What Is an Employment Agreement?
Key Takeaways
- An employment agreement is the binding contract that defines a physician’s compensation, duties, benefits, and exit terms.
- Restrictive covenants and termination clauses often matter more over time than the starting salary.
- Nearly every section of a physician contract is negotiable before signing.
- Tail coverage for malpractice insurance can cost six figures and should be settled in writing up front.
What is an Employment Agreement?
An employment agreement is the legal contract between a physician and their employer that spells out the terms of the working relationship, from compensation and schedule to what happens after you leave.
If it matters to your career or your income, it belongs in this document, in writing, before you sign.
For most physicians, this is the single most important financial document they will ever put a signature on. A first contract out of residency can shape earnings for a decade or more.
And unlike a job offer, which is really an invitation to negotiate, the employment agreement is binding. Courts will hold you to what the document says, not what the recruiter told you over dinner.
What a Physician Employment Agreement Includes
Contracts vary by employer and by state, but nearly every physician agreement covers the same core ground.
Compensation Structure
Base salary, productivity bonuses (often RVU based), signing bonuses, and how and when each gets paid.
This is where compensation benchmarks earn their keep, because “competitive salary” means nothing without data behind it. If your offer is below the MGMA median for your specialty and region, you want to know that before signing, not after.
Term and Termination
How long the agreement runs, whether it renews automatically, and the conditions under which either side can walk away.
Pay close attention to termination without cause. If your employer can end the agreement with 90 days notice and no reason, then in practical terms you have a 90 day contract, no matter what the term says.
Restrictive Covenants
Non-compete clauses, non-solicitation provisions, and confidentiality terms that follow you after the job ends.
These deserve more scrutiny than almost anything else in the contract because they operate when you have the least leverage. A non-compete with a wide radius can force your family to move just to keep practicing.
Related: Restrictive covenants in employment contracts: what they mean for you
Malpractice Insurance and Tail Coverage
Who pays for coverage, what type (occurrence or claims-made), and critically, who pays for tail coverage if you leave a claims-made policy.
Tail premiums can run into six figures for higher risk specialties. If the contract is silent on tail, assume you are paying for it.
Benefits and Allowances
Health insurance, retirement contributions, CME allowances, licensing and DEA fees, relocation assistance, and paid time off. Individually small, collectively worth tens of thousands per year.
Related: Why benefits packages may matter more than base salary
Duties and Call Obligations
What you are actually expected to do, where you will do it, and how often you will take call.
Vague language here tends to favor the employer. “Call as assigned” is an invitation for your schedule to grow after you sign.
Employment Agreements Are Negotiable
This surprises many first-time attendings, but nearly every section above can be improved before signing, and employers expect some back and forth.
The American Medical Association publishes guidance on understanding employment contracts for physicians precisely because so many sign without negotiating or without fully reading what they signed.
The terms you accept on day one determine your leverage on day one thousand, when you want to renegotiate, relocate, or leave.
Related: Key clauses physicians often overlook in employment agreements
Frequently Asked Questions
Is a Letter of Intent the Same as an Employment Agreement?
No. A letter of intent outlines proposed terms and is usually non-binding, though some provisions can carry weight. The employment agreement is the enforceable contract. Read more about physician letters of intent before signing one.
Can I Negotiate an Employment Agreement After Signing?
Generally only when the contract comes up for renewal, or if both parties agree to amend it. Your strongest negotiating position is always before your signature is on the page.
Should a Lawyer Review My Employment Agreement?
Yes. Contract language is written by the employer’s attorneys to protect the employer. An independent review by someone who works with physician contracts specifically can identify terms that are below market or unusually restrictive before they become binding.
Let Us Help You With Your Employment Agreement
Most physicians see only a handful of contracts across a career. The people writing those contracts see thousands.
That gap is exactly why having your agreement reviewed matters. Physicians Thrive pairs you with attorneys and compensation experts who work exclusively with medical professionals, so you know what is standard, what is missing, and what to push back on.
Reach out for a physician contract review before you sign, and negotiate from a position of knowledge instead of hope.
