3 key areas to clarify in an employment contract

October 25, 2017

In most states, non-compete covenants in physician contracts are enforceable if they are reasonable in their scope and duration.

 

1. The non-compete clause

It is common today for physicians to switch employment frequently. This may not be your last job, so focus on what might happen when you leave. Almost every physician employment agreement will have a provision that restricts his or her ability to work near their previous employer after termination.

In most states, non-compete covenants in physician contracts are enforceable if they are reasonable in their scope and duration. In highly populated areas, these provisions often prevent a doctor from working within five to 10 miles of their current employer, and often apply for 2 years after the end of employment.

Another important point is to specify when the non-compete does not apply. If the physician is terminated without cause, or if the physician terminates because of an uncured material breach of the employment agreement, the non-compete should be void.

Obviously, the employer may not agree to these restrictions, and the employer has a valid interest in preventing competition. However, it is a significant gain for the doctor if he/she can achieve any limits to the non-compete’s application.
 

2. Duties and call responsibilities

Another important part of a doctor’s first employment agreement is the description of duties and call coverage. Physicians continue to expect a better work-life balance, so the employment agreement should describe the employer’s expectation of duties and responsibilities. Ask your employer to provide your clinical hours in advance as these details clarify a physician’s understanding and expectations in this first job.

 

Similarly, the employer should specify expectations of call responsibilities. This includes describing how calls are taken-from the clinic or remotely-and explaining the rotation schedule for your specialty.

Oftentimes, a hospital cannot agree to a precise call rotation due to staffing changes and emergency situations. At the very least, hospitals should be willing to state in their contracts that the doctor will be allotted hours and call coverage on an equitable basis with other physicians in the same specialty.
 

3. Compensation and additional benefits

Finally, the employment agreement for starting physicians should include a clear explanation of compensation and additional benefits. Doctors should ensure that:

Compensation should be a “floor and not a ceiling” to their compensation during the initial term.
Compensation cannot be adjusted downward during the first two to three years, but it may be increased due to bonuses and incentive compensation. Make sure that your calculation is clearly defined.

Most first employment agreements include other monetary benefits, such as a signing bonus.
The range of signing bonuses can be large, from $2,500 to $100,000 and beyond. Understand these bonuses- and any attached limits-because you may have to repay the bonus if you leave during the initial term.

There is often an allowance for continuing medical education (CME). Ensure your contract pays licensing fees, medical staff fees, professional society dues and board exam and review course fees. Employers typically are amenable to these requests, provided that the requests are reasonable and the employer is given sufficient time to adjust the schedule. In certain circumstances, an employer may also repay student loans.

The big picture:

 In addition to these three key areas, a physician’s entire employment agreement should be carefully reviewed. Other areas of the agreement, such as benefits and malpractice coverage, are important but unlikely to be changed because employers won’t usually adjust benefits or insurance for one employee. Make sure you understand the whole agreement so you have realistic expectations.