June 7, 2021

By:  Matthew C. Smith


1. Who pays the cost of tail insurance?

Most all employment agreements state that the employer will provide medical malpractice insurance coverage. The medical malpractice insurance coverage can either be "occurrence" based or "claims" based coverage. For "claims" based coverage, it is essential for a tail policy of insurance to be purchased at the end of your employment. A tail policy provides coverage if an alleged claim arose during your employment but was not brought until after the end of your employment. A tail policy provides insurance for this coverage gap. Tail insurance is often expensive. Both the physician and employer benefit from the tail coverage. Be sure your attorney addresses in the employment agreement which party is to pay the tail insurance and under what circumstances.

2. What rights do you have to terminate the employment agreement?

Typically, employment agreements have a term ranging from one to five years. There may be life circumstances, work circumstances, or other reasons where you would want or need to terminate your employment. You should work closely with your attorney on the termination provisions, including the rights your employer has to terminate the employment agreement. Termination provisions often affect other rights and duties under the contract that have to be considered.

3. Have you carefully considered the duration, geographic scope, and covered activities of the covenant not to compete?

Most all employment agreements will have some type of a covenant not to compete. It is extremely important to negotiate the duration, scope and covered activities of a covenant not to compete. These provisions are one of the most heavily negotiated parts of the employment agreement. A mistake here can be costly. You should carefully consider and negotiate the covenant not to compete through your counsel.

4. Do you want to engage in outside work or moonlighting activities?

Employment agreements generally restrict your ability to do any outside work unless you receive the prior approval of the employer. You should work with your attorney on different methods that can be utilized to have your anticipated activities pre-approved as part of the employment agreement.

5. Does the employment agreement state how call coverage is handled?

Does the employment agreement adequately address how call coverage is going to be handled? There are specific provisions that can be utilized to help physicians receive equal treatment with respect to call coverage.

6. Does the employment agreement identify your work location and work schedule?

The employment agreement should identify your practice location and set the parameters of your work schedule. The employment agreement should provide procedures for how a practice location or work schedule may be changed during the employment agreement. These provisions often need to be negotiated. Changing work locations during the term of an employment agreement can also have significant implications on a covenant not to compete in the employment agreement.

7. You must carefully understand your base compensation and any productivity compensation.

Is your base salary guaranteed, or is it dependent on your productivity? If your base salary is guaranteed, for how long is it guaranteed? There should be detailed schedules explaining how productivity is going to be compensated and when it is to be paid. What does the agreement say about the payment of productivity after termination?

8. Are any of the employer's duties listed in the employment agreement?

The employment agreement should set forth the employer's duties. What does the agreement say about things such as being provided with suitable workspace, supplies, equipment, and staff for you to perform your duties? What commitments does your employer make regarding the standards used in its billing practices given that your productivity compensation is based on amounts actually collected?

9. Does the agreement provide you with an opportunity for partnership or to become a shareholder?

What does the employment agreement say, if anything, about the opportunity to become a partner or shareholder? What is the cost of a buy-in, how is it determined, what rights to management and ownership accompany the ownership? These issues should be discussed and negotiated by your attorney.

10. What benefits are identified in your employment agreement?

Employment agreements should also address issues such as health insurance, life insurance, disability insurance, vacation time, maternity leave, sick leave, continuing education leave, payment of your professional dues, subscriptions, medical licensure, and CME training.

Final Thought:  The above is simply a non-exhaustive list of important items that you should review and consider when entering into an employment agreement. Every employment agreement is different. For that reason, I recommend that you engage an attorney that practices in this area to help you review, understand and negotiate your employment agreement.

This article is not legal advice and is not intended to be legal advice. Should you have any questions regarding this article, please contact Matthew C. Smith, Esq., at Ziegler & Schneider, P.S.C., (859) 426-1300, for additional information.

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