New Landmines in Your Next (and Even Current) Employment Contract

Leigh Page

October 13, 2021

Physician employment contracts include some new dangers. This includes physicians taking a new job, but it also includes already-employed doctors who are being asked to re-sign a new contract that contains new conditions. A number of these new clauses have arisen due to COVID-19. When the pandemic dramatically reduced patient flow, many employers didn't have enough money to pay doctors and didn't always have physicians in the right location or practice setting.

Vowing this would never happen again, some employers have rewritten their physician contracts to make it easier to reassign and terminate physicians.

Here are 12 potential landmines in a physician employment contract, some of which were added as a result of the pandemic.

You Could Be Immediately Terminated Without Notice

One outcome of the pandemic is the growing use of "force majeure" clauses, which give the employer the right to reduce your compensation or even terminate you due to a natural disaster, which could include COVID.

"COVID made employers aware of the potential impact of disasters on their operations," says Dan Shay, a health law attorney at Alice Gosfield & Associates in Philadelphia. "Therefore, even as the threat of COVID abates in many places, employers are continuing to put this provision in the contract."

What can you do? "One way to get some protection is to rule out a termination without cause in the first year," says Michael A. Cassidy, a physician contract attorney at Tucker Arensberg in Pittsburgh.

The force majeure clause is less likely to affect salary, but could impact bonus and incentive tied to performance. It's wise to try to specifically limit how much the force majeure could reduce pay tied to performance, and to be prepared to negotiate that aspect of your contract.

No Protections if You're Let Go Through No Fault of Your Own

You could lose your job if your employer could not generate enough business and has to let some doctors go. This happened quite often in the early days of the COVID pandemic.

In these situations, the doctor has not done anything wrong to prompt the termination, but the restrictive covenant may still apply, meaning that the doctor would have to leave the area to find work.

What can you do? You're in a good position to get this changed, says Christopher L. Nuland, a solo physician contract attorney in Jacksonville, Florida. "Many employers recognize that it would be draconian to require a restrictive covenant in this case, and they will agree to modify this provision," he says.

Similarly, the employer may not cover your tail insurance even if you were let go from your work through no fault of your own. Most malpractice policies for employer physicians require buying an extra policy, called a tail, if you leave. In some cases, the employer won't provide a tail and will make the departing doctor buy it.

In these cases, "try for a compromise, such as stipulating that the party that caused the termination should pay for the tail," Nuland says. "The employer may not agree to anything more than that because they want to set up a disincentive against you leaving."

Employer Could Unilaterally Alter Your Compensation

Many recent contracts give the employer the option to unilaterally modify compensation, such as changing the base salary or raising the target required for meeting the productivity bonus, says Ericka L. Adler, a physician contract attorney at Roetzel & Andress in Chicago.

Adler thinks this change could have been prompted by employers' financial problems during the pandemic. In the early months of COVID, many physicians were not making much money for the employer but still had to be paid. So employers added a clause saying they could reduce compensation at any time, she says.

What can you do? Harsh provisions like this often come up in contracts with private equity firms, Cassidy says. "The contract might say the employer can adjust compensation or even terminate physicians based on productivity or their profitability," he says. "And it may say that if they reassign you to a new location and you refuse, they can terminate you."

"If you can't get these clauses removed, try to reduce the impact of a termination by providing longer notice periods or by inserting a severance agreement," Cassidy says.

Accelerating Notice for Without-Cause Terminations

Physicians who are convicted of a felony or other moral issue can usually be terminated immediately. But if you are terminated for other reasons — that is, "without cause" — you are given notice at a certain number of days before you have to leave (typically 60 to 90 days), so that you have time to find a new job.

Some recent contracts, however, allow for very little notice in without-cause terminations, which allows the employer to fire you in as little as zero days after providing notice, Adler says.

"This means that even if 90 days' notice is provided in the contract, the employer can decide that your last day will be an earlier date," she says.

Why is this happening? Adler says employers want to begin reallocating resources and patients as soon as possible. The problem came to employers' attention during the COVID pandemic, when they were contractually forced to pay doctors for doing little or nothing during the notice period, she says.

What can you do?  Possibly not much, other than attempt to negotiate. "Large employers typically don't want to drop this provision, but at the least, the doctor needs to understand the risk it creates for them," she says.

You Could Be Assigned to Far-Off Locations

As patient care needs changed dramatically during the pandemic, employers needed to reassign doctors to new locations.

Some new contracts allow employers to simply inform the doctor that they are changing the work location. However, "you don't want to be assigned to a new work location that is 50 miles away," Nuland says.

What can you do? Nuland recommends adding new language saying that if the new assignment is more than 20 miles away, both parties would have to approve it.

You Could End Up Working Too Many Off-Hours

"Most employers won't issue a specific work schedule," Nuland says. "They want the flexibility to assign evening or weekend work, and it would be difficult for a young doctor to change this."

What can you do? Nuland recommends trying to set some limits. "You can try to limit off-hours work to two times a month or something like that," she says. And if you need to have a special schedule, such as not working on Fridays, Adler advises that this should be put into the contract.

If you can't get anything changed in the contract, Nuland says the next-best thing is to ask employers to tell you specifically what they plan to do with you. "Most employers will give you an informal idea of what's expected — maybe not an exact schedule, but it's quite likely they will honor it," he says.

You Wouldn't be Able to Work Nearby if You Left the Job

Most contracts have a noncompete clause, also known as a 'restrictive covenant,' which prevents employed physicians from working in the area if they left the job.

"Almost every doctor I represent has told me that they're not concerned about the noncompete clause because, they believe, it is not enforceable anyway," Adler says. "This is incorrect."

Nuland says the faster pace of job-changing during the pandemic makes it all the more likely that doctors have to deal with a restrictive covenant. At the same time, he says, some employers have been expanding the restriction — either by enlarging the radius where the restriction applies or by making the restriction apply to each of their sites, so that each one has a restricted radius around it.

For example, one contract Nuland is currently reviewing has a 20-mile radius that in effect becomes a 120-mile radius because the employer is counting four offices.

What can you do? Nuland advises trying to reduce the impact of the noncompete — for instance, making it apply only to the offices where you worked, or trading more time for less distance. "If you have a 2-year, 20-mile restriction, ask for a 3-year, 10-mile restriction, where the radius could be easier to deal with," he says.

You Might End Up With Too Much Call

Contracts rarely detail your call schedule because employers want flexibility to expand call as patient care needs change, but you can try adding some specificity, says Sanja Ord, a physician contract attorney at Greensfelder, Hemker & Gale in St. Louis.

Contracts often use wide-open language to describe call, such as simply making it "subject to the house call policies," Cassidy says. Language that is more beneficial to the physician would say that call must be "equal" among "similarly situated" physicians.

But Ord says even provisions for equal call can turn out to be onerous if there are too few doctors in the call roster, so it's a good idea to find out just how many doctors will be participating in call.

Still, Adler says even that strategy can't remove all risk. What happens, she asks, if several physicians participating in call decide to leave? Then you might end up with call every other night.

What can you do? Cassidy recommends specifying a maximum amount of call — for example, no more frequent than 1 in 4 nights.

Physician Must Pay for Reimbursement Claw-Backs by Payers 

When auditors for Medicare or other payers find overpayments after the fact, called a 'claw-back,' the provider must pay them back. But which provider has to do that — you or your employer?

In many cases, your employer's billing office may have introduced the error, but there may be a clause in the contract stating that the physician is solely responsible for all claw-backs. That could be costly.

What can you do? Shay says the clause should state that you have to pay only when it is the result of your own error or omission, and also not when it was made at the direction of the employer.

Some Work May Be Outside of Your Subspecialty

In some cases, the employer may assign subspecialized doctors to work outside their subspecialty, Nuland says.

For example, he says he represented an endocrinologist who expected to see only diabetes patients but was assigned to some general internal medicine work as well, and an otolaryngologist client of his who completed a fellowship on facial plastic surgery was expected to do liposuction in a cosmetic surgery group.

What can you do? To prevent this from happening, Nuland recommends a clause stating that your work will be restricted to your subspecialty.

What the Employer Promised Isn't in the Contract

"Beware of promises that are not in the contract," Shay says. "You might feel you can really trust your new boss and what he tells you, but what if that person resigns, or the organization gets a new owner who doesn't honor unwritten agreements?"

Many contracts have an integration clause, which specifies that the contract constitutes the complete agreement between the two parties, and it nullifies any other oral or written promises made to the physician.

For example, the employer might have promised a relocation bonus and a sign-on bonus, but for some reason it didn't get into the contract, Ord says. In those cases, the employer is under no obligation to honor the promise, she says.

What can you do? Cassidy says it is possible to hold the employer to a commitment made outside the contract. The alternative document, such as an offer letter, has to specifically state that the commitment is protected from the integration clause in the contract, he says, but adds: "It is still better to have the commitment put into the contract."

Contract Is Simply Accepted As Is

"Generally, the bigger the employer, the less likely they will alter an agreement just to make you happy," Shay says.

But even in these contracts, he says there is still opportunity to fix errors and ambiguities that could harm you later ­— or even alter a provision if you can't remove it outright.

The back-and-forth is important, Adler says. "Negotiation means trying to have some control over your job and your life," she says.

Cassidy says a big part of contract review is facing up to the possibility that you may have to resign or be let go.

"Many physicians don't like to think about leaving when they're just starting a job, but they need to," he says. "You need to begin with the end in mind. Think about what would happen if this job didn't work out."

For more news, follow Medscape on Facebook, Twitter, Instagram, YouTube, and LinkedIn


Comments on Medscape are moderated and should be professional in tone and on topic. You must declare any conflicts of interest related to your comments and responses. Please see our Commenting Guide for further information. We reserve the right to remove posts at our sole discretion.