Compensation Structures
Compensation is typically the first thing associates focus on, but the structure matters as much as the percentage. The same nominal rate can produce very different income depending on how collections are calculated, what adjustments apply, and when payments are made.
Common Compensation Models
| Structure | How It Works | Typical Range |
|---|---|---|
| Percentage of Collections | You receive a percentage of cash actually collected on your production | 25% to 35% |
| Percentage of Production | You receive a percentage of billed production regardless of collection | 22% to 30% |
| Daily Guarantee | Minimum daily rate or percentage of collections, whichever is higher | $500 to $1,000/day minimum |
| Base Plus Bonus | Fixed salary plus bonus based on production or collections exceeding threshold | $120k to $180k base |
| Straight Salary | Fixed compensation regardless of production | $140k to $200k |
Critical Questions About Compensation
- Collections or production? Collections based compensation ties your pay to cash received, not services rendered. If the practice has collection problems, you bear that risk.
- What counts as "your" production? Does hygiene exam production count? What about procedures started by another provider?
- How are adjustments handled? Insurance write offs, patient discounts, and refunds can significantly reduce collections.
- When are you paid? Monthly? After collections are received? Lag time affects your cash flow.
- Are lab fees deducted? Some contracts deduct lab costs before calculating your percentage, significantly reducing compensation on crown and bridge work.
Example: Impact of Lab Fee Deduction
Crown procedure billed: $1,500
Lab fee: $200
Your rate: 30% of collections
Without lab deduction: $1,500 × 30% = $450
With lab deduction: ($1,500 - $200) × 30% = $390
Restrictive Covenants
Restrictive covenants limit what you can do during and after employment. These provisions can significantly affect your career options, so understanding their scope and enforceability is critical.
Types of Restrictive Covenants
Noncompete
Prohibits you from practicing dentistry within a geographic radius for a period after termination. Typical terms: 5 to 15 miles, 1 to 2 years.
Nonsolicitation of Patients
Prohibits you from soliciting or treating patients of the practice after leaving. May apply even outside noncompete radius.
Nonsolicitation of Employees
Prohibits you from recruiting staff to leave with you. Typically 1 to 2 years after termination.
Confidentiality
Prohibits disclosure of practice information including patient lists, fee schedules, and business practices. Often perpetual.
Enforceability of restrictive covenants varies dramatically by state. California largely prohibits noncompetes. Other states enforce reasonable restrictions. Even in enforcement friendly states, overly broad covenants may be modified or struck down. For detailed analysis, see our guide on restrictive covenants in dental contracts.
Noncompete Considerations
Before accepting a noncompete, understand exactly what you are giving up. Consider where you might want to practice if this position does not work out. Is there another opportunity within the restricted radius? Would you need to relocate? The best time to negotiate covenant terms is before you sign, not when you want to leave.
Termination Provisions
Termination provisions determine how either party can end the relationship and what happens when they do.
Key Termination Terms
- Notice period: How much advance notice must you give to resign? Most contracts require 60 to 90 days. Shorter is better for your flexibility.
- Termination for cause: What constitutes "cause" allowing immediate termination? Is the definition specific or vague?
- Termination without cause: Can either party terminate for any reason with notice? Mutual termination rights protect both parties.
- Effect on compensation: Are you paid for production through your last day, or only for collections received before termination?
- Effect on restrictive covenants: Do covenants apply regardless of who terminates and why? Some contracts waive covenants if the employer terminates without cause.
Negotiate reciprocity: If the employer can terminate without cause on 30 days notice, you should have the same right. If you must give 90 days notice, the employer should match. Asymmetric termination rights favor the employer.
Tail Coverage
Malpractice insurance "tail coverage" protects you against claims filed after you leave for treatment provided during employment. Understand who pays for tail coverage upon termination. If the contract makes you responsible, factor this cost (often $5,000 to $15,000) into your decision.
Partnership Track Language
Many associate positions are marketed as "partnership track" opportunities. The value of this designation depends entirely on how partnership terms are documented.
Vague vs. Specific Partnership Language
Example: Vague Partnership Language
"Associate may be considered for partnership after demonstrating commitment to the practice and meeting performance expectations."
Example: Specific Partnership Language
"After 3 years of employment, Employer shall offer Associate the opportunity to purchase 30% ownership. Purchase price shall be calculated as 65% of trailing twelve month collections attributable to the interest being acquired. Financing shall be available over 5 years at prime plus 2%."
If partnership is important to you, push for specific terms in the associate contract or a separate letter of intent addressing partnership. Vague promises are worth exactly nothing when the time comes.
Reviewing An Associate Contract?
Get experienced analysis of compensation structure, restrictive covenants, and partnership terms before you commit.
Schedule ConsultationBenefits And Expenses
Beyond base compensation, benefits and expense reimbursement significantly affect total value.
Common Benefits To Negotiate
- Health insurance: Employer paid, partially subsidized, or employee paid? Family coverage available?
- Malpractice insurance: Who pays premiums during employment? Who pays tail coverage upon termination?
- CE allowance: Annual continuing education budget and paid time for courses.
- Retirement plan: 401(k) with employer match? Profit sharing?
- Vacation and PTO: How many days? Are they paid based on salary or production average?
- Dues and licenses: Reimbursement for dental board license, DEA registration, association memberships.
- Signing bonus: One time payment upon starting, often subject to repayment if you leave within a certain period.
- Relocation assistance: If you are moving for the position.
Benefits have real dollar value. A position paying 28% with full benefits may be worth more than one paying 32% with no benefits. Calculate total compensation, not just the headline percentage.
Red Flags To Watch For
Certain contract provisions should trigger heightened scrutiny or potentially cause you to walk away.
Excessive Noncompete Scope
Radius over 15 miles or duration over 2 years. Multiple location restrictions that blanket an entire metro area.
Vague Compensation Terms
Undefined adjustments, discretionary bonuses, or calculation methods subject to employer interpretation.
Unilateral Modification Rights
Employer can change compensation, schedule, or duties without your consent at any time.
Asymmetric Termination
Employer can terminate with 30 days notice but you must give 90+ days. Penalties for early departure.
Signing Bonus Clawback
Repayment requirements extending beyond 1 to 2 years or triggered by employer termination without cause.
Tail Coverage Responsibility
You pay for tail coverage regardless of termination circumstances, adding thousands to departure costs.
Restrictive IP Assignment
Practice owns any innovations, improvements, or intellectual property you develop during employment.
Mandatory Arbitration
Waiving your right to court proceedings, especially with employer selected arbitration providers.
