How to Resolve a Physician Contract Dispute
Finding yourself on the wrong side of an argument with your employer can be an intensely stressful experience. If the conflict turns sour, you may risk jeopardizing your compensation, burning a professional bridge, or facing an ugly legal battle.
Fortunately, while contract disputes between physicians and employers are relatively common, most disputes can be resolved professionally with a solution that is acceptable for both parties. Even when a physician and employer find themselves at odds, both parties usually prefer a quick, painless resolution to a costly, prolonged legal struggle.
If you are facing a potential contract dispute, there’s no need to panic. By approaching the conflict with diplomacy, strategy, and professional support, you can reach a productive resolution. Here is a step-by-step guide to help physicians navigate a contractual dispute with an employer:
- Determine whether you or your employer is in breach of contract.
If you and your employer find yourselves in a disagreement over any aspect of your contract, you should first assess whether either party is in breach of contract. In the event that you choose to exit your contract early, identifying any breach of contract will help you determine if you can terminate with cause or terminate without cause.
Termination without cause occurs when an employer or an employee chooses to leave a contract even though no breach of contract has occurred. While termination without cause is usually allowed within contracts, it is subject to notice periods to ensure that the employer has sufficient time to find a replacement and the physician has sufficient time to look for a new job.
An employer may terminate a contract without cause if they cannot afford to continue employing a doctor, they no longer have need for a certain subspecialty, or frankly even if they don’t like you anymore. Physicians often terminate without cause if they receive a better job offer, need to relocate or have a falling out with their employer. While these are all perfectly permissible reasons to end a contract, none of these situations constitute a breach of contract.
Alternatively, a physician or an employer can terminate with cause if the other party has an uncured breach of contract terms. However, physicians face far more adverse consequences if they are terminated with cause. A termination with cause usually reflects a larger issue or conflict between the two parties; it is more likely to be scrutinized by future employers, and it can leave doctors on the hook for returning bonuses, paying for tail coverage, student loan forgiveness and many other recruitment incentives etc.
A good employment contract should clearly lay out the reasons for which a contract can be terminated with cause. However, if the contract terms are ambiguous or you are unsure whether a breach of contract has occurred, it’s best to consult a contract review professional to clarify your legal position.
- Use your cure period to your advantage
A cure period is a contractually identified amount of time that both parties are allowed to remedy certain breaches of contract. For example, a physician could find themself in breach of contract because they accidentally allowed their certification to lapse. If their contract allows for a 90 day cure period, the physician has 90 days to renew the certification and “cure” the breach of contract before they would be at risk of termination with cause. Certain breaches of contract, such as loss of medical licensure or felony conviction, are not subject to a cure period.
In a contract dispute where breach of contract has occurred, identify whether the breach is eligible for a cure period and whether the cure period has elapsed. The cure period can be a useful timeframe to negotiate a solution to contract disputes with your employer before termination with cause is even on the table.
- Pay close attention to your notice period
If you already know you want to leave your employer and therefore exit your contract, you should also consider your notice period. As previously mentioned, the notice period is the requisite amount of prior notice that the employer or employee must give in order to terminate a contract without cause. Notice periods usually range between 90-120 days, although they may be longer or shorter in cases where it is especially difficult or easy to recruit replacement physicians. Ideally, physicians and employers should be subject to the same notice period.
However, overly long and uneven notice periods are one of the most common causes of contract disputes between physicians and employers. For example, a physician may want to terminate without cause and accept another employment offer, only to discover that a lengthy 200 day notice period makes it virtually impossible to accept a new job. If they choose to leave before the notice period has elapsed, the employer could accuse them of breach of contract.
Whether or not a notice period violation turns into a contract dispute will often depend on the circumstances. If you are forced to move suddenly for a family emergency, and you do your best to serve out most of your notice period, most employers would be understanding. However, if you leave your employer in the lurch with only one month notice in order to accept a better job, they may be highly motivated to seek restitution for breach of contract.
- Assess your obligations after termination.
Many of the most fraught contract disputes begin after a physician has terminated their employment, only to receive a letter demanding repayment of bonuses, vacation days, or unvested benefits. Other times, a physician will accept a new job and face a lawsuit for violation of non-compete covenants by their former employer.
In the event of a contract dispute, threat of legal action is one of the first tools an employer will use to try to constrain or intimidate an employee. This experience is often extremely stressful and frightening for physicians. After all, most hospitals have an entire legal team with which they can pursue a legal dispute. However, most employers would rather avoid a drawn out legal battle when possible. Even if an employer initially demands exorbitant repayment, they may be appeased if you offer to pay back a small portion and delay your leave date by a few more weeks.
While some employers may not actually follow through on threats of legal action, some employers will. As a result, physicians should never assume that their contract terms are not legally enforceable. If you feel like you cannot adhere to the terms of your contract, it is always better to communicate with your employer beforehand and make a good-faith effort to reach an acceptable compromise. This may help you avoid a more bitter, contentious dispute down the road. Even if an agreement cannot be reached, these conversations can help you understand your employer’s motivations, priorities, and expectations for future negotiations. As soon as a contract dispute escalates to threats of legal actions, it’s time to enlist the help of a legal contract expert.
- Invest in a professional contract review.
There’s a common misconception amongst physicians that involving legal counsel, in a contract dispute will escalate the situation. In reality, employing the help of a contract attorney or review team is one of the most efficient ways to resolve a dispute with your employer.
A professional contract review can help you clarify your legal situation and help you reach a solution with your employer. A contract review team should include a physician-specific contract attorney who can explain your legal liability, assess the enforceability of your contract, and offer assistance with renegotiation. If the conflict dispute is caused by the transition from one employer to another, your review team can also work with your prospective employer to move back your start date or even negotiate for a buy-out of your previous contract.
By resolving a contract dispute or establishing a mutually-acceptable separation agreement, a professional contract review can save you tens of thousands of dollars and avoid ending your professional relationship on bitter terms.
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While dealing with a contract dispute can be daunting, you don’t have to figure it out alone. Our professional contract review team can help you understand your contractual obligations and negotiate with your employer to find a peaceable solution.
Of course, the best way to avoid a contract dispute is to invest in a thorough contract review process before accepting a job. By clarifying and revising any contract issues on the front end, you can minimize miscommunication and avoid unpleasant surprises down the road.
To learn more about contract dispute resolution and other contract review services, please schedule a talk with a Physicians Thrive advisor today.