Terminating a Physician Employment Contract: A Checklist
Most physicians enter into formal employment agreements with their employers. Some physicians wish to leave one job for another or to relocate and may risk being in breach of the employment contract. There are few things physicians should be aware of when terminating any employment contract.
Termination Notice ProvisionMany employment contracts, including physician employment contracts, contain a termination provision which outlines the methods in which either the physician or employer may terminate the contract. Most contracts contain a "without cause" termination provision, which allows either party to terminate the contract for any reason or no reason at all. This is the method by which a vast majority of employment contracts are terminated.
If the contract contains a "without case" termination provision, there will likely also be a notification provision which will state a minimum amount of time in which an employee can terminate the contract. In physician employment contracts, 90 days is very common. However, it's also not uncommon for the notice requirement to be slightly longer or shorter.
Covenant Not to CompeteA covenant not to compete, also referred to as a restrictive covenant or non-compete clause, is a promise by the physician employee not to engage in the practice of medicine for a certain period of time within a certain geographic area in which the employer operates. Some states have specific prohibitions on covenants not to compete.
If a physician's employment agreement contains a covenant not to compete, the physician will want to pay particular attention to the restrictions and any exceptions contained in the contract. If a physician does not follow the covenant not to compete, he or she risks potentially being in breach of the contract and could be sued for potential damages which the employer has accrued. Many covenants not to compete contain some exceptions which state the covenant will not apply under certain circumstances. The most common exceptions are if the employer terminates the contract without cause or if the physician terminates the contract due to a breach by the employer.
Potential Repayment of BonusesMany physician employment agreements contain one or several cash bonus incentives in addition to the normal compensation. The most common examples are a sign on bonus, relocation allowance, and student loan repayment assistance. Many contracts specifically require the employee physician to repay all or a portion of these bonuses if the physician terminates the contract prior to a certain minimum amount of time. A physician employee seeking to terminate his or her employment contract will need to review the employment contract, if one exists, to determine if there is any obligation to repay any bonus.