Can a Physician Back Out After Signing an Employment Contract?

Can I back out without repercussion if I have signed an employment agreement but don’t want to go through with it? The answer to that is it depends. You are bound to those terms when you sign a contract to start employment. Just because you don’t want to move forward with the agreement doesn’t mean that the employer hasn’t suffered damages or desire not to start. Let’s back up and break down each stage of the process. First, the employer offers you an employment contract. I assume you will either have it reviewed or negotiate the terms.

And then you sign the agreement, which will generally happen in the future. If you’re in training, maybe in your last year of residency or fellowship, you could sign contracts that won’t even begin for a year. If you are currently practicing somewhere and then looking for a new job, sometimes the other employer is willing to start as soon as you are ready. For most people, their without-cause termination notice is 60 to 90 days, somewhere in there. Some employers will give you the contract and expect you to start shortly after the 60- or 90-day period ends. 

What if Something Comes Up After Signing an Employment Contract?

So, you’ve signed the agreement, the terms are binding, the employers are expecting you to start, and then something happens. Your wanting to back out of the contract will also dictate how the employer reacts. It will also depend upon kind of the ideology of the employer. Some employers are very forgiving. They understand life happens. Maybe you had a significant other that was supposed to be in one location, and now they must move to another, and you need to follow them. 

Maybe an illness in the family will require you to move back home or somewhere else. Those personal situations where there is something wholly unforeseen and your situation have changed, you cannot go through with the contract. You need to confront the employer and say, this is what’s happening in my life. I appreciate your interest. I appreciate the agreement you offered me, and I understand you are relying upon me to start. However, I just simply can’t because of these issues. Most of the time, if you come to the employer honestly with those types of problems, they will be understanding. 

They will most likely let you out of the agreement without any consequences. Let’s do another scenario. You sign the agreement, you’re excited to start, and then another job creeps up and says, hey doctor, here’s more money, here are better benefits, here’s more time off, and now. However, you’re tied into another agreement. You want to leave, not due to family circumstances, just due to pure compensation or something else that improves the contract. Well, I can tell you that in those circumstances, most employers will not be excited to let you go just because of that. Now they certainly can’t force you to start.

What are the Potential Damages if you Terminate a Contract Before it Begins?

There will be a notice requirement in your contract. Theoretically, you could give the without-cause termination notice even though the contract hasn’t commenced and then get out of it. What are the potential damages if you do essentially terminate a contract before you even begin? It would depend upon when you noticed that you weren’t going to start. If you wait one week before your start date and the practice expects you to come, they’ve gone through the credentialing process. They’ve gone through the ping process of the facilities. They’re going to need privileges for you. 

They’ve hired additional staff for you, covered your medical license and DEA registration, and done all these things. They’re relying upon you to come in and start generating income by seeing more patients. And then you say I was supposed to start next week, but I’m not. That company has some damages because of your short notice, and they could come after you. When I said, go after you, I mean sue you, threaten to sue you, or many contracts of arbitration clauses where the case would go through the arbitration process. The more time you can give the employer to let them know that you will not fulfill the contract, the fewer damages the employer suffers. 

Most employers want nothing to do with litigation with other physicians. No matter the reason, if an employer gets a reputation as being litigious and going after physicians, that spreads fast amongst the physician community. It will be more difficult for that employer to bring on good, qualified physicians. Most people and organizations don’t want to get into a legal fight with the physician, regardless of how much time you give them. Now, on the other side, this primarily applies to physician-owned practices.

Terminating a Physician Contract with Smaller Physician-Owned Practices

Let’s say you were scheduled to join a smaller physician-owned practice. At least, in my opinion, those types of employers, maybe it’s a single physician-done practice. Those types of employers, in my experience, are more likely to go after, sue, or go to arbitration against another physician. If I had to be an armed share psychologist that thinks of the entrepreneurial spirit in a physician opening their practice and being self-employed. Their owner makes them more aggressive and defensive. And those types of issues with people pulling out of starting what they expected to be a good, positive working relationship.

Summary

So, can a physician back out of a contract after signing an employment agreement? Yes, however, there may be repercussions involved with that. I worked in the legal department of hospitals before. The risk management department would always go through training with the physicians. They said that if there was some clinical issue, the physicians who are upfront and truthful go to the family and explain what happened. There’s a negative outcome, and don’t hide things. 

They are much more likely to have a situation where the family will not pursue any legal action. I think it’s kind of like the situation. If you go to the employer, explain what’s going on, and just let them know this will not be a good situation for me. And then, even if I start, even if you force me to start, I will immediately give notice or notice even before it starts. That’s not a situation anyone wants. You do have some leverage even though you haven’t started. And the fact that nobody wants to bring in an employee that they know is just going to leave or leave within the required notice period immediately.

Other Blogs of Interest

• Can an Employee Refuse to Sign a Non-Compete | Employment Contracts
• Breach of Employment Contract Examples | Employment Agreement
• Consequences of Breaking an Employment Contract | Breaching Contracts

Can a Physician Back Out After Signing an Offer Letter? | Physicians Offer Letters

What happens if I sign an offer letter but I don’t want to go through with signing the actual contract? Maybe due to a change in circumstances or some family issue, you got a better job offer somewhere else. Perhaps you decided to move home instead of moving to a different city. The question is, can a physician back out after signing an offer letter? The short answer is yes unless there’s some binding language in the offer letter, which there rarely would be. The physician can back out. The offer letter has a kind of basic terms.

Signing with a Physician Practice

Usually, it would be like, okay, here’s what your compensation is. Maybe a brief review of benefits, the term length, how to terminate the contract, and a brief mention of a non-compete. It is generally like a one-page document that briefly describes what it will look like for your employment. There are times when I’ll have a physician get an offer letter, and just the kind of cursory terms look great. And then, when we get the actual agreement, it could change whether it’s a good offer or not. And so until the employee him a contract is signed, it will not be a binding document for that reason. Let me give some instances of maybe why the job opportunity looked okay with the offer letter. Still, once we got the actual employment agreement, it changed.

One thing could be how to terminate the agreement. I would say it’s probably rare to put into an offer letter. Still, usually, a physician must provide either 60 or 90 days notice to terminate the contract without-cause. This means they can get out of the agreement for any reason with the amount of required notice. Let’s say the contract had a 12-month without-cause termination notice. Well, nobody wants that. Once you give notice, relationships change within the organization. You’re on your way out. You’re no longer building a practice. If someone had a 12-month requirement, there would be an entire year of potential awkward relationships. And I would never suggest that a physician would have to give a year’s notice.

Physicians with a Letter of Intent

On the back end of that, Suppose you’re currently in practice and have to give 12 months’ notice. In that case, very few practices are willing to wait 12 months for the physician to provide notice and be able to leave. It just doesn’t happen that way. Sometimes, if the physician is in training and an organization predicts that they will be needed a year or two down the line, that’s a different story.

But if a physician is currently practicing and switching to a new job, they seldom wait two months. Another thing could be the terms in the non-compete. Maybe you’re expecting a reasonable non-compete like one year, 10 miles from your primary practice location. The reasonableness of non-competes varies from state to state. One of the only things that vary in physician contracts is location. Let’s say, for instance, it’s one year, 5 to 10 miles from your primary practice location. Other blogs of 

That’s what you’re expecting. And then you get the contract, and it’s a two-year non-compete and 25 miles from every location you practice while employed with the employer. That can change things substantially. Suppose someone is married to a town where they grew up there. In that case, the family wants to raise their kids there. Then they have some terrible non-compete, which would essentially force them to move for a period of time that can make a great offer a lousy offer. And that’s a term that could change. That’s not spelled out in the offer letter that could then make a great offer a terrible offer and benefits as well.

Physician Benefits in an Offer

Generally, there’s no specific recitation of all the benefits offered. What if the employer doesn’t offer health coverage, disability, or life or retirement? They won’t pay for your medical license and DEA registration. They won’t give you anything for continuing medical education. Perhaps the time off is terrible. The average amount of total time off is 30 days. That would include sick days, holidays, and vacation CME. Let’s say they offer you 15 total days. Almost no physician has that small amount of time off. And that could change substantially whether the offer is good or bad. So, yes, you do not have to go forward, even if you’ve signed an offer letter because the employment agreement terms could change the offer substantially. It can start in awkward conversations.

And the sooner you give notice to the employer that you are not going to start, the better. People also ask, what could be the absolute worst-case scenario? In this case, if it’s just an offer letter, I would say it’s a pretty low downside risk. If you sign an employment agreement and then wait until a week before you’re about to start, saying, Hey, I don’t want to start the contract. The employer can undoubtedly say that they’ve suffered some damages and could potentially come after you. Suppose you just signed the offer letter without seeing the employment agreement. In that case, I’d say that the physician is reasonably safe in backing out of it and looking elsewhere.

How to Get Out of a Physician Contract

How to get out of a physician contract? Now, how to get out of it, I guess, could have different meanings. We’ll go through the standard ways to get out of a contract or how it would end. First, you have the contract term that would end, and neither party would renew the agreement. If you have a two-year term that doesn’t automatically renew, if no one wants to renegotiate or extend the term, the contract ends, and that’s it. Second, you can mutually agree with the employer to terminate the agreement. At that point, the contract would end. The third would be without-cause termination, meaning you would give notice. 

Most contracts are somewhere between 60 to 90 days’ notice. You give them notice and finish out the 60 days. Then you can leave. Then the last way to terminate an agreement is with-cause. I think this probably is what most people think of if they get out of a contract. In any contract, at least it should state the main reasons why an agreement can be terminated with-cause or for-cause. Now, you’ll find that most of these sections list 20 things that the employer can terminate the physician for, and many times it’s completely silent as to how the physician can end the agreement with-cause. 

If Someone is Breaching the Physician Contract

Suppose someone is breaching the contract, meaning not following through on one of the terms of the agreement. If they’re in breach of contract, a physician could theoretically terminate for-cause. Most of the time, there would be a cure period. In most cases, it’s somewhere between 15 to 30 days. How that would work would be if the physician thinks the employer is breaching the contract. They will send them a written notice saying, here are the things you’re doing that breach the contract. 

Then you have a certain amount of time to fix the breach. And if the breach isn’t settled in that time, the physician can immediately terminate the contract. Most physician contracts are generally silent about how the physician can end the agreement for-cause, especially if you’re with a maybe a smaller physician-owned group. Many of those contracts are highly slanted towards the employer, which would be one thing that would favor the employer. At least one suggestion is if you’re given a new employment contract, make sure that there is some language that states the employee. 

The physician can terminate the agreement for-cause if the employer doesn’t fix the breach within a certain period. If that’s not in the contract, it needs to be. That would be the way to get out of the agreement. So, you have the usual ways contract ends, mutual agreement, termination without-cause. But the only way to get out, like the employer did something wrong and you want to leave, is to give them notice of what they’re doing wrong. If they don’t fix it in that time, you can terminate/get out of the contract. 

What Are the Tricky Issues?

These are tricky issues. I get calls all the time from physicians who say, my employer is doing this and doing that or not doing this, they’re not supporting me, I don’t have the proper staff. I feel unsafe due to the volume of patients they expect me to see. And my first question is: did you let them know about it? Have you given them notice? They are making this job unsafe or not following through on the contract. And most of the time, they say no, or I’ve talked to them verbally about it.

Physician Contract Notice Section

You need to, in writing, in the notice section of your contract. This means it will state that if there are notices to be given, you need to give them to this address, to this person, and to follow that. You need to put it in writing, these are the things you’re doing that are in breach of contract, or these are the things you’re doing that are making it unsafe to practice.

And that’s the start. If you haven’t done that, it’s hard to go anywhere from there. Suppose you’ve been sucking up a terrible working environment for six months. You’re finally fed up and want to get out immediately. In that case, you must let the employer know about it. You got to give notice.