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Breaking Down a Physician Employment Agreement

By:  Gina L. Campanella, Esq., FACHE

Physician employment agreements can be complicated and intimidating.  Often times, potential physician employees are under the impression that most of the text is “ordinary” and “non-negotiable”.  The more dangerous assumption is that problematic sections are unenforceable.  Even if a court may ultimately determine that a contract term is not enforceable, the employee will still have to spend a significant amount of time and money arguing his or her case.  Before entering into any employment agreement, it is important to understand exactly what each sentence and section means and what potential problems those terms may cause for the potential employee in the future.  Frequently there are terms that are far from “ordinary” lurking among the definitions and “boilerplate” and, more often than not, employers are willing to negotiate to make their potential employees confident in their choice of employment.

When presented with an employment agreement, a comprehensive review will break the document down into its various parts and does not dismiss any term as too basic or too complicated.  The following questions, which are in no way an exhaustive list, should be asked by any potential employee when reviewing a new employment agreement.

Basic Terms:

  • Is the employment full time or part time? Exclusive?
  • How many shifts per month? Hours per shift?
  • Is there a provision for the employee to take call or provide/receive sick coverage? If so, what are the notice requirements for sick coverage or limitations (if any) while on call?
  • Does the term automatically renew? If so, how does the employee stop if from renewing if the employee does not want to renew? If not, how does the employee cause a renewal if he or she does want to renew?

Compensation:

  • What will the compensation be? How will it be determined and when will it be paid?  Is there any allowance for a bonus?  If so, how it is it determined and how will it be paid?
  • Are there any provisions allowing for annual raises? Downward modification of salary?
  • Is there an allowance for paid time off?
  • Is there medical insurance coverage available? If so, how is it paid?  When is the employee eligible for coverage?  Is there coverage available for the employee’s dependents?
  • Are there provisions for CME, Licensure and Certification reimbursements?
  • Are there any retirement plans available to the employee? Is participation optional or mandatory?  Are contributions matched?

Professional Liability Insurance:

  • Does the employer provide and pay for the employee’s medical malpractice liability insurance?
  • What type of policy is provided? Claims made or occurrence based?

Termination:

  • Is there an option for the employee’s termination of the agreement? If so, how does the employee terminate the agreement?
  • What are the options for the employer to terminate the agreement?
    • Is termination by the employer limited to “for cause” events only?
    • Does the employer have the sole discretion to determine a “for cause” event? Is there any provision for the employee to be provided with notice of a problem and have time to cure the problem before termination can occur?

Non-Competition:

  • Is the employee permitted to work for any other employer or have ownership interest in any type of facility or provider during the term of employment?
  • Is the employee restricted in his or her practice for any period after termination of the agreement? If so, how far and how long?
  • Is the employee restricted in how or if he or she can contact patients after termination of the agreement?

When conducting a review, a potential employee should be very careful not to dismiss any paragraph or section of the agreement as “ordinary” or “boilerplate” language.  It is imperative that the potential employee not only read every sentence of the agreement, but also that he or she understands what each sentence means and the potential effect it will have on him or her either during or after employment.

Once this comprehensive understanding is complete, the potential employee must then evaluate the agreement and determine (i) what he or she would prefer the employer change, but such desired change would not be required for the employee to accept the position and (ii) what the employer must change or the employee will not accept the position.  After making this determination, the potential employee will be prepared to request changes to the agreement.

If the potential employee does not understand a section or sections of the agreement, or if he or she does not understand how any particular section may affect his or her future career, it is essential to seek help to both understand and modify the terms before entering into the agreement.

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