Pitfalls for a Dentist to Avoid in Employer-Employee Relationships

Here is guest post from our friend Mike Limsky, Esq. 

Without proper planning, dentists may find themselves at odds with their own employees. The potential problems are many and include misunderstandings, resentments, and even lawsuits. As a Maryland attorney with 25 years of experience representing dentists and other medical professionals, I have seen firsthand the various pitfalls a typical employer-employee relationship may suffer. By taking proper precautions, however, many of these problems can be prevented. When counseling current and prospective clients, we often advise the following:

1. Maintain good personnel records.  Maintaining thorough and accurate records of all employees and independent contractors is the first step toward avoiding problems. These records should include the terms under which the individual is employed, including compensation amounts, bonus calculations, vacation allowances, continuing education provisions, and other benefits. Detailed information about any personnel problems, such as the nature of the matter, the date of each incident, and any disciplinary action taken, should also be included.
2. Avoid written office policies and employee manuals.  This may seem counter-intuitive, but we generally discourage clients from providing employees with written office policies or employee manuals. The problem is that employers may unwittingly deviate from the procedures specified in these documents. Especially when matters like compensation and termination of staff are involved, such deviations can lead to lawsuits, with your own employee manual as a primary exhibit.
3. Require employment agreements with restrictive covenants.  We strongly urge employers to have their professional and administrative staff sign employment agreements that include an adequate and enforceable restrictive covenant. Without these covenants in place, a dental practice may face unfair competition from a current or former employee whose activities were not properly limited for the benefit of the employer. For example, an employee could leave the practice and attempt to hire one of your other employees, market to your patients, or make off with office records.
4. Provide required post-termination compensation.  If an employee’s compensation includes a percentage of his or her collections, then as a matter of law, the employee may continue to receive such compensation after leaving the practice. Although the employee would no longer receive any base pay, he or she should still receive the percentage of collections attributable to his or her work. Employers who fail to provide such post-termination compensation may be subject to treble (“triple”) damages.
5. Be cautious about “independent contractors.”  Employers should be extremely cautious when attempting to hire someone as an independent contractor. Simply calling the individual an independent contract will not be enough; the IRS may conduct an investigation to determine whether the classification is appropriate. If the IRS concludes that the individual is not an independent contractor but an employee, the employer may be found liable for any deficiency in withholding taxes and the accrued interest and may be subject to stiff penalties. Before classifying a new hire as an independent contractor, the employer is strongly advised to seek the advice of an attorney or CPA to avoid running afoul of IRS rules and regulations.
6. Avoid common-sense problems.  Avoiding some pitfalls in the employer-employee relationship should be a matter of common sense. The following problems, however, occur often enough to make them worth mentioning:
   i.      Intimate relationships in the workplace. Employers should discourage their staff members from engaging in intimate relationships with other employees, especially between supervisors and subordinates.
   ii.      Cash payments to staff. Providing staffers with cash payments for compensation, reimbursement, etc., should be avoided. Issuing checks instead ensures a traceable paper trail in case a problem arises later.
   iii.      Inconsistent treatment of staff. All staff should be treated with the same degree of professional courtesy and respect.
   iv.      Denying overtime pay.  Be sure to follow state law requirements for overtime pay, which may include certain exceptions.
   v.      Discriminatory practices.  Decisions about matters like terminating an employee, providing bonuses, or giving promotions should not be based on characteristics such as age, gender, disability, religion, race, sexual orientation, etc.
7. Retain specialized professional advisers.  Before retaining an attorney, CPA, or other professional, look for someone who has extensive experience serving dental practices and whose client base is made up largely of dental practitioners. This experience and familiarity will be an essential benefit as you navigate the legal and professional intricacies that distinguish dentistry from other enterprises.

Working with dentists over the years has shown how often problems can arise between an employer and the staff. More importantly, it has enabled us to develop effective ways to prevent many of these problems before they occur. By taking sensible precautions, dentists can save themselves time, money, and a lot of stress.

Michael R. Limsky is a partner at the Maryland law firm of Summerfield, Willen, Silverberg & Limsky, LLC. His extensive experience as a business and corporate lawyer includes a special emphasis on the unique needs of dentists and other medical professionals. Please remember that the information contained in this article is intended to provide general information about legal topics and should not be construed as legal advice. Mr. Limsky can be reached at mlimsky@swsl-law.com or (410) 363-4444.