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Shedding light on your moonlighting contract

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Woman signing document and hand holding pen putting signature at paper, order to authorize their rights.

The economy is still uncertain, and physicians are not immune to these challenging times. You might be tempted to create your own stimulus package by moonlighting.

Moonlighting usually refers to a resident or fellow taking a second, part-time, clinical job. In most cases, the reason for taking the second job is solely economic: to earn more money to supplement your salary.

The importance of your physician moonlighting contract

The moonlighting contract protects you and the part for whom you are working.

Moonlighting is, however, no longer the exclusive domain of residents and fellows. In an era of decreasing reimbursements from third-party payers, physicians with varying years of professional experiences and specialties are attracted to the opportunity to earn extra dollars by engaging in extracurricular clinical engagements.

Whether you are a resident, fellow, junior attending or seasoned physician, there are important legal considerations you must address before executing a contract to be a moonlighter. And yes, you should execute a contract. Do not rely upon a handshake or an exchange of e-mails. The moonlighting contract protects you and the party for whom you are working. It also helps prevent amnesia when there is a disagreement or misunderstanding between you and your second employer regarding your respective rights and responsibilities.

Are you allowed to moonlight?

This is the threshold issue that must be addressed before you do any clinical (and, depending on your contract, non-clinical) activities for any other party besides your primary employer.

Imagine seeing language in your contract with your primary employer that states: “During the term of physician’s relationship with employer, physician shall not engage in any activity that is competitive with employer unless physician receives the advance written permission of employer, and such approval may be revoked at any time.”

There are several questions that must be addressed:

  • What is a “competitive” activity? Is it clinical? Is it nonclinical, such as being an expert witness or dealing with intellectual property?
  • Is it tied to the radius of the contract’s restrictive covenant provision?
  • Is it tied to the hospital(s) or other ambulatory facilities where your employer’s physicians have privileges?
  • Is it limited to a particular specialty or a particular set of procedures, such as cosmetic, or cash pay versus third-party payer reimbursements?

Before you can safely take advantage of any moonlighting opportunity, you must get these issues addressed. To be sure you are not going to violate your primary employer’s contract, you should get these answers in writing, and have the same signed by you and your employer.

Consider work/life balance

There are some people, including physicians, who require very little sleep to function at an optimal level. However, your contract with your primary employer may not address your minimal sleep habits and needs and may simply state: “Physician shall devote his/her full time and attention to employer.”

What constitutes full time? Part of the answer may be dictated by your “normal” working hours. It may be unacceptable to work from 7 p.m. to midnight after working for your primary employer earlier in the day or having regular hours the following day. Is it OK to work a weekend shift for another employer when you have no regular office hours that day or on-call responsibilities?

It is imperative that you not burn the candle at both ends or do anything that would compromise patient safety or professional decision-making.

Not all physicians work a typical 8 a.m.-to-6 p.m. week. For instance, an emergency room physician or a hospitalist may be scheduled to work 14 10-hour shifts a month. You presumably have significant downtime where you might want to pursue other entrepreneurial, clinical or nonclinical ventures. Can you? It depends on what your primary employer’s contract does and does not state.

Careful review and drafting of contract terms can allow you to explore and take advantage of multiple business opportunities without violating the terms of your contract with your primary employer.

Every potential moonlighting situation is different, and you should anticipate as many different potential scenarios as possible. It is always preferable to address these situations upfront when negotiating the terms of your primary employer’s contract. You may have more leverage to carve out specific opportunities before you execute the underlying contract than you do once you are already working for the employer. It may be easier to address a “grandfathered” situation.

For instance, if you already have an established moonlighting arrangement and want to protect it from being a breach of your primary employer’s contract, it is easier to explain the dynamics of the situation to that prospective employer.

If you are always thinking about new opportunities or ventures, careful review and drafting of contract terms can allow you to explore and take advantage of multiple business opportunities without violating the terms of your contract with your primary employer.

Do you have a contract with your second (or third) employer?

Once you have confirmed it is acceptable under your primary employer’s contract to accept the moonlighting opportunity, your work is not done. It is equally important to memorialize the terms of the supplemental opportunity.

One of the first questions to ask is whether you will be an employee or independent contractor of the moonlighting employer. Your accountant can be invaluable in explaining the best option for you. In most circumstances, an independent contractor receives very few, if any, benefits of employment, such as paid vacation, CME allowance, health insurance coverage, etc. Most physicians receive these benefits through their primary employer.

Who will pay your liability coverage?

Just because you have professional liability coverage from your primary employer does not mean you will have the same professional liability coverage with your moonlighting employer. In fact, many primary employers specifically state in their contracts that: “Physician shall only be provided professional liability coverage for clinical services provided while working for employer.”

This language would expressly preclude professional liability coverage for any clinical services provided for any party other than the primary employer.

Even if the language in your primary employer’s contract is not clear, you must ensure you have coverage for all clinical moonlighting services you provide. The same considerations regarding occurrence coverage vs. claims-made coverage with tail insurance coverage must be addressed in your moonlighting contract.

If your moonlighting employer is going to provide you with occurrence coverage (make sure it complies with the relevant state minimum, if any), you do not need to worry about liability coverage when the moonlighting opportunity ends. If the moonlighting employer is providing claims-made professional liability coverage, you need to be sure the moonlighting contract addresses who pays for the tail coverage and in what circumstances.

As a basic economic premise, you never want to be in the position where your cost to acquire your professional liability tail coverage from your moonlighting job approaches or exceeds the aggregate pay you received from that same opportunity.

Will you have time for two jobs?

In addition to addressing the professional liability coverage issues, the moonlighting contract must address your scheduling issues. Your principal accountability and responsibility must be to your primary employer. You should not schedule evening or weekend moonlighting hours if you have regular office hours or rounding/call commitment for your primary employer.

While this scheduling issue seems obvious, you must be sure your moonlighting employer understands and respects your loyalty to your primary employer. If you are asked to cover additional hours on an emergency basis for your primary employer, that will be to the detriment of your moonlighting opportunity.

Having the flexibility to end your moonlighting opportunity on relatively short notice is also important. If your moonlighting job impacts your primary job responsibilities in any manner (or your primary employer believes that it does), you need to be sure you can gracefully step aside to protect your relationship with your main employer.

No one likes to be considered second class, but your moonlighting employer must understand that when push comes to shove, you will give up your moonlighting job before you risk the termination of your main employer relationship.

Non-solicitation and non-compete clauses are always a concern in a moonlighting job. You should not accept a moonlighting job that will impinge in any way upon your obligations to your primary employer. By the same token, the moonlighting employer may appropriately require that you not poach any of the moonlighting employer’s business opportunities or patients and take them back to your primary employer.

A successful moonlighting job may inevitably lead to that becoming your primary employer. Drafting clear language is imperative to make sure you do not inappropriately step in a minefield.

Before you accept a moonlighting opportunity, you need to make sure your primary employer relationship allows you to do so, and the terms of your moonlighting job are carefully crafted to protect you accordingly.


Bruce D. Armon

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