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, some kind of family issue, maybe you got a better job offer somewhere else. Maybe you decided to move home instead of moving to a different city. Basically, the question is, can a physician back out after signing an offer letter? The short answer is yes, probably, unless there’s some kind of binding language in the offer letter, which there almost never would be. The physician can back out. The offer letter just has kind of basic terms.
Signing with a Physician Practice
Normally, it would be like, okay, here’s what your compensation is. Maybe a brief review of benefits, the term length, maybe how to terminate the contract, maybe a brief mention of a non-compete. It is normally like a one-page document that just kind of briefly goes over here’s what it’s gonna 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 absolutely change whether it’s a good offer or not. And so until the employee him an agreement is signed, it’s not going to be a binding document for that reason. Let me give some instances of maybe why the job opportunity looked okay with the offer letter, but 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 but let’s say, normally a physician would have to provide either 60 or 90 days notice to terminate the contract without cause. Meaning, 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, right? Once you give notice, relationships change within the organization, you’re on your way out, you’re no longer you’re building a practice. If someone had a 12-month requirement, there would be an entire year of potential kind of 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, if you’re currently in practice and you have to give 12 months’ notice, there are very few practices that are willing to wait 12 months for the physician to give notice and be able to leave. It just doesn’t happen that way. Sometimes, if the physician is in training, and an organization forecast 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’re almost never gonna 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. Non-competes kind of the reasonableness of non-competes varies state to state pretty much are like one of the only things that kind of varies in physician contracts, but, let’s just say, for instance, it’s one year, 5 to 10 miles from your primary practice location. Other blogs of interest include:
- Can a Physician Back Out After Signing an Employment Contract?
- What is the Most Common Physician Compensation Model?
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 that you practice in while employed with the employer. That can change things substantially. If someone is absolutely married to a town, like they grew up there, the family’s there, they wanna raise their kids there, and then they have some absolutely terrible non-compete, which would essentially force them to move for a period of time that can make a great offer a terrible 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 bad offer. Benefits as well. Generally, there’s no specific recitation of all the benefits that are 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 bad. The average amount of total time off is 30 days. That would include sick days, holidays, 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, in short, yes, you do not have to go forward, even if you’ve signed an offer letter because the terms of the employment agreement could change the offer substantially. It can start in awkward conversations.
And the sooner that you give notice to the employer that you are not going to start, the better. People also ask, what could be like 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. Obviously, if you sign an employment agreement and then wait until a week before, you’re about to start and then say, Hey, I don’t wanna start the contract, the employer can certainly say that they’ve suffered some damages and potentially could come after you for that. If you’ve just signed the offer letter without even seeing employment agreement, I’d say that the physician is fairly safe in backing out of it and looking elsewhere.
Employment Contract Offer
If I have signed an employment agreement, but I don’t want to go through with it, can I back out without repercussion? The answer to that is it depends. When you sign a contract to start employment, then you are bound to those terms. Just because you don’t want to move forward with the contract, doesn’t mean that the employer hasn’t suffered damages duty or desire not to start. Let’s just kind of back up and break down each stage of the process. First, the employer offers you an employment contract, and I assume you’re going to 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 you’re in your last year 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 essentially as soon as you are ready and for most people, their without cause termination notice is 60 to 90 days, somewhere in there. Some employers will give you the contract and then expect you to start within shortly after the 60- or 90-day period ends. So, you’ve signed the contract, the terms are binding, the employers are expecting you to start and then something happens, right? What led up to the decision to you wanting to back out of the contract will also kind of 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 then now they must move to another, and you need to follow them. Maybe there’s illness in the family that’s going to require you to move back home or somewhere else. Those personal situations where there is just something that was completely unforeseen and that your situation has changed, you just absolutely cannot go through with the contract. You just need to confront the employer and just say, look, this is what’s happening in my life. I really appreciate your interest. I appreciate the agreement that 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 issues, they’re going to be understanding and they’ll most likely let you out of the agreement without any consequences. Let’s do another scenario. You sign the agreement, you’re all 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, although you’re kind of tied into another agreement, you want to leave and not due to family circumstances, just due to pure compensation or something else that makes the contract better. Well, I can tell you in those circumstances, most employers are not going to be super excited to let you go, just because of that. Now they certainly can’t force you to start, right?
There will be notice requirement in your contract, and I guess, theoretically, you could just give the without cost 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 began? I think it would depend upon when you gave notice that you weren’t going to start. If you wait one week before your start date and the practice is expecting you to come and they’ve gone through the credentialing process and they’ve gone through the ping process of the facilities, they’re going to need privileges for you at, and they’ve hired additional staff for you, and they’ve covered your medical license and DEA registration, and they’ve done all these things. They’re relying upon you to come in and start generating income by seeing more patients.
And then you say, hey, I know I was supposed to start next week, but I’m not. That company has some damages because of your short notice, and they could potentially come after you. When I said, come after you, I mean either sue you, threatened to sue you, or many contracts of arbitration clauses where the case would go through the arbitration process. The more time that you can give to the employer to let them know that you are not going to fulfill the contract, the less damages that that employer suffered. Most employers simply want nothing to do with litigation with other physicians. No matter what the reason is if an employer gets a reputation as being litigious and going after physicians, that spreads fast amongst the physician community, and it will be more difficult for that employer to bring on good, qualified physicians.
For the most part, people and organizations simply don’t want to get into a legal fight with the physician, regardless of how much time you gave them. Now, on the other side, this mostly applies to 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 much more likely to go after or sue or go to arbitration against another physician. If I had to be an armed share psychologist that thinks kind of the entrepreneurial spirit in a physician opening their own practice and kind of being self-employed and being their own owner makes them more aggressive and defending. Those types of issues with people who are pulling out of starting what they were expecting to be a good, positive working relationship.
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 and the risk management department would always go through training with the physicians and they said, if there was some kind of clinical issue, the physicians who are upfront and truthful and go to the family and explain what happened, and there’s a negative outcome, and don’t hide things, they are much more likely to have a situation where the family is not going to pursue any kind of legal action. I think it’s kind of like the situation. If you go to the employer, explain what’s going on, just let them know this is not going to be a good situation for me. And then even if I start, even if you force me to start, I’m going to immediately give notice or give notice even before it starts. That’s not a situation anyone wants to be in. 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 immediately leave or leave within the required notice period.
How to Get Out of an Agreement
How to get out of a physician contract. Now, how to get out of it, I guess, could have different meanings. We’ll just go through the normal ways to get out of a contract or how it would end. First, you have the term of the contract that would just end and neither party would renew the agreement. If you have a two-year term and it doesn’t automatically renew, if no one wants to renegotiate or extend the term, the contract ends, 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 somewhere between 60 to 90 days’ notice.
You give them notice, finish out the 60 days, then you can leave. Then the last way to terminate an agreement is with cause. I mean, 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 how a contract 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 terminate the agreement with cause. Obviously, if someone is breaching the contract, meaning not following through on one of the terms of the agreement, then if they’re in breach of contract, a physician could theoretically terminate for cause. Most of the time, there would be what’s called 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, in some way, they will send them a written notice saying, here are the things you’re doing that are breaching the contract. Then you have a certain amount of time to fix the breach. And if the breach isn’t fixed in that time, then the physician can immediately terminate the contract. One thing I find is that most physician contracts are generally silent as to how the physician can terminate the agreement for cause, especially if you’re with a, maybe like a smaller physician owned group. Many of those contracts are highly slanted towards the employer, and that would be one of the things that would favor the employer. At least one suggestion is if you’re given a new employment contract, make certain that there is some language in there that states the employee, meaning the physician, can terminate the agreement for cause if the employer doesn’t fix 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 normal ways contract ends, mutual agreement, terminate without cause. But the only way to get out, meaning like the employer did something wrong and you want to leave, is you got to give them notice of what they’re doing wrong. Then, if they won’t fix it in that time, then you can terminate / get out of the contract. 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? There are making this job either unsafe or they’re not following through on the contract. And most of the time they say no, or I’ve talked to them verbally about it. You need to, in writing, in the notice section of your contract. Meaning, it will state if there are notices to be given, you need to give it to this address, to this person in this way, you need 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 is kind of making it unsafe to practice.
And that’s the start. If you haven’t done that, it’s hard to go anywhere from there. If you’ve just been sucking up a terrible working environment for six months, and then finally you’re fed up and then want to get out immediately, you must let him know about it. Got to give notice.
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