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Tips For Terminating Your Employment Contract For Doctors & Non-Compete Clauses

Tips For Terminating Your Employment Contract For Doctors & Non-Compete Clauses, From Contract Attorneys

Considering terminating your employment contract or not sure how a non-compete agreement will affect future employment? We asked the experts for their tips for these common employment contract questions.

We spoke to three attorneys who regularly help doctors review and negotiate their contracts — Michael J. Salchert, shareholder at Larkin Hoffman, Jillian M. Clark, transactional associate at Byron, Carlson, Petri & Kalb, and Justin Marti, attorney and principal of Marti Law Group

In this article, we spoke to these contract attorneys about tips for terminating employment contracts and how to handle non-compete agreements.

What do doctors need to think about when leaving an employed position? How can contract attorneys help?

MS: Termination clauses in agreements are extremely important. If at all possible, doctors should negotiate an out in the agreement. It is torturous to be bound by an agreement to work a long period of time for an undesirable employer and not have an option to walk without penalty. 

When negotiating terms of employment, doctors should pay particular attention to the termination section of the agreement. If it allows them to terminate by providing a written notice for a number of days prior to termination, then a doctor has an out. Almost always, an employer gives themselves a termination by notice but not the doctor. However, there is a fairness argument to be made if this is the case. Doctor and employer should be granted the same rights of termination, not unequal rights. 

When terminating, depending on the circumstance, doctors should review their agreement with an attorney. There may be insurance coverage obligations that arise because of termination or other points that need to be addressed as the result of termination. Also, there is likely specific language to terminate so it conforms with the requirements of the agreement, 

JC: Doctors should understand the impact of both the non-compete provisions and non-solicitation provisions in their employment contract. The non-compete will contain a specific temporal and geographic restriction on when and where they can work after leaving their current employment. Additionally, the non-solicitation will restrict who the doctor can solicit as a patient or employee.

JM: First and foremost, it is good practice to refer to the existing employment agreement to ensure that proper notice is given of the intent to leave. This will help to avoid bad blood, so the employer can begin searching for a replacement. 

Additionally, exiting doctors should consult with an attorney familiar with their respective state’s laws to understand the impact of the non-compete agreement, if one exists. It is important to draw a distinction between non-competes and non-solicitation. 

A non-compete limits a worker’s ability to do that same job elsewhere. A non-solicitation is handled differently, protecting an employer from an ex-employee going after their established patient or client base. 

When leaving, it is not uncommon for doctors to inform patients they are departing the practice and for some of those patients to follow the provider. The patients certainly have a right to choose which doctor they want to see. Where it becomes troublesome is when a doctor requests the patient to come see them at the new location, whether orally or written via emails, mailers, or social media. There is a fine line between merely stating you are leaving and soliciting folks to come with you. The latter scenario is where we see providers getting into hot water. So be sure to steer clear of soliciting patients…if they love you, they will find you!

How should doctors handle non-compete clauses? Do you see them enforced? 

MS: Doctors should negotiate their restrictive covenants carefully because non-compete and non-solicitation terms in agreements are typically enforced by employers. Employers will try to apply non-compete distances from all their locations when in practice, the doctor primarily works at a single location. Non-competes from multiple locations could broaden the non-compete area to effectively prohibit alternative employment for a doctor in the entire city where they live. 

Doctors must be cognizant of how the non-compete is written so it only applies reasonably to the area where they actually work. Also, doctors should utilize carve outs in the non-compete agreements. For example, if a doctor knows they are going to do locum tenens work, carve out an exception that allows work at a clinic temporarily within the restrictive area. 

Some doctors think that the large employer should not care about what they do competitively, but actually the contrary is true. If an employer does not enforce restrictive covenants, especially non-compete clauses, they open up a defense to future non-compete violations by other employees. In other words, a future employee who violated a non-compete can say that the employer is arbitrarily enforcing the non-compete against them because they let others get away with it. 

JC: New doctors often fail to seek a limited non-competition geographic radius restriction or fail to attempt a shorter time frame. It is normal to see these non-compete provisions in most employment agreements, but the doctors should try and negotiate as narrow of terms as possible. 

Furthermore, most states require some form of additional compensation included in the employment agreement to make these restrictive covenants enforceable. While most restrictive covenants are followed, it is not unusual for an employer to file suit to enforce the practice’s interests. The employee must tread lightly as litigation is very expensive. Employers will exploit the threat of litigation and its expense as a deterrent.  

JM: Non-compete agreements have been – and continue to be – one of the mostly hotly debated issues in business and employment law. Being focused exclusively on healthcare, our firm is continually monitoring various state and federal legislative initiatives to judge enforceability as it pertains to providers. 

A few states have issued an outright ban on non-competes, determining that it puts an unfair burden on workers (regardless of industry) from being able to perform the work they were trained to do. Other states have issued carve outs to enforceability, such as ruling that they will not be enforced against medical providers. 

Recently, the Federal Trade Commission (FTC) went so far as to propose an outright ban on all non-competes across the country. While we have yet to see if anything will come of that, the short answer regarding enforceability is that it depends primarily on three factors: (i) the state in which you are located, (ii) the duration of the term (the length) and (iii) the geographic radius. 

The legal term used to determine enforceability is “reasonableness.” It is a rather subjective term, as what is considered “reasonable” in one setting may not be “reasonable” in another. As an example, while a 30-mile non-compete radius may be acceptable in a rural setting where folks are accustomed to driving long distances for their daily work and essentials, such a radius would rarely stand up in a major metropolitan hub.

Approaching Your Next Employment Contract

As you prepare for your next job, it is important to have a clear plan when it comes to negotiating your employment contract. These tips provide a guide, but each situation is unique. 

We recommend speaking with a contract attorney who can advise you on your specific needs and goals. If you need help finding a contract attorney, our Build Your Team program can get you connected to one for free.

Michael, Jillian and Justin answered more questions about contract negotiation. Find them here:

Panacea Financial, a division of Primis. Member FDIC.

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