarian
will leave one hospital to take another position where she sees the potential of "getting in on the ground floor" of a specialty
or a good opportunity to develop her unique skills in a specific area.
Sometimes this will mean signing on to a multidoctor specialty practice where there's a chance to be promoted to medical director.
Or it might be a chance for a position with a large veterinary group as the start-up doctor at a newly opened branch or satellite
In these cases, the veterinarian involved expects that advancement is likely. As part of that, he or she might be promised
the necessary building blocks to allow that advancement to occur, such as increased marketing to develop the caseload. Oral
assurances might be made as to the future hiring of other doctors to free up managerial time for the experienced new hire.
It might be as simple as the implied assurance of a sufficient caseload to allow the experienced associate to make a name
for himself or herself at the practice and in the community.
The problem occurs when all these spoken and e-mailed intentions are never committed to writing. The hiring practice very
well might know that new doctors will spin their wheels without costly marketing efforts at a new satellite or will be hamstrung
with routine dog and cat appointments in the main office with no time or caseload to permit the development of their interests
in exotic medicine and surgery.
Finally, when the contract is interpreted as to its legal enforceability, all the usual suspects are there: a salary cap,
a broad non-compete clause and frequently a long-notice requirement if the associate wants to leave. What might well be missing
is the key language mandating that the associate receive what he or she came to the practice for in the first place: commitments
to practice expansion, financial obligations by the practice owners and new staff to permit the associate's pursuit of his
or her special interest.
Veterinarians, you can avoid a lot of these problems with better understanding of your employment contracts. Get it in writing,
know what you're signing, and make sure you're happy with your legal responsibilities and the responsibilities of your new
employer under the terms of the contract.
Dr. Allen is president of the Associates in Veterinary Law P.C., which provides legal and consulting services to veterinarians.
Call (607) 754-1510 or visit firstname.lastname@example.org