Exploring the Issues that Early Career Physicians Need to Understand When Presented with an Employment Contract

Headnote

Physician employment contracts are complex and often written to benefit the employer. Consequently, physicians should understand the ambiguities in employee contracts and be attuned to such elements as restrictive covenants, loopholes, malpractice insurance, compensations plans and bonuses, duties and obligations of physicians, and indistinct contract language.

KEY WORDS: Medical/surgical training; employment contract; fiduciary; employee; restrictive covenant; malpractice insurance; termination provisions; compensation; confidentiality clauses; incentive clauses; referral restrictions; gag clauses; termination without cause.

For their first job after medical/surgical training, physicians frequently sign an employment contract with an existing group practice. The provisions of that contract, and the exact language in which it is expressed, control their obligations, responsibilities, and rights in their new position, as well as their employer's obligations and responsibilities to the physician.

CRITICAL CONTRACT TERMS

Many newly minted physicians make the fundamental mistake of thinking they can review and negotiate the employment contract on their own, without the assistance of an experienced contract attorney to help them understand the fine points of the employment contract. Unfortunately, that often proves to be a costly mistake. Here are some of the areas of employment contracts around which physicians would benefit from legal counsel.

Oral Promises versus Written Agreement. It is common in employment situations for matters to be discussed that do not end up in the written employment agreement. The physician may have been told she will need to take weekend call "one weekend per month" but the contract states "Physician's professional obligations shall include night and weekend call in accordance with the rotation established by the practice." Or, the physician was told that all employed physicians receive an annual cost-of-living increase, but the contract is silent on this point.

Because it is the written contract that controls the employment, if the number of call obligations or the cost-of-living adjustments is important to the employee, these issues should be precisely and accurately defined in the written contract.

Physicians often fail to research the prospective employer and the landscape of the employment situation. Physicians should exert the same due diligence researching an employer's credentials as the employer exerts checking the physician's credentials and background.

Physicians should try to find out how much physician and staff turnover has occurred. How profitable is the practice? Does...