Do your team members need a contract?


Simple practice policy may not protect you from employees out to damage your veterinary business.

Over the years I've focused on the most obvious aspect of noncompete covenants-they prohibit a doctor who leaves a practice from engaging in competitive activity within a certain geographical distance for a defined period of time. But I haven't paid as much attention to the other provisions these agreements typically contain: restrictions against soliciting employees of the practice after they leave, disclosing business information to third parties and disparaging the practice verbally or in writing to third parties.

Generally, veterinarians understand that the hiring away (or poaching) of a doctor from another practice is very easy to prove. Consequently, they rarely bother trying to do it. Purloining client and patient information may occur in rare cases, but most practice owners who hire an associate recognize that a battle with another practice is more trouble than it's worth. Finally, most veterinarians recognize that if they start spreading gossip or defamatory statements about a former employer, they not only sound profoundly unprofessional, they invite a lawsuit from the offended party.

None of this applies with your hourly support team members. 

What if?

In most clinics, there isn't much standing in the way of a receptionist, veterinary technician or assistant engaging in the sorts of behaviors most doctors' contracts expressly forbid. Consider these scenarios-all of which have actually happened to your colleagues when their disenchanted noncontract employees quit or were terminated.

> Suzie the treatment assistant becomes friendly with one of your associates. She leaves for a higher-paying position at a competing clinic and tells her old pal, “My new place is considering adding another vet; why don't you introduce yourself to my boss and sell him on hiring you-it'll be like old times!”

> Betty the receptionist heads down the street because she can't get along with the technical staff. Before you know it, she's texting all your other receptionists, saying her new job has better hours and a friendlier bunch of LVTs-so “you guys should get over here and fill out an application!”

> Tommy the kennel guy is tight with the rescue and shelter community. When his sloppy work at your practice stands in the way of his getting an annual raise, he quits and heads to one of your competitors. Shortly thereafter, none of the local adoption programs will recommend your hospital for new-pet exams or sick visits. Tommy has told everybody “what really goes on” at your clinic.

> Any of the above-mentioned folks quits after an argument with you or your manager. Suddenly Instagram, Twitter and Facebook are awash in comments and testimonials describing what a terrible practice you run.

> As an alternative, any one of the above-mentioned folks quits for a new job, but only after copying client lists and medical records of everyone she knows so the new practice can contact them to solicit their business.

While some hospitals have vague and unenforceable policies covering these sorts of threats, most don't expressly prohibit this kind of activity at all. And in an age of exploding social media, the damage that can be caused by a team member who engages in these behaviors has never been greater. One possible solution is to have your team members sign a “contract” of sorts.

Pro-contract arguments

A contract can protect you against cyber attacks, promote a zero-tolerance stance on negative post-employment behavior and can emphasize a thief's legal liability.

> Today, with the explosive growth of cyber-opinion outlets, anyone can almost instantly write a virtual book about your business. Hence, it would be nice to have some degree of legal protection against false, negative posts that can easily impact both your practice goodwill and your ability to recruit high-quality employees.

> If a current employee interviews elsewhere in anticipation of departing your clinic, it will be good for the new potential employer to be aware that your hospital's ex-employees are legally prohibited from stealing away coworkers and clients. A signed contract with hourly workers tells the world that your practice does not tolerate that behavior.

> Your contract can be crafted to make team members aware that walking off with client records opens the thief to major liability. This includes not just liability to you under the covenant but liability to state regulators. Personal and proprietary information is protected by a number of state laws. So even if an employee isn't afraid of what you might do, a nonpoaching agreement might scare him or her out of records theft for fear of criminal liability.

Contract cons

You may want to consider when drafting your contract that courts have expanded the concept of consideration in many employment contracts and these agreements might not be enforceable. Also, a contract may scare off potential employees.

> In order to have an enforceable agreement, there must be “fair and adequate consideration.” This means that in order to enforce the rights of one party, both sides must be giving up something of comparable value.

Recently, more courts have been denying enforcement of DVM associate noncompete agreements, citing too great a disparity in consideration. For example, a veterinarian works for six months, then leaves a practice under burden of a three-year noncompete clause-this is not a “fair and adequate” balance of value. When it comes to team members, a court could view a nonsolicitation or nonpoaching agreement as excessive in light of the minimal consideration of a $10-per-hour job with no guaranteed term.

> Candidates for any sort of job are often inherently reluctant to sign any sort of contract. Therefore, if your agreement is complicated or difficult to understand, good potential workers could be scared away by the idea of having to sign something legal just to get a routine hourly job.

Of course, you can tell new hires as well as existing hourly employees that you have adopted a policy that requires all workers, not just DVMs, to sign a nonsolicitation, nondisparagement or noncompetition agreement. But as with most things that seem simple, there are hidden complexities to consider. Once you've weighed the pros and cons, only you can decide whether a team member contract is right for your practice. 

Dr. Allen is president of Associates in Veterinary Law. E-mail

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