For a young physician, his or her first employment agreement with a health care company or physician group is a major milestone. What should be a stepping stone to a successful and rewarding professional career could lead to major problem if not carefully reviewed, negotiated, and fully understood before signing. Absent unusual circumstances, Virginia courts tend to hold people to the terms of the contracts they voluntarily sign.
Here are a handful of important issues typically addressed in physician employment agreements:
- Term and Renewal. It is important to understand the commitment being made between the contracting parties in terms of period of time. Is this a one-year term or a multi-year deal? Upon expiration of the initial term, does the agreement renew automatically or only if someone proactively exercises a renewal option? Can either party terminate the agreement early and, if so, under what circumstances?
- Duties. What are the employer’s expectations and requirements for its new employee? This provision is often vague and open-ended to maximize flexibility for the employer. At a minimum, parties should specify whether this will be a part-time or full-time position and what the typical work schedule will be (e.g., night, weekend, and holiday work schedules should be memorialized). Will the physician/employee be allowed to do outside work (commonly known as moonlighting)?
- Compensation. Compensation seems like a simple concept, but this topics is often a source of dispute and concern when it comes to professional service providers. Compensation can take various forms including base salary, bonus opportunities based on a variety of factors and formulae, continuing education allowance, paid leave, retirement benefits, disability benefits, severance/deferred compensation, moving expenses, signing bonuses, and the list goes on.
- Restrictive Covenants. This set of provisions typically includes non-compete and non-solicitation restrictions (sometimes non-hire provisions) that will restrict what an employee can do after the employment agreement expires or terminates. These provisions are subject to a lot of negotiation (rightfully so) and should be carefully tailored to suit specific facts and circumstances. If not drafted carefully and reasonably, Virginia courts will not be inclined to enforce restrictive covenants. From an employee’s perspective, however, it would be dangerous to sign an overly restrictive agreement in the hopes that a court would refuse to enforce it down the road.
- Patient Records. Under Virginia law, patient records belong to the employer (the healthcare facility or physician group), not the individual physician. Employer ownership of patient records is typically confirmed in the Employment Agreement. From an employee’s perspective, it is helpful to negotiate some form of transition mechanism allowing for a patient records to be copied and distribution of a jointly prepared notice to the departing physician’s patients. Ultimately, it is a patient’s right to choose his or her physician.
This is just a modest sample of the issues typically addressed in a physician employment agreement. Perkins Law is pleased to assist employers and employees with the drafting, review, and negotiation of employment agreements and other contracts to memorialize key business relationships and transactions.