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.
Other Blogs of Interest
- What to Know Before Signing Your First Physician Contract | Contracts
- What Can You Negotiate in a Physician Contract? | Doctors Contract Negotiations
- Will I Be Paid My Bonus if I Terminate the Physician Contract Early? | Termination of Contracts
Can Physicians Terminate a Contract Without Notice?
Can a physician terminate an agreement without notice? In my mind, that just simply means can they leave a job without any amount of notice and then move on without repercussions? The answer is that you can go without notice. Still, there will be legal implications, and you are opening yourself up to liability for a few reasons.
The first reason is that there will be a termination without-cause clause in almost any physician employment agreement. Sometimes it’s called for no good reason. And in that scenario, the physician contract will state that either party can terminate the agreement with a certain amount of notice to the other party. So, terminated physician contracts don’t need a reason, no one has breached the physician contract, or maybe nothing is wrong.
It’s just the physician who wants to move on. Or maybe the employer is laying off the physician due to lack of volume or something like that. The physician contract will state either party can terminate the physician contract for any reason. However, they must provide a certain amount of notice, as stated in the physician employment physician contracts. Most of the time, it’s either 60 or 90 days. That’s the standard. In that scenario, let’s say the physician wants to leave.
They would, in writing, provide notice to the practice that says, under the physician contract, I’m giving you 60 days’ notice. My last day of providing care will be X date. And then you move on with your employment. Now, just because the physician contract was terminated without-cause doesn’t mean there aren’t some problems for you or at least issues that you need to deal with when it’s over with
Things to Consider in Terminating a Physician Employment Contract Agreement
Some things that will follow when you terminate a physician’s contract without-cause, or at least usually follow, there will be a restrictive covenant. And that is either a non-compete or non-solicit in the physician’s agreement. In terminating an employment agreement without-cause, they will still apply. And so, you need to think about, alright, what are the restrictions on my practice after I leave the employer? Many employers will have repayment obligations for bonuses they’ve paid out.
If you start employment, then you leave within a year or two. The employer will prorate that bonus based on how long you’ve been there since you started. Let’s say you were given a $30,000 signing bonus and your initial term was three years. Then the employer may say that one-third of that $30,000 is forgiven yearly. So, if you were to leave between years two and three, you’d owe them back $10,000 at the end of the physician contract. And same goes for relocation assistance. They gave you some money upfront. Usually, it’s forgiven over time. Then you’d have to pay back whatever the outstanding amount is.
What if Your Physician Employment Contract Includes a Productivity Bonus?
Another thing to think about if you terminate a physician contract without-cause is if you have a productivity bonus in the physician contract, either net-collections or RVU. Many of them will state that if you’re not employed when the compensation is given out, you’re not going to get it. Or maybe if it’s like an annual bonus, they won’t prorate it either. The timing of when you give that notice is essential so you’re not losing out on whatever productivity bonus you earned.
What Will Happen if Your Medical Contract Contains a Claims-Made Policy?
And then kind of the last thing that can usually follow is if you have a claims-made policy, who’s going to pay for tail insurance. If the physician is responsible for tail insurance, they must pay that amount before the contract ends. And that can usually be somewhere between ten and a hundred thousand for OB-GYN or maybe a high-level surgeon.
Is It a Good Idea to Terminate a Physician Contract Without Notice to the Employer?
What happens if you don’t provide notice to the employer? In the physician contract, as I said before, there will be a clause that says you can terminate the physician contract without-cause with this amount of notice. So, what happens if you don’t give any notice? You walk in on a Monday and say this job sucks. I’m out of here. You walk out, and that’s it. Well, you’re in breach of the physician’s contract. What are some things that can happen when you breach physician employment contracts? Well, the employer could assert damages.
Meaning lost revenue for the patients that you would’ve seen that they don’t have coverage for recruitment fees for replacing the physician. Also, expenses are incurred when there’s no physician to be there with staffing or vendors. And so, how that would work is that the employer would sue the physician for breach of physician contract. Then they would claim those damages, then fight it out in court, or if there’s an arbitration clause, they will arbitrate. It’s a terrible idea to walk out on an employer if there’s a without-cause termination clause.
Physicians, Remember Continuity of Care for Patients
Another consideration is continuity of medical care for your patients. If you were to leave a job without providing any notice, what’s going to happen to your patients? Although employed, they may be your patients. They are the employer’s patients. So, the physician couldn’t just up and take all the patients to a new practice for a couple of reasons. There’s probably a non-compete and non-solicit that would prohibit that in some legal way.
Now, patients can choose who their provider is, and I’m not going to get into that right now. But the continuity of care aspect is something that needs to be considered. Are there bridge scripts written if they’re maybe psych patients absolutely in need of medication? Has there been any opportunity to refer the patients out to someone else? Is there someone in-house who can take over the patients? Not only could you get sued for damages, but if you just up and leave all the patients in the lurch, you’re also asking for a board complaint, and nobody wants to deal with their state board.
I promise you I’ve represented hundreds of professionals before the licensing boards, and it’s not a fun process for a provider. So, can you terminate a physician’s employment contract without any notice? Yes, but it’s a terrible idea that could open the physician to many problems.
What is the Best Without Cause Termination Length in a Physician Contract?
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 without-cause termination notice is 60 or 90 days.
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 to discharge the employee; this type of dismissal should instead fall under “termination without a call.” You must understand which kind of your termination before making a final decision on whether or not it would have adverse consequences in other departments within your organization.
Termination Without Cause
Terminating an employee without-cause is a common practice among private employers. This dismissal can occur for several reasons, such as budget problems, 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 specific criteria in their contract. However, they 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 law.
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
A new employer does not have to wait a long period of time for the physician to start.
Not enough time to prepare for a new job (tail insurance, credentialing, housing, etc.)
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 amount of time. Still, if there was a specific date stated on when it would end, that could also be included. An example of this might include someone hired with no specified term length. And they are then coming back after they have completed their degree or reached some other goal set by both parties. So that work can resume more easily without starting from scratch whenever something happens outside their control, like graduating college in four years instead of six. You could go part-time while working during your first two years before going full-time once classes stop for summer break.
Termination Without Cause
You would be wise to use a duration clause when defining an agreement’s effective period. It can help you protect your interests should the contract need early termination. It also helps clarify what type of early termination is possible for both parties involved. And it includes things like whether or not it will end on its own accord, 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. However, those usually allow flexibility on behalf of both parties. Who may desire to continue after expiration and wish not to terminate before 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. Still, 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 the Length Does 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 each month.
- If the initial term is 36 months, each year completed will forgive 1/3 of the sign-on bonus.
- The physician does not complete the initial term, they must repay all the sign-on bonuses.
Set Term With the Employer
But, not all employees enjoy the same protections when it comes to employment. This is why it’s so essential 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.
Termination | Terminated Without Cause
In a fixed service contract, employees can be terminated early 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. For instance: If an employee wasn’t providing services agreed upon by contract but had been given sufficient time for absences due to illness or injury. Then they could cancel it without giving notice; however, if there is no reason provided by either party, this would fall under “constructive dismissal.”
An employee who signs a fixed term of employment has certain rights when considering being dismissed. Based on an agreement with the company during the negotiation stages- one such right relates to whether or not duties were met per the original terms set.
Physician Contract Questions?
Contract Review, Termination Issues and more!