1099 v W2 (Physician Independent Contractor Agreements)

An independent contractor agreement is a vital part of the modern workplace. For many professionals, including in the healthcare industry, working as an independent contractor can offer several contract benefits, such as having control over your work schedule and enjoying the ability to collaborate with multiple companies. 

While such a contract agreement may seem attractive to most people, it is essential to dive deep into what this independent contractor agreement entails. And how it differs from a traditional employment contract. This way, you’ll get to know what to expect and how to handle yourself during the contract duration. In this blog post, we will discuss:  

• What is an independent contractor agreement
• Is a physician an independent contractor
• Employment contract agreement vs. independent contractor agreement
• What to look out for when signing an independent contractor agreement

What Is an Independent Contractor Agreement? 

An independent contractor agreement is a legal document between the hiring company and an independent contractor. This agreement outlines the terms of the working relationship, including the services, the compensation, and other relevant details.

It is important to note that independent contractors are not employees of the company they are contracting with. Instead, they are self-employed individuals who provide services to that company. This can breed confusion, primarily if you’ve never worked as an independent contractor. You may have questions about what’s fair and reasonable and how to work with what’s provided and what’s not provided in the contract. If this is your case, you should consider consulting an experienced physician contract lawyer to help you review the contract. And guide you on all you need to know before signing the agreement. 

Is a Physician an Independent Contractor? 

A physician can be an independent contractor or an employee depending on the contract agreement they signed when starting their job.  

The vast majority of physicians are employees meaning they signed an employment contract. However, some specialties, such as dermatology and anesthesiology, are more independent contractors.  

Employment Contract Agreement vs Independent Contractor Agreement

As discussed below, there are three significant differences between an employment agreement and an independent contractor agreement.

Work Status 

When you sign an employment contract agreement, you become an employee of the hiring company. However, if you sign an independent contractor agreement, you’re considered a self-employed individual or a freelancer.

Taxes 

If you sign an employment contract agreement, you must complete the w-2 tax forms. This means that taxes will be deducted directly from your salary. While if you sign an independent contractor agreement, you’ll be paid full compensation. However, you’ll be required to complete the 1099 tax forms to pay off your taxes on your own at the end of the year. 

Benefits 

An employment contract offers benefits such as life insurance, health insurance, disability insurance, paid time off, retirement plans, and Continuing Medical Education (CME) reimbursement. In contrast, an independent contractor agreement doesn’t offer any company benefits. However, you may be eligible for a higher salary and compensation factor for relative value units (RVU). 

What to Look Out for When Signing an Independent Contractor Agreement

Contract agreements can seem complex and hard to comprehend due to the terminologies and conditions used. However, it is essential to fully understand the contract agreements before signing them to know what to expect. It also helps cut off any misunderstandings. Here are  some key things to look out for:

The Length of the Contract 

How long is the term length? Is it for one project or an ongoing relationship? What are the start and end dates? Does the contract renew automatically, or do you need to renew it manually? It is essential to clearly understand how long you’ll be working with the company. This way, you can plan and avoid surprises down the road, such as job security issues. 

The Scope of Work 

What exactly are you being contracted to do? Is there any time limit to delivering? The contract agreement needs to be as specific as possible here. The clearer the scope of work, the less likely there will be any misunderstandings later on, especially concerning compensation.

Payment Terms 

How and when will you be paid? From your perspective, it is probably one of the most critical aspects of the contract. You’ll want to ensure that you’re getting paid on time and that all the terms and compensation models are laid out.  

Cancellation Policy 

What happens if either party wants to cancel the contract agreement? Are there any penalties involved? What grounds are needed to cancel the contract, how much notice should be given, and in what format? You’ll want to know this upfront if you need to cancel the contract agreement for any reason. You should also be aware of any repercussions arising from canceling the contract.

Non-Compete Agreements 

A non-compete agreement or clause restricts an independent contractor from working with a competitor of the hiring entity during the duration of work. In that case, you are prohibited from working in a specific period after the contract agreement ends and within a particular geographical area. 

Contractor | About to Sign an Independent Contractor Agreement? 

Before signing an independent contractor agreement, you must understand what you agree to. This way, you can know what to expect and be sure the contract agreement is fair to you as it is to the hiring company. The first step is reviewing the contract and negotiating where needed. To make this even much easier for you, you should consider consulting an experienced healthcare attorney who can review and advise accordingly. Attorney Robert Chelle is a professional contract attorney who has helped many healthcare workers review their independent contractor agreements. He can help you too. Feel free to reach out today.

Independent Contractor Relationship

Remember, as an independent contractor. You’re free to work for multiple entities simultaneously, meaning you must be careful not to breach your contract by working with a competitor of your hiring company. If you breach this agreement, you may face the consequences, such as being sued by the hiring entity.

Other Blogs of Interest

• What is Without Cause Termination in a Physician Contract? | Physician Termination Agreement
• What Can You Negotiate in a Physician Contract? | Doctors Contract Negotiations

Is a Physician an Independent Contractor? | Medical Doctor

One question that comes up occasionally is, are physicians independent contractors? The answer to that depends on what kind of contract you signed. There are two types of contracts for doctors. You have employment agreements and then independent contractor agreements. With an employment agreement, you’re an employee. Then the contract you signed will specify all the terms of what the physician needs to do and what the employer needs to do. Then in an independent contractor agreement, many of those terms are the same. Still, there is much less detail in an independent contractor agreement for some employment agreements. Let’s briefly go through the two, and then we’ll get back to when a doctor is an independent contractor.

Independent Contractor Agreement for Doctors

The main differences are one, in a physician employment agreement, the physician is paid via W-2, and then the employer will pay for most of the things necessary to be a doctor: licensing, DEA registration, credentialing, privileging, practice insurance, and the expenses associated with being a doctor. You’re not paid as a W-2 employee in an independent contractor agreement. You’re paid via 1099, meaning the doctor would have to take out the taxes when they file their returns. Then, most of the time, the entity contracting with the independent contractor will not pay for the dues and fees and all the other expenses. 

So, the physician will be the one that pays for the license, DEA, and continuing medical education. There are also no benefits associated with an independent contractor agreement generally. So health vision, dental, life, disability, retirement, all that stuff, won’t be provided to the independent contractor. Another question is, what’s better for me, and what’s the point of both? I find it’s very specialty-dependent. Anesthesiologists and dermatologists, for whatever reason, have more independent contractor agreements than any other specialties.

Medical Practice Tax Considerations

Some of these practices only utilize independent contractor agreements because they can avoid paying employment taxes. These are essentially quasi-employment agreements. The doctors kind of act as employees, their schedules set for them. They’re using the employer’s facilities and supplies and staff. However, if a physician isn’t an independent contractor, they would generally create an LLC. Then they would run all of the payments through the LLC bank account. They would also be able to deduct the expenses, all the things that I went through before licensing CME, malpractice, insurance, tail insurance, all that kind of stuff as well. 

I mean, if I had to weigh one versus the other, well, usually, if the physician does have the choice between the two. It would depend upon the compensation structure of whether it would be worth it or not to accept an independent contractor agreement. If it’s based purely on net-collections, sometimes it is more lucrative to be an independent contractor. Still, suppose I have to give a percentage of which way a physician ultimately benefits more. In that case, it’s probably like 80/20 employment agreements because all the things the independent contractor has to pay for, those provided by the employer, add up over time. 

Then another thing to think about is some individual physicians can’t get some of the things that a more significant employer can. It isn’t easy to get personal health insurance feeling it’s expensive. Then all the other things, vision, dental, life, disability, malpractice, and tail insurance, add up quickly. Anyway, if a physician’s debating between the two, I wish I could give a better answer besides it. It depends, but that’s an overview of whether doctors are independent contractors or not. It just depends upon what kind of contract they signed.

Are Doctors Independent Contractors or Employees? | Independent Contractor or Employee for Doctors

Are physicians employees or independent contractors? Kind of a simple explanation. It depends upon the contract that you signed. Most physicians will be employees, meaning they must sign an employment agreement with a new employer. For some specialties like dermatology and anesthesiology. Those two are much more likely to be engaged as independent contractors than employees. Physicians can be hired as an employee and independent contractors as well. It just depends upon what contract agreement they signed. Let’s go through each one. 

Doctor as Employee 

In an employment agreement, the physician is an employee. They’ll receive a W-2, they’ll receive employee benefits: health, vision, dental, life, disability, and then have their medical license and DEA registration. There’ll be some amount paid for continuing medical education. They’ll also receive paid time off. Anyone who signed an employment agreement would typically get all the expected benefits of being an employee. The salary structure, usually, would be or could be a base salary,  based on net-collections, RVU. Or it could be a combination of all three. It just depends. But in a normal situation, if you’re joining a hospital, a physician-owned practice, or a healthcare network. You’re almost always going to be an employee. 

Doctor as Independent Contractor

Let’s take anesthesiologists, for instance. Maybe they’re moonlighting on the side, infrequently working for a group, or they signed an independent contractor agreement. So, the legal distinction between independent contractors and employees will be. Instead of receiving a W-2 at the end of the year, physicians would receive 1099. In that scenario, the employer will take no taxes from whatever they earn. They get a check. Then they’re responsible for paying the taxes to the state. 

If you’re in a state that has that, then obviously, the federal government as well. In an independent contractor agreement, physicians usually have to pay for their own licensing and DEA registration. They won’t get time off, and they won’t receive any benefits. The employer will usually pay for the malpractice insurance policy. But then you also must think about that scenario, alright, well, who pays for tail insurance? The normal compensation structure in an independent contractor agreement wouldn’t be a base salary but usually net collections-based or encounter-based. 

You would get a flat fee for doing a certain service, something like that. Ideally, in an independent contractor agreement, you’re supposedly able to get in and out of it without hassle. The schedule should be up to physicians. The IRS has a 20-factor test to determine whether someone is an employee or an independent contractor. The physician practices utilize independent contractor agreements. The benefit to them is they don’t have to pay employment tax on any of the wages they provide to physicians. And they don’t have to give any benefits.

Chelle Law will provide a physician contract review to identify the areas that could improve. And to assist you in negotiating the best contract possible today. 

Benefits Independent Contractors Get

The benefit to the physicians of utilizing the independent contractor agreement is usually a little better compensation. The percentages for net-collections might be a little bit higher. The RVU thresholds might be a little bit lower. And the compensation factor for the RVUs might be a little bit higher. They would generally create an LLC or something similar. Then be able to deduct all of the expenses associated with their practice for that employer. They could claim the things I just talked about. Licensing, DEA, if they have paid for malpractice, any business expenses, office, whatever it is. They could theoretically deduct those over time. 

Which of the Two Is Better for Doctors?

Which one is better? Being an employee or independent contractor? Generally, I find physicians will come out ahead under an employment agreement versus an independent contractor agreement. In some scenarios, they’re just not going to have the choice. The employer could say you will only be an independent contractor for us. We will never issue an employment agreement to you, take it, or leave it. And in that scenario, the physician must decide. 

One thing that comes up occasionally is someone who’s never been a 1099 employee. They’ve never been independent contractors before. They’re getting all this money from the work that they’re providing. Then at the end of the year, they think, oh man, I didn’t either budget for this. Or, I wasn’t sending in the quarterly earnings to the IRS. They get to the end of the year and haven’t saved all their money. So, ensure that you are budgeting if you’re working as a 1099 employee. Setting aside whatever amount is necessary to pay the taxes.

Worst Case Scenario for Independent Contractors

The worst thing that could happen for independent contractors. Get to the end of the year and not be there to pay taxes. So, can physicians be employees or independent contractors? Indeed, they could be either one. They could be both. If they work as employees somewhere else, moonlighting elsewhere as independent contractors. It simply comes down to what kind of agreement they signed. Independent contractor agreements are, in my opinion, much less complicated. Usually much shorter than employment agreements. Simply because they’re not going through all the benefits typical employees would receive from their employer. It’s generally easier to get through an independent contractor agreement, but certainly, there are negotiating points for each one. Anyway, that’s the difference between the two.

Physician Independent Contractor vs. Employee

Considerations for physicians as employee versus an independent contractor. Let’s kind of break down both. If you’re an employee, you will receive a W2 at the end of the year. It just summarizes all the compensation you’ve received and then all the taxes the employer withheld from it. If you’re an independent contractor, you won’t receive a W2. You’ll receive a 1099 at the end of the year. And that’s just a summary of the compensation received from that business. They withhold no taxes to the independent contractors. Let’s take the relationship between the two, and let’s start with when you’re an employee. 

Physician as Employees

You will receive all the benefits of normal employment when you’re an employee. They’re going to pay for your malpractice insurance. They will pay for your health, vision, dental, life, disability, retirement, privileging, credentialing, and continuing medical education. And also probably provide you with moving expenses and another signing bonus. You get a lot of ancillary benefits as an employee. 

Insurance in Independent Contractor Agreement

As an independent contractor, you’re not going to get any of those things. They’re not going to pay for your dues or fees. They may pay for your annual premium for your liability insurance, but I find that’s hit or miss. It’s very rare if you have a claims-made policy that they would pay for tail insurance. So, that’s something you’ll have to worry about as well. And then all of the other things, you’ll have to pay for yourself. You must find your own health, dental, and vision insurance.

You get disability, life, you set up your retirement, whatever you decide which way to go. All of that falls upon the physicians if they’re a  1099 independent contractor. Now, for some, ultimately, you come out ahead compensation-wise. As 1099, you can deduct all the things I just discussed. There are some tax advantages to being an independent contractor. I’m not a tax attorney. I’m not going to get into the specifics of that. But I would suggest reaching out to an accountant with experience with that. And can kind of walk you through what is the most advantageous compensation/tax situation for you. It’s going to be very specific to the job services. If someone potentially has the option of either being an employee or an independent contractor, they have to consider several factors.

What Situation Is Best for Your Medical Practice?

I find it’s rare for it to be the option of the physician. Typically, the position is either going to be this or that. It’s not up to you. I mean, it’s very rare when I review a contract agreement that we have to discuss. Alright, well, I do have two options and two contracts. Which way do you think I should go? Most physician-owned businesses simply don’t give the option to the physician. It’s either one or another. Now, maybe you have two separate job services, an independent contractor and one as an employee. Then you’ll have to determine what situation is best for you. But it depends upon the physician. I find some physicians classified as independent contractors do some things wrong.

One, they don’t know where to go to get the things a normal employer would provide them. So, all those insurances and retirement and that type of thing. And they’re just not the type of person who is good at handling that side of their life. Then two, with no taxes withheld from their compensation, I find many of them spend what they get. Either they’re not giving their quarterly payments to the government. Or at the end of the year, they have an enormous tax bill they were maybe shocked to pay out. So, suppose you are going to be an independent contractor. In that case, you must be on top of setting aside an amount from each paycheck you’re getting from the business. That way, at the end of the year, you’re not entirely screwed in getting together all the money you need to pay for your taxes.

Distinction Between the Two

It’s probably safer and more secure to be an employee versus an independent contractor. Usually, the notice required to terminate the agreement is shorter than an independent contractor. That means either party can get out of the agreement without much notice to the other. Now, as a physician, continuity of care always has to be taken into account. If you’re an independent contractor unless you are in a specialty where it’s just like shift work. Or maybe if you’re anesthesia and pop in, you do the case and leave. But if you are a physician with a patient base and providing care to them, if you tell your employer, “I’m not coming in tomorrow, there will be some continuity of care issues.” It could lead to some board complaints or other problems down the road. So, it would help if you considered that as well. 

Notice Period Requirement

What is the notice required to terminate the employment contract? It’s usually 60 to 90 days if you’re an employee. Whereas if you’re an independent contractor, you don’t see many notice periods less than 30. Still, sometimes it might be as low as two weeks for an independent contractor agreement. So, that’s a little breakdown between having an employee and independent contractor status in physician practice. As I said before, you need to look at the situation. And determining compensation-wise doesn’t make the most sense considering the tax deductions and that type of thing.

What to Know Before Signing Your First Physician Contract | Contracts

What should you know before you sign your first physician employment contract? This question is a broad topic, but we’re going to hit the main areas, things to think about before signing your first employment agreement. 

Ways to Determine if Compensations Offered Are of Fair Market Value

First, determine whether the compensation you’re being offered is fair market value. There are a couple of, I guess, good ways of going about trying to find that. Well, the MGMA, the medical group management association, collects annual salary data from across the country. If you can access that, they have a lot of good information about total compensation, average net-collections, and average RVUs generated by specialty. It’s hard to get that info sometimes.

I mean, if you Google around, you might be able to find some of the compensation data that’s a couple of years old. Or you can talk to someone who has access to the data, like for our firm, we have access to the data. So, we can tell the physician exactly what the numbers say. Now, that’s certainly not the be-all-end-all. There are other services out there that offer something similar. But I also think it’s limited because some specialties have a tiny sample size. In addition, just total compensation should not be the determining factor when looking for a job. Alright, so that’s compensation. 

Another way of thinking about it would be, if you have classmates in your training program, you need to ask them what they’re receiving. It’s going to vary based upon geography and then setting. Are they going into a hospital network? Are they going into the federal facility? Or are they going into private practice in some way? It is good to speak to people you train with to see what they’re being offered. And then mentors are another excellent place. 

How To Terminate Contracts

If someone is already out and maybe they’ve been a teacher for you or a mentor, ask them if they’re willing to talk about the type of compensation they’re receiving. Next would be how to terminate the agreement. Something you need to consider. There are four ways to terminate a contract if the initial term ends. Let’s say you have a two-year contract, and no language states it automatically renews. It just ends, and the contract terminates. You can complete a contract by mutual agreement. Then you can also terminate a contract with-cause. So if one of the parties breaches the contract, either party can terminate the contract if the other party doesn’t fix the breach. It’s called cure. And then lastly, and this is what I want to hit on, is without-cause termination. 

Every contract you sign must have without-cause termination in it. There are minimal circumstances where no without-cause termination would be okay. If you’re a J-1, that one would probably benefit you not to have that in there. But without-cause termination means you can terminate the contract at any point, for any reason, with a certain amount of notice to the other party. Contracts that don’t have without-cause termination, meaning you must work out whatever the initial term is. There’s no way of terminating the contract for any reason. They would have to breach it if you wanted to get out of it.

Why Do I Need No Cause Termination on My Contract?

The reason why you need that is, let’s say you start with the job, you’re paid on productivity, and the volume is not there. It’s not your fault, or maybe the employer brought you in telling you it was going to be one way, and the call is just excessive. Or perhaps it’s just a terrible personality fit; whatever reason you’re not happy in that job, you need the ability to get out of it if you want. So, it would be best if you had without-cause termination in the contract. Somewhere between 60 to 90 days is standard for physicians.

Legal Mistakes Physicians Make Are Not Going Through Non-compete

Alright, next, the non-compete. A non-compete says the physician can’t work after the contract terminates for a period within a specific area. For example, most non-competes are one year, sometimes up to two.

And then, a reasonable mileage would be 10 to 15 miles from your primary practice location. Often, the employer will try to tag multiple locations. So, maybe if you worked in three outpatient clinics in a hospital or something. They try to attach it to all four of those, or perhaps the employer has many facilities in the area. You’ve only worked at one of them, and they might try to attach it to all the facilities they own. That’s not fair either. You want to try to get it to one year, 10 to 15 miles from maybe at most two locations. Anything beyond that would be considered unreasonable. There are a few states where it’s entirely unenforceable to have a non-compete. But for the most part, most states allow non-competes for physicians.

Health Care Malpractice Insurance, Do Not Practice-Without It

Lastly, with malpractice insurance, the employer should almost always pay for your underlying annual premium. How much they must pay each year to insure you? Depending upon the policy, whether it’s a claims-made or an occurrence-based approach, it will determine if you must pay what’s called tail insurance.

If it’s a claims-made policy, tail insurance is necessary. A good rule of thumb is that tail insurance costs about twice your annual premium. In some specialties, it can be costly. OB-GYN, some of the higher-level surgical things could have tails that are fifty to a hundred thousand dollars. You want to avoid having to pay for that. So, make sure that there’s either a fair split between the employee and employer or having the employer pay the total cost of the tail insurance, or there’s also insurance called occurrence-based coverage. And in that scenario, tail insurance is not needed at all. It’s about a third more expensive than claims-made, but you won’t have to pay for tail insurance in that scenario.

Now, you probably need to think about dozens of other things. I would say, in my mind, those are probably the foremost important. But you have benefits, bonus structure, contract length, other restrictive covenants with the non-solicitation agreement, non-disparagement, confidentiality, your hours worked, and the call. I mean, you need to think about a ton of things. So, I would suggest reaching out to someone with experience reviewing contracts. I mean, when you’re signing a contract that could be worth a million dollars, at least in my opinion, it would be foolish not to get it looked at by someone who knows what they’re doing.

Can an Employee Terminate an Employment Contract? | Employment Contracts Termination

The short answer is, obviously, yes. However, it will be determined based on the terms of the contract. In any employment contract, there will be a section that deals with the times, the employment contract’s length, and then termination, so how that contract ends. Let’s first talk about the terms of the agreement.

Most employment contracts will have a date, meaning it’s a year-long, two-year, or three-year contract. Then if the agreement doesn’t terminate, it will state a language. It will automatically renew for successive one-year terms. In that case, if a contract isn’t closed in another way after the initial period ends, it’ll just continue forever until terminated.

I would say there is a rarely fixed term with no language about automatic termination. If it’s just a two-year fixed term with no automatic renewal, it would just end at the end of two years, and that would be it. The parties can go their ways. 

What Are the Reasons for Contract Termination?

Now, regarding terminating the contract, the first part is that if there is no renewal, it ends, and the employment contract ends. Second, by mutual agreement. Suppose the employer and the employee agree that the relationship isn’t working. In that case, they can always, by contract, decide to move on, and then that’s it, you can move on. Next would be with-cause termination. In this case, if someone breaches the employment contract, there’ll be language that states why the employer can fire the employee. If you need a license to perform the activity and lose your license, or if insurance is required and you’re uninsurable. There are, I guess, vague behavioral clauses. 

If you’re disabled, you die, I mean, ordinary things, but there should also be a part called a cure. And so, in that case, if one of the parties believes the other party is in breach of an employment contract, the most common reason is just payment concerns. Either someone is unpaid, they were promised an amount in the associate employment agreement, or maybe the timing. Also, the bonus payment is involved, and there is disagreement over the professional owed amount. That’s always a big, I guess, the reason why there would be an allegation of breach of contract. 

What Happens if Breach of Contract Is Committed?

If you believe the employer breached an employment contract, you’d have to provide them with written notice. And then the cure period means the employer would have a period to fix whatever the breach of associate contract is. Typically, that’s somewhere between 15 to 30 days. And the same can go for an employee. 

If the employer thinks the employee is in breach of contract, they give them written notice, and then the employee has 15 to 30 days to fix the breach. If the breach is unfixed, the other party still believes the other party is in breach. Usually, that party has the option to terminate the dental associate agreements immediately. The last and most common way in most employment contracts is without-cause termination. There’ll be language that states that either party can terminate the employment agreement at any time, for any reason, with a certain amount of notice to the other party.

Typically, it would be somewhere between 30 to 90 days. Suppose the professional is unhappy and wants to move on. In that case, they give written notice saying I’m utilizing the without-cause termination notice in the employment contract. Then they must work out for 30, 60, or 90 days. Then at the end of that period, they can move on without any concerns regarding terminating the employment contract. Yes, an employee can terminate an employment contract, but they must follow the terms of the agreement. 

Employment Contract Termination and Non-Compete Clause

Just because an employee terminates, the contract doesn’t mean it necessarily ultimately ends at that point. They could be required of the employee if they terminate the contract. Many times, if given a signing bonus or relocation assistance, The employee would have to pay back a prorated portion of that if they left within the initial term of the employment agreement. Others could have non-compete associated with it.

So, just because an employee terminates the contract doesn’t mean that the non-compete doesn’t apply. It does, or at least it does in most circumstances if you’re in a state where non-competes are enforceable. How long will that last if there is a geographic restriction and then some temporary condition? That will continue even if the employee terminates the contract. If some malpractice insurance is involved and tail insurance is needed, it will say who must pay for that in the contract. Employees may also be responsible for that if they terminate the agreement. Although the employee can terminate the employment agreement, it doesn’t mean that there aren’t at least some strings attached. 

One of the highest priority things I look at in the contract when I’m going over it with a professional. How do you get out of the agreement? And then what do you have to do if it ends within a certain period? In that way, the employee can know that I need to set aside this amount of money if I must pay for tail insurance or if I must pay back the signing bonus. So, they’re essential discussions and things employees could negotiate before signing any employment agreement. Hopefully, that was helpful—kind of an overview of the termination of an employment contract. 

How You Can Terminate an Agreement

You probably shouldn’t, and your employment contract probably prohibits it. In any agreement, it’s going to state how you can terminate an agreement. It could be for-cause, without-cause, mutual termination, or maybe the initial term ends. But in most cases, I mean most contracts are terminated without-cause termination. Without-cause termination, either party can terminate the contract with a certain amount of notice to the other. Typically, around 30 to 90 days is a standard amount for most employment agreements. Suppose you are an employee, and for whatever reason, you don’t want to work for the employer anymore. In that case, you must follow those terms written on the without-cause termination notice.

And it always needs to be written. It’s going to state that you must write a letter. And then, it will also say if it’s a 60-day without-cause termination. The employee has to provide it 60 days prior, work it out, and after the 60 days are over. The employees are free to go once the contract terminates, and the employees are free to move on. They want to go where they want to go after that—considering if there’s a non-compete or a non-solicit. Still, we’re not going to get into that today. 

How Do Employees Provide a Notice?

The most crucial part as far as this goes is that it will be called “notice” or “notices.” It’s toward the back of the employment agreement initially provided by the company. And this will state who, then how you need to provide notice if there is communication.

An employee could provide in writing a certified letter or overnight hand delivery of whatever termination notice you’re going to provide. And that would then be considered adequate notice. Very few contracts allow email as an effective notice medium. If you gave, let’s say, you wrote an email telling your employer. I’m giving you without-cause termination notice, and I have 60 days. X will be my last day of work. I appreciate the opportunity. Well, if the email is not an effective communication medium within that notice section, that’s not considered effective notice. And then, the employer could make you work for another 60 days until you provide adequate notice. So, that’s the essential part. You need to look in the notices section and determine if the proper way to terminate the employment agreement includes email. 

I can tell you if I review a hundred employment contracts, 98 of them will not include email or fax. And you certainly can’t just verbally tell your employer you’re leaving. It must be in writing. And most often, it has to be sent either by certified mail or hand-delivered. It depends on whether you work for a small practice or a vast conglomerate with locations in every state. It’ll be impossible to hand-deliver the notice if you must provide notice to the headquarters, and that’s halfway across the country. 

The Consequence of Notice Not Received

To be safe for the most part, you need to write a letter. You’ll have to print it out and send it via certified mail that the employer is using. Usually, it’s one or two. You must send it to the owner if it’s a smaller practice. If it’s a big conglomerate, you have to send it to probably your boss plus the legal apartment of the company as well. If you look through, how much notice do I have to provide? And then how do I have to provide effective notice? You’ll be safe. 

I have a couple of scenarios, and people have called me after the fact. And they’ll say I sent a letter to my employer’s email. I told them I was going to terminate the employment contract, and they didn’t say anything. I assumed that my contract would end on a specific date. The employer was mad about the employee leaving the company. The employer ticked off that they were leaving. So, what they did was they just sat on it for 45 days. And then, 15 days before the physician thought he was going to leave, they said, you didn’t provide us with effective notice.

Providing Notice Through Email

Email isn’t an effective form of communication to provide notice. You owe us another 60 days until you give us adequate notice, meaning a written letter sent via certified mail. And so, the physician had already lined up another job, he had a start date in mind, and then he had to return to the new employer. He would say, I apologize; I will have to delay my start date by almost two months. That was a tough pill to swallow for the physician. If you follow the terms of the notice section, then you should be okay. Mean, you need to think about a ton of things. So, I would suggest reaching out to someone with experience reviewing contracts. I mean, when you’re signing a contract that could be worth a million dollars, at least in my opinion, it would be foolish not to get it looked at by someone who knows what they’re doing.

Reach Out to an Employment Contract Attorney 

Before signing an employment contract, you must know all the contract benefits you are entitled to. It means reading your contract carefully and asking questions where needed. It will help you avoid misunderstanding. It will also enable you to enjoy a long and prosperous medical career. Another consideration is whether the Agreement contains a non-compete agreement.

One way to ensure all contract benefits are offered as they should is by having an employment contract lawyer review your contract or independent contractor agreement. This way, the attorney can guide and advise you accordingly. Attorney Robert Chelle is a professional contract lawyer who can help you review the benefits under your contract. He has helped many healthcare professionals, and he can help you too. Feel free to reach out for assistance today.