3 Physician Employment Agreement Terms to Review before Resigning
Our healthcare and business law firm works with many providers at all stages of employment, including physicians taking their first jobs after training, becoming partners at practices, and selling their practices and retiring. One consistently stressful time for all providers is resigning from a practice. Through our experience, we have learned many tips to assist providers in exiting employment as smoothly as possible. If you have questions regarding this blog post or need counsel navigating an employment exit, you may contact us at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, email@example.com. You may also learn more about our law firm by visiting www.hamillittle.com.
Our first step with clients is always to start the exit process by reviewing their employment contracts. Assuming the agreement is enforceable and binding, your employment agreement governs how you and your employer behave. Most clients want to leave professionally and effectively and so do not want to breach the contract on their way out. The following are terms we generally start with in reviewing employment contracts:
- Term and Termination
The term and termination sections of your contract will be relevant to answer important questions relating to how to terminate your employment. Specifically, think about the following questions when reviewing these sections:
- Does this contract naturally end?
- How much notice do you need to give to leave without cause?
- Are there specific termination situations that may apply allowing you to leave with more or less notice?
- Are there provisions allowing you to terminate without notice that may be relevant?
- Does the section contemplate allowing termination by “mutual agreement”?
Once you and your counsel have an understanding of the “how,” you can move on to additional provisions in the contract.
- Tail Insurance
Whether tail insurance is required and who covers tail insurance upon termination is another important term to understand. The liability insurance section of your contract may dictate that who pays for tail insurance depends on how the employment is terminated. For instance, sometimes, after you have worked for an employer for a few years, the employer covers tail insurance no matter the reason for termination. This may prompt you to work through that period before terminating. Other times, a contract is silent on who covers tail insurance. In that case, it is usually recommended to speak with counsel on ways to approach the subject of who covers tail insurance. If the contract clearly states you cover tail insurance, it is important to understand your responsibility fully. For instance, what are the coverage limits listed? When do you have to provide proof of coverage to the employer?
- Restrictive Covenant
Most clients are also conscious that they signed a non-competition clause (most physicians do). To understand the restrictions in place for you, the first step is to review the restrictive covenant provision in your employment agreement. Generally, non-competition clauses apply regardless of the reason for termination. The key terms within non-competition clauses usually include the restricted period, geographical area, and types of activities restricted. It is important to review these points compared with the next position you wish to take. Note, there may be ways to negotiate modifications to your non-competition clause if your non-compete is more restrictive than you would like. If your non-competition effectively precludes you from working where you would like to, speak with counsel to see if there may be options for negotiating modifications. Also, keep in mind that there likely are non-solicitation and non-recruitment clauses in your contract restricting you from soliciting patients, employees, etc. Be mindful of these restrictions when choosing if, how, and when to share your resignation with your coworkers and/or patients.
There are, of course, numerous considerations before providing notice of resignation or non-renewal. The above tips are intended to outline what to look for in your employment agreement as the initial step in this process. If you have questions regarding this blog post or need counsel navigating an employment exit, you may contact us at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, firstname.lastname@example.org. You may also learn more about our law firm by visiting www.hamillittle.com.
*Disclaimer: Thoughts shared here do not constitute legal advice.