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
    .  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
    .  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
    .  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

  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:
    Intimate relationships in the workplace.
    Employers should discourage their staff members from engaging in intimate
    relationships with other employees, especially between supervisors and subordinates.
    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.
    Inconsistent treatment of staff. All
    staff should be treated with the same degree of professional courtesy and
    Denying overtime pay.  Be sure to follow state law requirements for
    overtime pay, which may include certain exceptions.
    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
or (410) 363-4444.