COMMENTARY

How to Negotiate Your Nurse Practitioner Contract: What to Challenge, When to Walk Away

Carolyn Buppert, MSN, JD

Disclosures

February 19, 2021

Many employers present nurse practitioners (NPs) with a written contract to sign after they accept a job offer. The contract contains the terms of employment and binds both parties to whatever terms are specified in the contract.

Employment contracts run in length from 2 to 30 pages. They are very similar to physician, nurse midwife, and physician assistant contracts. The terms are negotiable. Some employers are more willing to negotiate than others.

A contract usually specifies what the NP will be doing, for whom, which location or locations, and if for a year or more, in return for a defined compensation. Typical terms include:

  • Malpractice insurance: What are the limits? Who will pay the premium? Who will pay for extended (tail) coverage if the policy is "claims made"?

  • Salary, sometimes with bonus provisions and incentives, such as performance pay

  • Benefits: vacation, health insurance, disability insurance, and retirement plan

  • Practice expenses: continuing education tuition, professional society memberships, and subscriptions

  • Schedule

  • Termination: how the contract may end, either with cause or without cause

  • Collaboration and/or supervision: Does the employer agree to provide physician oversight if state law requires it?

  • Restrictions on outside work

  • Restrictions on future employment

  • Assignment by NP to employer of right to bill for NP services

  • Assignment by NP to employer of rights to intellectual property developed while employed. For example, if an NP writes a book on endocrinology practice while employed by an endocrinology practice, the employer may demand that the intellectual property rights to the book belong to the employer.

  • On-call services: Is an NP is required to be on-call after hours, and if so, how often?

The parties may negotiate any of these terms before signing. Although all of these terms are important, I think these four categories of terms are the most controversial:

  • Extended malpractice coverage if insurance is claims made

  • Termination: notice period

  • Restrictions on future employment

  • Restrictions on outside work

Extended Malpractice Coverage if Insurance Is Claims Made

Employers usually will agree to provide malpractice insurance. Often, however, contracts don't specify what type of insurance will be provided — a claims-made policy or an occurrence policy. Often, physician practices have claims-made policies. In order to keep a claims-made policy in effect after an NP has left the practice, someone (either the practice or the NP) must take out an extended coverage policy, often called a tail policy.

Usually, an employer will agree to contract language that obligates them to pay the premium for the NP's extended coverage when it comes time for the NP to leave. Some will not. If the employer will not agree in writing to pay the premium for extended coverage, the NP should either decline to sign the contract or purchase their own occurrence policy. Occurrence policies cover incidents that occurred when the policy was in effect and do not require extended coverage. This is important because a patient may file a malpractice lawsuit a year or more after an incident occurred, and by then, the NP may have retired or resigned. NPs need coverage that extends long after they leave a job.

Restrictions on Future Employment

Here is a typical "restrictive covenant" that an employer may include in the first contract go-around:

Employee agrees that during Employee's employment and for a period of two (2) years after Employee's employment by the Company has been terminated or ceases for any reason, Employee shall not, directly or indirectly whether as sole proprietor, partner, venturer, member, manager, stockholder, director, advisor, consultant, officer or employee or in any other form, method or capacity or through any persons, subsidiary or employee acting as nominee or agent, except on behalf of the Company, conduct, operate or engage in or be interested in or associated with any person or entity which provides advanced practice registered nursing services within a twenty (20) mile radius of any office of employer.

In plain language, that means an NP may not practice within 20 miles of any location operated by the employer for 2 years after leaving employment. With this language, the employer is trying to avoid a situation where an NP works at the practice for a couple of years, builds up a patient following, and then departs for the practice next door, taking most of these patients with them.

It is not in an NP's best interest to voluntarily restrict their future job opportunities. Optimally, an employer would agree to delete such language. But if an employer refuses, and the NP is unwilling to walk away, there are four aspects of this paragraph that an NP would want to negotiate. The four aspects could be narrowed in these ways:

  • Shorten the time period of the restriction by changing "2 years" to "1 year."

  • Add a specified specialty or focus into the restriction. That is, rather than restrict the NP from providing any advanced practice nursing services, the NP might agree not to provide the service specifically provided by the employer. For example, the NP providing evaluation and management services in a nursing home might agree not to provide similar services for a nursing home within the restricted radius. That would allow the NP to work in office, home, or hospital settings.

  • Reduce the radius. Instead of 20 miles, the NP might agree not to work within 2 miles of the employer's office.

  • Draw the radius around a single practice address rather than agreeing not to practice within a certain number of miles of any office of the employer.

Often, contracts contain additional language that penalizes the NP monetarily if the NP breaches the noncompetition clause. Some contracts provide that an NP must pay the employer a year's salary if the NP violates the restrictive covenant. Often, contracts that include restrictive covenants also stipulate that the employer may get an injunction to stop the NP from practicing within the restricted territory. Bottom line: Don't expect to be able get out of a restrictive covenant. NPs need to be able to live with any restrictions they sign their name to in the contract.

Termination Notice Period

In employment contracts, some employers are requiring that NPs give 120 days' notice if they want to leave the job. Sometimes there is a monetary penalty if the NP doesn't give the required notice.

The rationale is that it takes time to replace an NP. However, 120 days is too long when someone wants to leave. Prospective employers usually don't want to wait 4 months for a new employee to start. NPs should try to negotiate for 30 days' notice. Some employers will agree and some won't. Anything longer than 60 days' notice is not justifiable, in my opinion.

Restrictions on Outside Work

Here is a version of contract language I see frequently:

"Employee shall not engage in any outside professional and/or employment activities involving financial return without employer's prior written consent."

My response to this language is: It is the employee's business what they do on their own time.

Employers don't want an employee to leave at 4 PM to go to another job when there are patients still to be seen. However, that won't happen if the employee abides by the schedule set in the contract. Employers also don't want an employee to simultaneously work for a competitor, but that could be handled with language that prohibits an NP from working for a competing practice.

Another version:

"All income generated by Employee, such as consultative work, witness fees, report fees, and honoraria shall belong to the Company, whether paid directly to the Company or to Employee. Employee shall, upon the Company's request, render a true account of all such income generated and/or received by Employee while an employee of the Company."

Again, any work that the employee does on the employee's own time should be the employee's business. I advise NPs not to give up rights to what they earn on their own time; that is, ask that the paragraph above be deleted from the contract. If the employer refuses, the nurse practitioner has a decision to make — accept the wording or turn down the job offer.

It is imperative that NPs challenge terms they can't abide by or don't want to live with. NPs do not want to be sued for breach of contract, so they should be committed to following the terms of contracts they sign. It is only the time before signing a contract in which the NP has negotiating power to change terms. If the employer won't agree to terms the NP can live up to, then the NP should walk away.

Carolyn Buppert (www.buppert.com) is an attorney and former nurse practitioner who focuses on the legal issues affecting nurse practitioners.

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