How to Break an Employment Contract

Carolyn Buppert, MSN, JD

Disclosures

July 10, 2018

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Question

A healthcare clinician asks, "Can I get out of an employment contract, if I need to? If so, how?"

Response from Carolyn Buppert, MSN, JD
Healthcare Attorney

The answer is going to be found in the contract. All employment contracts for clinicians have, or should have, provisions for termination of the agreement. Usually, a contract will say how both the employer and employee may terminate the contract. The employer may terminate "for cause" if the clinician loses his or her license, refuses to perform duties, is convicted of a felony, is found to be impaired at work, loses the ability to bill Medicare, or can no longer get malpractice coverage. Or, the employer may terminate "without cause" by giving the employee a specified number of days' notice.

Typically, a contract states that the employee may terminate by giving the employer notice of intent to terminate the agreement, 30 to 120 days prior to the date the employee wants to terminate. Whether the contract specifies 30, 60, 90, or 120 days is important to the clinician, because even 30 days is a long time when one wants to leave a job. And, prospective employers usually don't want to wait more than 30 days for a candidate to be ready to work. The reason employers want a long notice period prior to termination is that it can take significant time to recruit and hire a replacement clinician. So, negotiating the notice time, before the contract is signed, may be tricky, because the parties have competing interests. The employee may want to offer to give the employer what the employer wants in another aspect of the contract in return for a shorter notice requirement. Clinicians should expect that when a contract calls for 60 days' notice the employer is quite serious about holding the employee to that commitment.

Another way out of a contract is to let the contract run its "term" and not renew. For example, many contracts are for 1 to 2 years. At the end of the year or 2 years the contract is over. However, be vigilant, because many contracts have "evergreen" clauses. An evergreen clause is a statement that says the agreement shall automatically renew for another 1-year term unless either party notifies the other of intention not to renew, not less than 30 days (or 60 or 90 days) before the end of the contract's term. That puts the burden on the clinician to make the required notification, or the clinician is bound for another year.

When notice is required, if a clinician doesn't give the required duration of notice the employer can sue the employee for breach of contract. At minimum, failure to give the notice as required leaves the employer with a bad impression.

Another way an employee can get out of a contract is to ask to be released. The employer may or may not agree. If the employer says "yes," the employee should ask for the release in writing.

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