Red Flags in a Physician Assistant Employment Contract? | Medical Employment Contract Red Flags

What are some red flags in physician assistant contracts? Sometimes the red flags are the words on the page, but other times red flags are missing. I’m going to go over the most common red flags that I see in a physician assistant employment agreement. The first one would probably be unreasonable non-compete clauses. Depending on your state, most states’ non-compete clauses for healthcare providers are enforceable, but you do want to check your state law. If they are enforceable, you want to check is it reasonable? What I mean by that is, normally, a non-compete clause will be anywhere from one to two years. I always try to advocate for at least one year only, not over a year.

One year, it should be, or less. It could be six months, that would be great. And then you want to look at the restricted area. Typically, it goes by miles and it kind of depends. You must take into consideration where you’re located and what your makeup looks like. Like, are you in a rural area? Are you in a city? And then you want to see, okay, is this mileage unreasonable? Really anything over 30 miles is going to be, in my opinion, unreasonable. And I would try to negotiate that down. So, we’ve talked about how long they’re for, and then how much is included in that restricted area from competing with your employer. The other thing you want to look for is how many locations does that restricted radius apply to? This is a little tricky and a lot of times employers try to slip this in there.

They may say or have language in there that states any location of the practice with the company, or they’ll say any location you provide services at. That means if you fill in for a provider that’s on vacation, you’re a non-compete clause now attached to that location. Let’s just say you have 10 miles from your primary location, but now you could have 10 miles attached to multiple other locations. This is dangerous especially if let’s say the company expands while you work for them. And it could knock out a huge chunk of the state. You may have to move if you decide to end your employment. So, overly restrictive non-compete is a red flag. The other thing you want to look for in a non-compete itself is what services are you restricted from? Other topics of interest include:

• What is the Most Common Physician Assistant Compensation Model?
• Can a Physician Assistant Break Their Contract?

If you’re a PA who’s offering services and for a general practitioner, you shouldn’t really be excluded from providing services for maybe general surgery or psychiatric care or something like a totally different specialty, you shouldn’t be restricted from doing that. And it depends on the state if you’re allowed to switch specialties, but anyway, you just want to know what you’re restricted from providing. Those are the red flags that kind of go with the non-compete clause. The next major red flag I see in contracts is something that’s missing. There should always, and I mean, always be a without cause termination clause in your contract. And without cause termination means either party can terminate the agreement or your employment for any reason or no reason at all. You don’t even have to give one. Normally, you just must give a certain amount of notice.

And that notice period is typically anywhere from 60 to 90 days. If you’re in a very rural area or a high-need area, sometimes I see it go up to 120, but I would probably ask to have that limited to 90 days. You just simply give your notice and then at the end of that, your agreement has terminated, and you guys can go your separate ways. Sometimes contracts don’t have that language in there. They’ll say that you’re contracted to work for your employer for anywhere, usually, two to three years. And the only way to get out of it is to ask them to be released. This is a dangerous spot to be in because they might not want to release you, and then you have to make a difficult decision if you want to breach your contract.

And that gets into a whole other mess. So, always look for a without cause termination. Okay, so we’ve gone through non-compete clauses, without cause termination should always be included and then you should always have your benefits. If you’re getting health benefits, retirement, disability, and life insurance, all those things should be outlined in your agreement. Now, they’re not probably going to go into detail about how much you’re paying in premiums, that kind of thing, but they should mention that it will be offered to you. So, that should also be in there as well. Then let’s talk about your compensation. Compensation obviously should be in there. A red flag is if you can’t figure out how you’re getting paid. And I have seen this before. Many physician assistants are paid with a flat base or hourly or per shift. But you’re easily able to calculate how much you’re going to be making.

But when you have things like patient quotas and there’s like weird metrics, RVUs are typically not used in a physician assistant contract, but if there are RVUs, you want to make sure you know how much you’re getting per RVU, how that’s calculated and when you’re paid out for those. If anything on collection, you want to know what percentage of collections you’re getting and when you get paid out for those. You want to be able to figure out what you’re making and how it’s calculated. The other red flag I see in sort of the compensation range is whenever you get a sign-on bonus or relocation bonus or relocation expenses. Normally, you’ll get a bonus which is a large amount of money that you’re going to get upfront upon signing this agreement. You want to be careful because there are sometimes red flags in those, because there are normally strings attached, which means that by accepting that money, you’re agreeing to stay employed for normally two to three years with your employer.

And if you terminate your agreement for any reason, even without cause, you will have to pay back either that entire bonus or you’ll have to pay it back at a prorated amount. Now, there’s always going to be some type of payback provision, but a red flag is when you have to pay back the entire amount because when you receive that money, it’s taxed as income. And so, therefore, let’s say the bonus is 10,000. Well, when you get that bonus, you’re not going to receive the full 10,000 because taxes will be taken off the top. So, it’s best if it’s prorated which means for every month that you’re employed, a portion of that amount that you must pay back is forgiven. So, that’s something that’s important as well. And then lastly, other red flags might be no CME allowance, and continuing medical education.

This is something that you need to practice and provide services for your employer. So, they really should reimburse you for that or give you an allowance per year. And that can be anywhere from 3,000 to 5,000, normally.

Breaking an Employment Contract with Red Flags

Can a physician assistant break their contract? The answer is yes, they can. However, if breaking their contract means that they’re breaching it, they’re not adhering to the terms that they agreed upon with this job, they may have some legal or financial consequences that you will want to consider before making that decision. So, before you break the contract, there are normally lots of different ways that you can be led out of your contract. You always want to go to your employment agreement and read it very carefully. There are normally many clauses on termination. Your employer can terminate your agreement for cause if you have violated some policies, you’ve lost your license of practice, or you’re convicted of a crime. There’s normally enumerated the list there.

And if any of that happens, then your employer will terminate the agreement. Another way you can be let out of your employment agreement is a without cause termination. Most employment contracts and you want to read yours carefully, will have a clause in there that says you may terminate your employment without cause. It can be for any reason or no reason at all upon giving a certain amount of notice. The range can be anywhere from 60 to 90 days. Occasionally, if you’re in a rural area or a high-need area, sometimes it can go up to 120 days. If you want out of your contract, you need to give written notice and it needs to be given properly. Again, this can be a little unique to each situation, so you want to look at the employment agreement and it will state how you need to give proper notice.

It’s usually always in writing, it can be hand-delivered to certain personnel, sometimes it must go through certified mail, other times you’re able to email it to certain personnel as well. So, just make sure you give your notice properly and you give your notice at the appropriate time. Like we talked about, it’s normally 60 to 90 days and then you can be let out of your agreement, that’s the best way to do it. However, even if you do it this way, there still might be some financial consequences. If you received any type of sign-on bonus or relocation bonus or reimbursement, those types of bonuses when you’re given a lump sum upfront whenever you’re starting your employment, normally have some sort of requirement that you must complete a certain period with the company. This is normally anywhere from one to three years.

Employee of a Practice Seeking a New Job

And if you terminate your employment for any reason within that time, you may have to pay back that entire bonus, or you may have to pay back the bonus at a prorated amount which means however many months you’ve been there, a portion of that amount is forgiven. You always want to be careful that you’re not just breaching the contract. Again, because even if you breach the agreement, there may be something in your contract called liquidated damages or something about damages. Meaning, if you break this agreement and you don’t give proper notice, you will have to pay your employer tens of thousands of dollars. So, this is something you always want to look out for. I do see this in about 50% of all the contracts that I review, so you want to be careful. Breaking a contract is serious. So, I always recommend consulting an attorney. That’s something we do here at our firm to make sure that you are terminating your contract properly.