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Dental Associate Agreements in Illinois: Terms That Shape the Relationship

A dental associate agreement should define compensation by production or collections, preserve the dentist’s clinical judgment, assign schedule and staffing responsibilities, and make termination, patient records, post-employment restrictions, and professional liability workable.

By Lincoln Square Law · 9-minute read

Define “production” and “collections” before using either word in compensation

Percentage compensation is common in dental agreements, but the percentage does not answer what is being measured. If compensation is based on production, identify whether the base is gross charges, an office fee schedule, adjusted production after contractual write-offs, or another defined amount. If it is based on collections, identify refunds, chargebacks, lab costs, discounts, insurance recoupments, financing fees, and payments received after the associate leaves. The agreement should identify the report used to calculate compensation and a reasonable process to correct errors.

Illinois wage law gives those drafting choices practical consequences. Compensation owed under an employment agreement is treated as wages, and final compensation includes earned commissions, earned bonuses, and other compensation owed under the agreement (820 ILCS 115/2). Final compensation generally must be paid no later than the next regular payday after separation (820 ILCS 115/5). The contract should therefore make the earning rule understandable enough that the practice can calculate the final amount without inventing a new rule after termination.

A draw or guaranteed base should also be described accurately. If the practice can reconcile a draw against later production, state when the reconciliation occurs and whether a deficit carries forward. If the associate receives a daily minimum only when scheduled, explain what happens for office closures, continuing education, illness, or a schedule the practice cancels. The goal is a formula the payroll report can reproduce.

Clinical control is not a management preference

Illinois dental law draws a direct line around clinical judgment. Section 38.1 of the Dental Practice Act generally prohibits a dentist from being employed by a non-dentist to provide dental services except as the Act allows, and prohibits a non-dentist from directing, controlling, or interfering with clinical judgment. The statute identifies treatment selection, patient referrals, record content, certain refund and warranty decisions, clinical advertising content, and final decisions concerning employment of dental assistants and hygienists as examples of clinical judgment (225 ILCS 25/38.1).

That does not mean an associate controls every business decision. A practice can set hours, staffing budgets, inventory systems, documentation deadlines, billing workflows, safety procedures, and other administrative standards. The contract should distinguish those business rules from the dentist’s professional decisions. A DSO or management organization can provide administrative support, but the associate agreement should not read as though an unlicensed manager can overrule diagnosis, treatment, referrals, or the clinical content of the record.

The Dental Practice Act also addresses fee division. It treats division of dental fees for referrals as a disciplinary issue, while recognizing bona fide independent-contractor and employment arrangements among health professionals and other entities when otherwise lawful (225 ILCS 25/23). Compensation clauses should therefore be evaluated with any management, referral, ownership, or marketing agreement that affects the same revenue. A lawful associate percentage does not automatically validate every percentage paid elsewhere in the structure.

Schedule, staffing, and laboratory responsibility should match how the office runs

A short sentence requiring the associate to work “the schedule assigned by the practice” leaves too much unresolved. Define expected days and hours, evening or weekend rotation, emergency coverage, hygiene checks, new-patient distribution, time off, continuing education, and the process for changing locations. If the practice operates multiple offices, state whether travel is expected and how far the assignment can move without a written amendment.

Staffing provisions deserve care because Illinois law identifies final decisions about dental assistants and hygienists as part of the clinical-judgment protection in Section 38.1. The agreement can give management authority over budgets, payroll, human-resources procedures, and ordinary staffing administration while recognizing the dentist’s protected role in clinical staffing decisions. That boundary should also be reflected in the DSO or MSO agreement so the documents do not contradict one another.

Laboratory and remakes are another common source of compensation disagreement. If lab fees are deducted from production or collections, say which fees, at what amount, and when. If remakes reduce credit, define the conditions and who decides whether the remake is clinically required. The dentist’s clinical judgment should not be converted into a unilateral compensation penalty controlled by a nonclinical manager.

Patient records and confidentiality should survive the associate’s departure

The agreement should state that patient records are maintained by the practice in accordance with applicable law and privacy obligations, while giving the associate appropriate access during employment to treat patients and complete documentation. It should prohibit taking or using patient information for an unrelated purpose, but it should not prevent lawful access that is necessary for treatment, continuity, defense of professional services, or another permitted use. The HIPAA analysis depends on the actual relationship and purpose, so broad “no copies under any circumstances” language can create operational problems.

At departure, identify who completes unsigned notes, handles pending lab cases and referrals, responds to patient requests, and manages treatment in progress. The contract should coordinate with the practice’s privacy and record-retention policies. A patient-communication plan can be prepared in advance even if the exact notice depends on the circumstances. The objective is continuity rather than ownership rhetoric.

Confidentiality provisions should protect genuine business information without claiming ownership of the dentist’s general professional skill. Define the practice information that must be returned or deleted, the systems from which access will be removed, and the limited circumstances in which the associate may retain information because law, a payer, malpractice carrier, or a legal claim requires it.

Illinois restrictive-covenant rules apply to dental associates too

The Illinois Freedom to Work Act sets earnings thresholds for noncompetition and nonsolicitation covenants. In 2026, an employer may not enter into a noncompetition covenant unless the employee’s actual or expected annualized earnings exceed $75,000, and may not enter into a nonsolicitation covenant unless earnings exceed $45,000. Those thresholds are scheduled to increase to $80,000 and $47,500 on January 1, 2027 (820 ILCS 90/10). The agreement must use the law applicable when the covenant is entered into.

A covenant is not enforceable merely because the associate clears the threshold. Illinois requires adequate consideration, an ancillary employment relationship, protection no greater than necessary for a legitimate business interest, no undue hardship, and no injury to the public (820 ILCS 90/15). The employer must also advise the associate in writing to consult with an attorney and provide at least 14 calendar days before employment begins or at least 14 days to review the covenant, even though the associate may choose to sign earlier (820 ILCS 90/20).

Draft the restriction around the actual practice. A covenant that distinguishes active patients, referral sources, confidential information, and a reasonable geographic service area is easier to analyze than a form that prohibits all dental work across a large territory. The parties can separately address solicitation of staff, use of trade names, phone numbers, websites, and marketing assets. Those issues are different from whether a departing dentist can continue practicing the profession.

Termination should connect payroll, malpractice, scheduling, and patient care

Termination language should identify the notice period, events permitting immediate termination, cure rights, and what happens to the schedule during notice. Licensure restrictions, exclusion, loss of required insurance, fraud, theft, serious safety events, or inability to perform may justify different treatment from an ordinary performance disagreement. If the practice can remove the associate from patient care during notice, the agreement should say what compensation continues.

Professional-liability coverage should be specific enough to administer. Identify whether coverage is occurrence or claims-made, required limits, who pays premiums, whether tail or extended-reporting coverage may be required, and who bears that cost under each exit scenario. Tail allocation is a negotiated term, so it should not be left to a sentence that says only “associate is responsible for all insurance.” The closing file for an associate departure should reconcile payroll, open insurance claims, outstanding lab work, patient follow-up, prescriptions, system access, keys and devices, marketing references, payer rosters, and malpractice notice. When the contract anticipates that checklist, termination becomes a managed handoff rather than a series of unrelated emergencies.

Use a compensation exhibit and an offboarding exhibit

A strong dental agreement can be shorter when two exhibits carry the operating detail. The compensation exhibit can define the production or collections base, excluded items, lab deductions, guarantee or draw, bonus timing, and report used for calculation. The offboarding exhibit can identify records completion, patient-care handoff, access termination, payer updates, property return, insurance steps, and final-compensation reconciliation.

Before signing, compare the agreement with the practice’s DSO or MSO agreements, ownership documents, employee handbook, compensation reports, malpractice policy, and HIPAA procedures. The associate should not receive one promise from the contract and a different rule from the operational systems. Consistency is the best way to make the contract useful after the relationship becomes stressed.