What to know before signing an employment contract

The termination process

Termination is arguably the most important provision in an employment contract. It will spell out if an employer or physician may terminate the contract with or without cause, or if the contract may terminate spontaneously by the terms of the contract or operation of law.

The most preferable contract will allow either party to terminate the contract without cause by prior written notice within a one- to three-month notice period.

With this option, both parties have equal bargaining power and equal access to terminate an employment relationship that is no longer desirable. In this scenario, the physician may terminate the contract by simply providing the employer with advance written notice.

An attorney can help you review the notice period, what should be contained within the body of the written notice, how and where to send the written notice, and which clauses of the contract will cease and which will survive termination.

When a contract is terminated for cause, the parties may have more obligations that survive termination than if the contract is terminated without cause.

The reasons an employment relationship may be terminated for cause should be clearly listed and explained within the body of the contract.

An employer will typically release a physician with cause for reasons associated with the physician’s inability to continue practicing medicine, including suspension or revocation of license, or felony criminal charges or convictions. The physician will typically have the right to terminate for cause if there is a material breach of the contract that the employer fails to cure.

When it is the physician who is terminated for cause, depending on the language of the contract, the physician may be entitled to some type of appeal.

Regardless of the mode of termination, it is imperative that you immediately consult with a qualified attorney because the rights and obligations of each party will vary widely from contract to contract. You’ll want to be well-informed of any obligations or remedies the contract provides.

Post-termination obligations

Regardless of the manner in which the employment contract is terminated, you and your former employer will have residual obligations to one another that should be clearly outlined in the employment contract.

It is possible that both the employer and the physician may be able to insist on additional duties and tasks of the other party. The common obligations to consider will include billing or record keeping, return of any and all property of the employer, reconciling of the financial obligations of each party, and clarification of all surviving contract clauses.

Pay careful attention to confidentiality, non-disclosure, non-solicitation, non-disparagement and non-compete provisions. Each clause will carry equal legal weight for you, but non-compete provisions are the most immediate concern.

Non-compete clauses, also called restrictive covenants, are a restriction on the physician’s employment or practice after the expiration of an employment contract.

Prior to entering a contract, carefully consider the level of restriction, including the time period, the designated range of restriction and the availability of buy-out provisions or mutual agreements to release the physician from the restriction.

After termination, consider whether or not the restriction is enforceable, whether or not the circumstances of the termination trigger the restriction, and whether or not this restrictive covenant includes a restriction on the solicitation of your former employer’s patients or employees.

By consulting with a qualified attorney with expertise in physician contracting before you sign your employment agreement, you will be certain that the terms of possible termination are fair and reasonable.