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Employment Contracts

Employment Contracts. Objectives. Understand a noncompete agreement and its limitations Know the difference between termination with cause and without cause Be comfortable negotiating the terms of an employment contract. Noncompete Agreement. A restrictive covenant ("noncompete" clause)

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Employment Contracts

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  1. Employment Contracts

  2. Objectives • Understand a noncompete agreement and its limitations • Know the difference between termination with cause and without cause • Be comfortable negotiating the terms of an employment contract

  3. Noncompete Agreement • A restrictive covenant ("noncompete" clause) • refers to language in the contract (or it may be a separate document) that restricts you from practicing near your employer's office for a specified distance and period of time if you decide to leave your employer.

  4. Noncompete Agreement • Restrictive covenants are region-specific. • A restrictive covenant that prohibits an employee from practicing within 10 miles of a former employer's office for a period of one year may be easily enforceable in Montana but ruled invalid in Manhattan (New York City), since it effectively would prohibit you from practicing anywhere in Manhattan. • Sometimes includes a damage clause that requires the employee physician to pay a designated amount of money (e.g., six months' salary) to the employer if a violation of the covenant occurs.

  5. Noncompete Agreement • A restrictive covenant is unenforceable if a physician is recruited to join a physician practice and the practice receives remuneration from a hospital to help the recruitment process, according to New Stark II regulations that went into effect in July 2004

  6. Termination • Two types • termination "for cause" (e.g., medical incompetence, moral turpitude) • termination "without cause" (where reasons need not be given) • A 3-year contract with a 60-day "termination without cause" clause is, in effect, a 60-day contract.

  7. Benefits • Do not assume certain benefits (ie vacation time) are a given. • Expectations should be discussed beforehand and negotiated into the contract

  8. Benefits • Bonuses • Ownership prospects • On-call obligations • Family medical leave policy • Life, health and disability insurance • Retirement plan (ie 401 K) • Vacation/leave of absence/sick policy • Allowance for CME • Membership dues and subscriptions • Moving expenses

  9. Role in Practice • Will you be a salaried physician or full partner? • If you will not be a full partner, will the opportunity be offered to you at a future date? If so, at what cost? •  Will you have a voice in the administration and management of the practice? If so, to what extent, and with what limitations (eg, staffing, purchases, additional of new physicians, policy changes, site changes)?

  10. Malpractice Insurance • Does the practice cover your malpractice insurance? • Will tail insurance for malpractice be provided? See prior topic ppt slides on insurance for more information

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