Physician Contract Review Focus: Exiting a Contract
Don’t let the fine print fool you– Right to Terminate clauses can have a serious impact on a physician’s career.
Consider the following scenario:
You move to a new state to begin an exciting new position. While the job sounds great during recruitment, the contract doesn’t include details about call hours, productivity expectations, or bonus metrics. After starting the position, you realize that you are expected to work unreasonable hours with insufficient support staff. To make matters worse, it turns out the productivity requirements for your bonus are virtually impossible to meet.
When you decide you want to leave the role, you learn that your contract does not give you the right to terminate with cause, even when your employer does not cure the breach of contract. As a result, you are forced to terminate without cause resulting in a messy, expensive legal dispute with your employer.
Unfortunately, this situation is all too common for physicians who overlook the details of their Right to Terminate clause. Often obscured with vague language and legalese, these terms contain crucial details about how and when a physician is allowed to exit their contract. Fortunately, professional contract review is designed to help doctors avoid inequities and oversights within the Right to Terminate clause.
What is a Physician’s Right to Terminate?
It’s standard for contracts to require a 90 day notice period from either the physician or the employer in the event that one party wishes to terminate the contract. The notice period may be longer in locations where it is more difficult to fill positions, because the employer will want more time to recruit a replacement. However, it is highly uncommon that a notice period exceeds 180 days.
Regardless of the stated notice period within your contract, a situation may arise that forces you to leave your position before finishing out the notice period. If the cause for your sudden termination is serious and unavoidable (i.e. a family member falls gravely ill), in our experience we have found employers tend to be understanding. In most cases of emergency termination, the employer will work the physician to facilitate an agreeable exit plan.
On the other hand, if you tell your employer that you want to terminate early to accept a better job offer, it is very likely that your exit will be more difficult. It’s possible that your employer will insist on repayment of bonuses or threaten legal action for breach of contract. While some employers won’t actually follow through on these demands, others will. Regardless, at this point, you will need an attorney to assess your situation and reach a mutually acceptable solution with your employer. In most cases, employers will avoid pursuing costly lawsuits if an acceptable alternative is proposed.
Termination for Cause vs. Termination Without Cause
Physician contracts are typically terminated in one of two ways:
The first way is termination without cause. In this case, the physician or the employer can terminate employment even though the other party has not breached the contract in any way. For example, a physician can terminate their contract if they get a better offer, or an employer can terminate a contract if they can no longer afford to employ a certain physician. Termination without cause is generally allowable as long as both parties observe the notice period.
However, doctors should review their contract carefully to ensure that both the employee and the employer are bound by the same notice period. For example, it is not a good sign if a contract requires 180 day notice period from a physician for Termination Without Cause, but allows the employer to terminate without cause given only 30 days notice. This disparity is cause for concern, because it allows the employer to give very little notice for termination, while forcing the physician to observe an inordinate notice period.
The second way to end a contract is termination for cause. Termination for cause occurs when either the employee or the employer fails to uphold the terms of the contract. The specific conditions that can trigger termination for cause are laid out within the Right to Terminate clause.
Depending on the reason for the termination, a physician or employer may be allowed a cure period, which is a specified amount of time to rectify their breach of contract. For example, if a doctor is in breach of contract because their medical license has expired, a two-week cure period would allow them to renew their license and fix the issue. However, other breaches, such as a felony conviction or revocation of medical license, will trigger an immediate and automatic termination for cause. Conversely, a physician may be able to terminate with cause if an employer fails to offer a promised partnership or requires the doctor to work more than their contracted hours.
Contract Review & Right to Terminate
Before signing an employment offer, every physician should invest in a professional contract review. During a review, a physician-specific attorney should evaluate the terms of your Right to Terminate clause to ensure the conditions are clear and equitable.
When your contract is reviewed, the attorney should look carefully for red flags within the Right to Terminate clause. Common issues include:
- Overly broad or unclear language regarding Termination for Cause: If your contract allows for termination with cause based on any provision of the contract or any behavior deemed unprofessional or non-collegial, this allows your employer far too much leeway to make up an excuse to fire you.
- Notice periods that are too long or inequitable. If your contract requires an unduly long notice period, it may make it difficult to secure another position if you choose to leave the job. Also, if your employer is afforded a significantly shorter notice period, they may be able to terminate your contract without giving you adequate time to look for a new job.
- No employee Right to Terminate. A contract should clearly lay out a physician’s right to terminate for cause if the employer has not cured a breach of contract. An employee should also have the right to terminate without cause given an appropriate notice period.
Physicians Thrive advisors can review your new or existing contract to help you understand and negotiate all employment terms, including Right to Terminate. After reviewing almost 6,000 physician contracts nationwide, our team can work with both you and your employer to clarify vague language and rectify potential problem areas.
Avoid unforeseen contract issues and build your career with confidence. Contact an advisor to learn more about physician contract reviews and Right to Terminate issues today.