Top 5 Contract Mistakes
Whether you are starting a new job or renegotiating, don’t make one of these common contract mistakes.
1. Salary vs. Production
With the increased demand for veterinary services comes higher salaries. If you’re not sure what salary to ask for, it’s time to do your research. The AVMA has resources like the Veterinary Salary Estimator that may help guide you. If there are any government entities near you that hire veterinarians, such as state veterinary schools, the salaries are usually published and available to the public.
The Base Salary is the salary that you will consistently get paid. If you don’t get production, then base salary will be your regular salary. For those who work in academia or non-traditional veterinary jobs, you are most likely paid just a regular salary. In that case, you want to negotiate the highest salary possible.
Some associates in general practice or ER are paid on salary, and some are paid production-based employment. With production, you want a high base salary, but it should not be your main focus. In many cases, the percent production will be your most valuable asset to increase your overall salary.
Production for general practice associates is typically between 20-25%. For specialists, the production tends to be higher. At its core, production is based on the total amount of money that the company collects from your services.
In most contracts, you will have statements like “the employee will be paid the base salary or 25% of production, whichever is higher”. For that reason, you always get paid your base salary, but if you surpass that base salary with production, then you will get additional compensation. In this scenario, negotiating a better production percentage might be better than negotiating a higher base salary, since the production might have a lot more potential.
Unfortunately, not all clinics are the same and what production means may vary. You might see contracts that limit what counts for production, excluding several products and services from your production calculation. These details should be easily understandable in the contract and if you do not understand it, ASK!!!
2. Blind-sided by a juicy sign-on bonus
A sign-on bonus is a bonus usually given for signing the contract. Either the whole amount or a fraction of it will be disbursed within 30-60 days of employment.
Your first check might look juicy, but don’t go and spend all of that money.
Sign-on bonuses come with some contingencies. One main one is how long you must work in the company to keep that money. Some vets have made the mistake of cashing the check and spending all of the money, not knowing that if anything goes wrong and they leave their job prior to that timeframe, they might have to pay back the full amount.
The sign-on bonus is also where some people mistakenly think that the full amount is theirs to keep. Depending on how the employer pays out the bonus, you might have to pay taxes on the full amount. That means 20-35% of that money may not be yours, but Uncle Sam’s. Ask for the bonus to be prorated, meaning that if you work half of the term, you get half the money, and understand the tax implications.
3. 10-miles is not that bad (Non-competes)
If there is a non-compete clause in your contract, you will have a radius and a time frame that you must abide by.
A 10-mile radius might not sound like much, but look at a map and verify what this might mean to you. In a rural setting, 10 miles is just a 15-minute drive, but in an urban setting, 10 miles could mean that you have to find a job over 30 minutes from where you used to work. Remember it is a radius, not the driving distance.
The type of practice should be specified. For example, if you’re an emergency vet, any non-compete should only cover emergency practice.
The time frame is also important. One to two years after separation will mean that after you leave your job, you will not be allowed to practice in that area for a year or two. Again, depending on where you live, this might make your life very difficult in the future.
The best non-compete is NO non-compete.
4. Not considering benefits as part of “compensation”
Benefits from your employer are essential for your wellbeing and to develop as a veterinarian. Each company is different, and some might have a laundry list of benefits while others may not have any.
All of these benefits have a dollar value to them, and they should be quantified and considered when selecting a job.
The salary should not be the only driver of your decision.
5. Not reading the contract
Read the contract! If you don’t understand it, seek professional help from a lawyer. Employers might tell you that the contract cannot be altered, which just means that they’ll need to send it back to their lawyer if you request changes.
However, NUMBERS can be negotiated and changed in the contract.
Above all, don’t sign something you don’t understand.
Willie Bidot, DVM, DACLAM