Article Date: 4/1/2005

Freeze! Hone Your Negotiating Skills Before You Accept That Job Offer
Negotiating an employment contract can be fraught with pitfalls, especially if it's your first time. Here's how to get what you want.
By David H. Hettler, O.D., Alexandria, Va.

You've just been offered a job you really want. Now what? Do you ask about money? Do you need a lawyer? Do you really need a contract?

In this article, I'll discuss the various aspects of an employment contract, including what's reasonable and the warning signs that should prompt you to move on. First, I'll answer some frequently asked questions.

DO I NEED A CONTRACT?

A good contract protects you and your employer. It spells out the terms of your employment upfront, addressing expectations on both sides. Think twice about starting a business relationship with someone who's reluctant to put an agreement in writing. In fact, if a potential employer refuses to sign an agreement, you may be better off looking elsewhere.

DO I NEED A LAWYER?

My short answer is yes. But you can choose a lawyer's level of involvement. If you're uncomfortable negotiating for yourself and asking for money and benefits, you can have a lawyer deal with the whole process from negotiation to contract review. However, you can minimize legal fees and facilitate the negotiation by first discussing the details of the contract with your future employer and having him explain any terms you don't understand.

When your lawyer reviews the contract, he should point out areas that may be unacceptable or restrictive to you. (See "Look Closely at the Non-compete Clause" for more on this topic.) Armed with this information, you can go back to the employer and ask if he'll modify the contract.

WHAT DO I ASK FOR?

To determine your salary needs, a budget is a must. Calculate your fixed expenses, variable expenses and taxes, then negotiate the salary you require. Remember, compensation means more than just how much you're paid. Benefits can make a huge difference in your total compensation. Don't rush to say "yes" before reviewing all aspects of the package. Failing to do this could cost you money.

Find out how you'll be paid -- weekly, monthly, bi-monthly -- and if you'll be paid a salary, a commission, a percentage or if the employer uses a production-based method. Production-based pay systems aren't necessarily bad. This may be the best way for a motivated O.D. to make extra money. It's not unreasonable to ask for a guaranteed minimum in the beginning. If you're replacing another O.D., find out what his production was so you can estimate what your salary will be.

CHECK OUT THIS BAKER'S DOZEN

In addition to salary, many of the following items will be addressed in your contract. You should consider:

1. Raises. Are raises based on length of service, measurable practice statistics or production growth assumption?

2. Production bonuses. Think about how you can increase production. Finding ways to generate more revenue shows your initiative. Will you share in some of the growth?

3. Vacation. How much is standard for the practice? Can you carry over unused days, or are you paid for them at the end of the year? Can you take additional time off and make up days? Can you take additional time off without pay? Are there blackout months?

4. Professional liability (malpractice) insurance. Group practices normally provide liability insurance for all the doctors in the group to ensure there are no gaps in coverage. Employers often feel it's in their best interest to provide this coverage because they'd almost certainly be named in any lawsuit. Make sure the coverage provided to you is sufficient for the limits in your state.

5. Disability insurance. Over your lifetime, you have a much greater chance of a work interruption from disability than from death. Does the employer offer this insurance? Who pays for it?

6. Medical insurance. Every new O.D. needs medical insurance. You can face financial ruin if you have a catastrophic illness and don't have coverage. First, determine that you'll be covered, and then find out the details of the plan, including coverage for your spouse and family.

7. Life insurance. If you're single with no dependents, you may not need this benefit. However, if you have student loans and someone cosigned for you, then you should have a term policy sufficient to pay off your debts. An employer can provide a term policy up to $50,000 for employees tax-free. This is an inexpensive benefit for an employer to provide for all employees.

8. General liability insurance. Sometimes called an umbrella policy, this will give you extra coverage against incidents, such as an auto accident where there's personal injury or property damage in excess of your auto insurance limits. This also covers someone slipping on the sidewalk of your home that you neglected to shovel or repair.

9. Retirement plans. Various plans -- 401(k), IRA, SEP ---allow you to save pretax dollars for retirement. Find out if your employer will add to or match your contribution.

10. Schedule of working hours. Be sure to hammer out the details of your work week, including any need to change your hours. Some employers may not be able to offer you full-time hours initially. On the other hand, you may want the option of reducing your hours if and when you want to start a family or your own practice.

11. Professional dues. Who will pay for membership in national, state and local optometry associations? Will your employer pay for you to join civic groups, such as the local Chamber of Commerce?

12. Continuing education. Every state mandates CE hours, and every O.D. needs to keep up with trends and new technology. Will your employer pay tuition and travel expenses to meetings? Will he pay you for time spent in class?

13. Cafeteria plan for medical and dependant care. This benefit can save you taxes on $5,000 per year for qualified expenses. Depending on your tax bracket, this can be a nice additional saving.

BE READY TO NEGOTIATE

The above "wish list" includes some benefits that may not be covered in a basic employment agreement. As you go through your list of questions, keep track of what's not covered. If your total compensation package is satisfactory, you may not mind paying for some benefits.

If you decide to pay for some benefits yourself, ask your potential employer if he'll deduct money from your salary to pay noncovered expenses. You'll save money by paying these expenses with pretax dollars. For example, if your employer won't pay for education, ask if he'll deduct a meeting expense of $500 and then pay it for you. Other than bookkeeping time, this costs your employer nothing but will save you 33% to 60% -- or $165 to $300 -- depending on your tax bracket.

WHEN TO WALK AWAY

If an employer says no to too many of your requests, ask yourself if this is really the opportunity you want to accept. If an employer seems unreasonable during negotiations, this attitude could carry over to the workplace.

If you're not satisfied with the terms of a contract and the employer won't change them, you may be better off looking elsewhere instead of letting a negative attitude infect your chances of future success in this job.

A GOOD FIT

Negotiating your first contract doesn't have to be intimidating. Prioritize your needs and expectations, review key items carefully and keep up a dialogue with your potential employer. The strategies I've outlined here should help you find a good fit.

Dr. Hettler is a 1984 graduate of The Ohio State University College of Optometry. He's one of two senior partners in an eight-person optometric group, which has six full-service offices in northern Virginia. He's a past president of the Northern Virginia Optometric Society and current president of the Virginia Board of Optometry.

 

 

Look Closely At the Non-Compete Clause

Most employment contracts have a restrictive covenant, also known as a non-compete clause. This protects employers from losing customers to employees who develop a following and then open a business across town.

A non-compete clause states you won't work within a specific distance from your present office for a specific length of time after leaving your current employer. Violators may incur a penalty. As an O.D., you should expect this to be part of your contract. You should decide what length of time will be acceptable to you if the relationship fails.

For example, the contract may state you can't work within three miles of the practice for 2 years. If you do, you may be required to pay dollar damages or a percentage of your revenue or income. This could mean if you work for only 2 weeks in a practice, you can't work in another practice in that market for 2 years.

Our group practice uses a more flexible approach while still protecting the practice. Our time limit is twice the number of months worked in the practice for the first year. If a new O.D. works for us only 2 months, his restriction is for 4 months after leaving. We're protected because an O.D. who's worked only 2 months isn't as great a threat, while longer employment automatically has longer time restrictions. 

 

Full-time vs. Part-time

Part-time employees generally don't qualify for benefits. If you're considering a part-time position, ask your potential employer if he'll adapt his benefits to your abbreviated schedule. You may find out you're better off working full-time for one employer at a lower salary plus benefits, than for two employers at a higher daily rate but without benefits.

 

 


Optometric Management, Issue: April 2005