What is the Best Without Cause Termination Length in a Physician Contract? | Physician Dismissal
Nearly every physician employment contract contains a provision that allows either party to terminate the agreement for any reason with a certain amount of notice to the other party. The typical amount of without-cause termination notice is either 60 or 90 days. Therefore, the initial term of the agreement is meaningless if either party can terminate the agreement for any reason at any time with proper notice.
Types of Contract Termination
Terminating employees is an important business decision. There are two types of terminations: with-cause and without-cause. To fire someone for violating company policies or committing unethical acts can be justified as termination with-cause. But firing them for poor performance alone may not be enough reason to discharge the employee. This type of dismissal should instead fall under “termination without call.” You must understand which kind you’re terminating before deciding whether it would adversely affect other departments within your organization.
Termination Without Cause: Common Among Private Employers
Terminating an employee without-cause is a common practice among private employers. This type of dismissal can occur for several reasons, such as budget problems or operational restructuring and downsizing. The phrase “termination with-cause” might be more accurate since the employer has grounds to fire someone who isn’t performing up to expectations or meeting certain criteria in their contract. However, they do have this right under work-at-will laws present in some form across all 50 states unless moving forward would violate state or federal employment statutes.
How Does a Physician Provide Notice?
There will be a Notice Section in every physician employment contract. This Section will detail how notice can be given: personal delivery, via certified mail, email, fax, etc. The physician must provide written notice of intent to terminate the agreement. Verbal notice is not sufficient.
Considerations with Longer Notice
- Greater than 90 days’ notice
- More time to prepare for a new job (travel, credentialing, etc.)
- Awkward work environment
- Hostility from employer
Considerations with Shorter Notice
- Less than 90 days’ notice
- Less interaction with the employer
- The new employer does not have to wait a long time for the physician to start
- Not enough time to prepare for a new job (tail insurance, credentialing, housing, etc.)
Physician Contract Term Length
The term of the employment agreement refers to how long the contract lasts. Most physician employment agreements are between 1 to 3 years, with automatic renewal after the initial term ends.
Contract duration clauses are often found in employment contracts to outline how long the contract will last. This is typically done for an indefinite time, but if the contract stated a specific date on when it would end, that could also be included. An example of this might be someone being hired with no specified term length and coming back after completing their degree. Or maybe they’ve reached another goal set by both parties so work can resume again more easily without starting from scratch every time something happens outside their control. Things like graduating college in four years instead of six because you could go part-time while working during your first two years before going full-time once classes stopped for summer break.
Using a Duration Clause
You would be wise to use a duration clause when defining an agreement’s effective period. This can help you protect your interests should the contract need early termination and also helps clarify what type of early termination is possible for both parties involved. It includes things like whether or not it will end on its own accord at some point, if any specific events trigger an automatic expiration date (such as a breach), and more!
When creating a contract, both parties should know what the terms are. If there is a duration clause in place, it’s common for either party to be able to renew with one another if they desire. And as long as you spell out your conditions within the duration clause, this can also prevent confusion about when their time will expire and how much notice must be given before termination of service takes effect.
Not every contract has a precise end date, but those that do usually allow flexibility on behalf of both parties who may desire to continue after expiration or wish not to terminate prior to its conclusion. You could always include these personal clauses into the main document, explaining them clearly, so everyone knows where they stand at all times- including yourself!
For Cause Termination
Companies usually have an employee handbook to outline the standards of behavior expected from their employees. A separate code of conduct may also be in place, outlining specific incidents for termination should they happen within a company or on its premises. Common causes that lead to immediate dismissal include violence and drug abuse. Although, theft is not uncommon either, as well as sexual harassment, depending upon the severity and number of offenses committed by one individual. The more severe cases typically result in automatic termination with lesser violations which might require progressive warnings before finally being terminated if it reaches a point where other options are no longer viable.
When Does Term Length Matter?
The one instance where the initial term of the agreement matters is if the physician must repay a sign-on or relocation bonus if they leave within the initial term of the agreement. The agreement will dictate how much of the sign-on bonus is forgiven based on the physician’s employment length. For instance:
- If the initial term is 24 months, 1/24 of the sign-on bonus is forgiven monthly.
- If the initial term is 36 months, each year completed will forgive 1/3 of the sign-on bonus.
- If the physician does not complete the initial term, they must repay all the sign-on bonuses.
Set Term With the Employer
Simply put, not all employees enjoy the same protections when it comes to employment. This is why it’s so important for individuals negotiating a contract to be fully aware of their options before committing themselves and signing on that dotted line. For example, an at-will employee can get let go with no notice if they don’t do what their employers want them to—think back from your favorite show where someone gets fired because she didn’t sell enough lemonade in one day! Meanwhile, some contracts specify fixed terms, like two years or more. These agreements will detail specific reasons and probation periods (if applicable) for termination without-cause should either party fail to uphold certain obligations set forth by this agreement.
When an employee must quit their job, they are obligated to give notice that the relationship is ending. It’s typical for a physician to provide between 60 to 90 days’ notice before terminating employment so both parties can prepare accordingly.
An employment contract is a formal agreement between an employee and employer in which the two agree to work together. Fixed-term contracts are one type, but there are other types for jobs with more fluid timelines, such as hourly wages or commissions based on performance.
Valid Reason Needed to Terminate Physician in a Fixed Agreement
Employers can terminate employees early in a fixed service contract if the employer provides valid reasoning and proof. However, employers must provide evidence that an employee was not fulfilling their obligations before termination can occur. Suppose an employee wasn’t providing services agreed upon in a contract but had been given sufficient time for absences due to illness or injury. Then they could cancel it without giving notice. However, if either party provides no reason, this would fall under “constructive dismissal.”
An employee who signed a fixed term of employment has certain rights when considering being dismissed from work earlier than expected based on agreement with the company during negotiation stages- one such right relates to whether or not parties met duties as per the original terms set.
Physician Employment Agreement Review
Contracts are a pervasive and obligatory part of nearly all business and legal transactions. Well-drafted contracts help to enumerate the responsibilities of the involved parties, divide liabilities, protect legal rights, and ensure future relationship statuses. These touchstones are even more crucial when applying their roles to the case of a physician employed by a hospital, medical group, or other health care provider. While contract drafting and negotiation can be long and arduous, legal representation is necessary to protect your rights.
The present-day conclusion is simple: a physician should not enter into any contract without having the physician contract reviewed by legal counsel.
There is simply too much risk for physicians to take contract matters into their own hands. In addition to the specific professional implications, contract terms can significantly impact a physician’s family, lifestyle, and future. There are many important contract terms and clauses which can present complex and diverse issues for any physician, including:
- Non-compete clauses
- Verbal guarantees
- Insurance statements
Additionally, often the most influential terms and clauses in any employment contract are the ones that are not present. With the advent of productivity-based employment agreements, any physician must review an employment agreement before they execute it. Attorney Robert Chelle has practical experience drafting and reviewing physician contracts for nearly every specialty.
Physicians Can Benefit From a Thorough Contract Review
New residents, attending physicians, doctors entering their first employment contract or established physicians looking for new employment can all benefit from a thorough contract review. By employing an experienced attorney for your representation, you can ensure that you will be able to fully understand the extensive and complex wording included in your contract. By fully understanding the contract, you will be in a better position to make your own decision on whether or not you want to enter into the agreement, which will affect your career life for years to come.
The financial benefits gained from having your contract reviewed and negotiated by an experienced healthcare attorney far outweigh the costs associated with a review. You are a valuable resource, and you should be treated and respected as such. Attorney Robert Chelle will personally dedicate his time to ensure that you are fully protected and assist you in the contract process so that your interests are fairly represented.
Every physician’s contract is unique. However, nearly all contracts for health care providers should contain several essential terms. If the contract does not spell out these crucial terms, disputes can arise when there is a disagreement between the parties regarding the details of the specific term. For instance, if the doctor is expecting to work Monday through Thursday and the employer is expecting the provider to work Monday through Friday. Still, the specific workdays are absent from the agreement. Who prevails?
Crucial Terms in Contracts for Physicians
Spelling out the details of your job is crucial to avoid contract conflicts during the term of your employment. Below is a checklist of essential terms that contracts should contain (and a brief explanation of each term):
- Practice Services Offered: What are the clinical patient care duties? Are you given time to review administrative tasks? How many patients are you expected to see (like in pediatrics)?
- Patient Care Schedule: What days and hours per week are you expected to provide patient care? What is the surgery schedule? Are you involved in the planning of your schedule?
- Locations: Which facilities will you be scheduled to provide care at (outpatient clinic, surgical sites, in-patient services, etc.)?
- Outside Activities: Are you permitted to pursue moonlighting or locum tenens opportunities? Do you need permission from the employer before you accept those practice medicine-related positions?
- Disability Insurance: Is disability insurance provided (short-term and long-term)?
- Medical License: Will the practice offer reimbursement for your license? Will an advisor be provided?
- Practice Call Schedule: How often are you on call (after-hours office call, hospital call (if applicable))?
- Electronic Medical Records (EMR): What EMR system does the practice of medicine use? Will you receive training or time to review the system before providing care?
- Base Compensation: What is the annual base salary? What is the pay period frequency? Does the base compensation increase over the term of the agreement? Is there a yearly review or quarterly review of compensation?
- Productivity Compensation: If there is productivity compensation, how is it calculated (wRVU, net-collections, patient encounters, etc.)? Is there an annual review?
- Practice Benefits Summary: Are standard benefits offered: health, vision, dental, life, retirement, etc.? Who is the advisor of human resource benefits?
- Paid Time Off: How much time off does the job offer? What is the split between vacation, sick days, CME attendance, and holidays? Is there an HR guide?
- Continuing Medical Education (CME): What is the annual allowance for CME expenses, and how much time off do they offer?
- Dues and Fees: Which business financial expenses are covered (board licensing, DEA registration, privileging, AMA membership, Board review)?
- Relocation Assistance: Is relocation assistance offered? What are the repayment obligations if the agreement terminates before the expiration of the initial term?
- Signing Bonus: Is an employee signing bonus offered? When is it paid? Do you have to pay it back if you leave before completing the initial term? Are student loans paid back? Is there a forgiveness period for student loans?
- Professional Liability Insurance: What type of liability insurance (malpractice) do they offer: claims-made, occurrence, self-insurance?
- Tail insurance: If tail insurance is necessary, who is responsible for paying for it when the agreement terminates?
- Term: What is the length of the initial term? Does the contract automatically renew after the initial term?
- For Cause Termination: What are the grounds for immediate termination for-cause? Is a review provided to dispute the termination?
- Without Cause Termination: How much notice is required for either party to terminate the agreement without-cause?
- Practice Post-Termination Payment Obligations: Will you receive production bonuses after the agreement ends?
- Non-Compete: How long does the non-compete last, and what is the prohibited geographic scope?
- Financial Retirement: Is a financial retirement plan offered?
- Non-Solicitation: How long does it last, and does it cover employees, patients, and business associates?
- Notice: How is the notice given? Via hand delivery, email, US mail, etc.? Does it have to be provided to the employer’s attorney?
- Practice Assignment: Can the employer assign the agreement?
- Alternative Dispute Resolution: If there is a conflict regarding the contract, will mediation or arbitration process be utilized? What is the standard attorney review process for conflict? Who decides which attorney oversees the process?
Coming into a new organization with a favorable contract can put the physician in a positive financial situation for years to come. Before you sign the most important contract of your life, contact Attorney Robert Chelle for assistance.
If you have questions about your current medical malpractice policy or are interested in having your employment agreement reviewed, contact Chelle Law today.
Other Blogs of Interest
What is Without Cause Termination in a Physician Contract? | Physician Termination Agreement
What is without-cause termination in a physician contract? Essentially, it allows either party to terminate the contract agreement at any time. For any reason, with a certain amount of notice to the other party. Without-cause termination is essential because if a physician enters a job, everyone expects a position to be great, right? You don’t take a job hoping you want to leave immediately, but things change, or it certainly can be different once you start.
Let’s say a physician takes a job. After a few months, it’s clear that it’s not a good cultural fit, or maybe they’re on productivity compensation. Whatever the reason, they’ve decided. I do not want to stay here. And so, without-cause termination will allow that physician to give notice, work out a period, and then move on.
Average Length of Without Cause Termination Notice
The average length, or at least the standard for most without-cause termination notice periods, is somewhere between 60 to 90 days. Anything higher than 90 days causes a couple of problems. Anytime somebody gives notice, the dynamics will change between the physician and the other physicians or the organization itself. You’re no longer in the long-term plans. Sometimes, there can be insufficient blood as well. And so a shorter period to have to work out whatever is advantageous. It’s just better. If you had a 180-day notice, you’re there for six months dealing with a potentially awkward environment.
Another thing to consider is the longer the lead time, the harder it is to find a new job. If you’re coming out of training, everyone comes out at the same time. So, all employers understand this. And there’s a rhythm to when they offer jobs and start onboarding and all that type. If you’re out, you’ve been out for a while. And then you decide to switch, it can be at any time, but most people don’t post for jobs six months in advance. They will say, we have a need now. If you have a six-month notice requirement for your job, you may lose out on job opportunities because they need someone much faster than six months.
And so, they’re going to find somebody and leave you in the dust.
Two main reasons: don’t put yourself in a toxic environment for an extended period, and then two, help shorten it down so that you can find a new job more efficiently. In the physician contract, it’s going to state how much notice you must give.
How Much Notice Time Do You Need to Terminate an Agreement?
And let’s say it’s 60 days. This example will also state that it must be in writing. So, you need to find in the physician contract that it’ll be under the termination section. And it will say without-cause termination, for no good reason, or something like that. And then it’ll just state that either party can terminate the contract agreement with a certain amount of notice to the other, as I said before, in 60 days.
There’s another section in your physician contract called either notice or notice. And it will state exactly how you can provide notice to the employer. It’ll say whether it needs to be certified mail or hand delivery. Most physician contracts don’t have email. Indeed, there’s no verbal acknowledgment, no fax. If you were to tell your boss, hey, I’m leaving in 90 days, but not give them a written letter that states you’re going. As a result, they could potentially force you to work for another 60 days until you give them adequate notice. So, those two sections.
Look into the without-cause termination section to see how long or how much notice you must give. And then, look in the notices section and ensure that you can provide adequate notice. I’ve had a couple of times where physicians have called me after the fact and said I emailed my boss. It was 60 days’ notice; they waited 45 days and then came back and told me I didn’t provide them effective notice. And now, they’re saying I must give them another 60 days. Well, it’s vindictive on the part of the employer. They were mad and did that just to kind of screw with the physician.
What Happens if a Physician Do Not Give Effective Notice
But if you don’t give adequate notice, it doesn’t count. Ensure you’re both offering the right message and following the notice section. Now, what happens if you decide to leave a job and don’t give the proper amount of notice? Well, many physician contracts will have penalties associated with that. For instance, a common way of doing it would be to penalize the physician. They didn’t give enough notice of whatever their average daily rate was for every day. If it was 60 days and they only gave 30 days, they’d owe 30 days of their average pay to the employer. Average pay could be a significant amount of money.
You want to ensure that you give as much notice as required in that without-cause section. Therefore, you can’t be penalized. Employers could come after you for recruitment costs, locums to cover your shifts, or if you’re an outpatient or something like that. It’d be rare for them to do that. However, you are opening yourself up to liability if you fail to give them the specified amount of notice in your physician contract.
Physician Contract Questions?
Contract Review, Termination Issues and more!