THE DENTAL ASSOCIATE CONTRACT
Compatibility is key to a successful working
relationship. Certain personality types work
well with one another, and others do not.
Personality testing and profiling tools are
effective, inexpensive, and easy to use to assist
the practice owner in assessing compatibility.
If personality testing and profiling tools are
utilized, they need to be understood by those
SPOUSES WITH FAMILY MEMBERS IN
A spouse or other family member working in
the practice can greatly influence operations,
including scheduling, patient assignment,
administration, and supervision of staff. A
spouse or other family member working in a
practice is common and usually positive, but
the associate should be aware of what every-
one’s specific role is in light of any future
LENGTH OF ASSOCIATION
Some associates will not be owners, working
on a part-time or full-time basis indefinitely.
Others will be owners—and more should be.
For specialists, the association typically lasts
one to two years. For general dentists, asso-
ciateships generally last two to four years.
There are always exceptions. The associate’s
productivity must grow to a consistent level.
This allows the associate to avoid a pay reduc-
tion as an owner and pay for the practice
interest, which means that economically the
future ownership is based upon consistent
productivity and not time.
The associate is an employee, not an
independent contractor, unless the associate
works part time and other factors are present.
Worker classification is determined by the
IRS and individual states on a case-by-case
analysis. It is not simply a “check the box”
choice by the practice owner or associate. If
the practice pays the associate, schedules the
associate, requires the associate to follow
practice policies, and subjects the associate
to a restrictive covenant, the associate is an
2 Keep in mind that states, the IRS,
and now the Department of Labor3 greatly
dislike independent contractor relationships
and lose significant revenue from
Worker misclassification is an expensive
proposition for all concerned. The associate
should not agree to a provision in an independent contractor agreement holding the
practice harmless or indemnifying the practice from misclassification. If the practice
owner and associate really think that the
associate can be properly classified as an
independent contractor, the associate should
practice through an S-corporation as a separate entity, not as an individual or a single
member limited liability company that is
treated as a sole proprietorship.
If the associate position will lead to owner-
ship, the associate should request and expect
that the practice owner has already deter-
mined his or her exit choice. The associate
should expect the owner to present a confi-
dentiality letter, employment agreement,
practice valuation, detailed letter of under-
standing outlining the specific terms of future
ownership, and ownership agreements. The
future ownership will be in the form of co-
ownership, complete ownership at a later
date, or a solo group arrangement. While the
practice value for future ownership in some
form may be recalculated after a year or on a
mutually agreeable date after the associate-
ship begins, it is important to have a baseline
value at commencement of the associate’s
employment or shortly thereafter.
The associate’s lawyer and CPA should
review the items prepared by the practice
owner’s lawyer. The advance preparation of
co-ownership or other ownership items and
agreements is essential—the date of value,
business and tax structure, and agreement
terms are extremely difficult to agree upon a
year or two after the associate’s employment
It is not enough to agree upon the associate
contract provisions. The important considerations preceding the associate contract are
crucial to a successful long-term relationship—
and hopefully future associate ownership and
1. Kurek v. Commissioner, T. C. Memo. 2013-64; Cave v.
Commissioner, T.C. Memo. 2011-48.
2. Prescott WP, Altieri MP, VanDenHaute KA, Tietz RI.
Worker classification issues: generally and in
professional practices. The Practical Tax Lawyer.
2017; 31( 2): 17-28. 1.
3. Weil D. Administrator’s interpretation No. 2015-1.
United States Department of Labor website. https://
AI-2015_1.htm. Published July 15, 2017. Accessed
May 11, 2017.
WILLIAM P. PRESCOTT,
ESQ. EMBA, of WHP in Avon,
Ohio, is a practice transition
and tax attorney. He is a former
dental equipment and supply
representative. His most recent
book is titled Joining and
Leaving the Dental Practice,
second edition. For this and Mr.
Prescott’s other publications, visit PrescottDentalLaw.
com. Mr. Prescott can be contacted at (440) 695-8067
The associate is
an employee, not
works part time
and other factors