Doctor’s Contracts: Pitfalls and Traps Save

I have signed a few employment contracts in my career. Signing a legal document always makes me nervous. Did I forget to add something, was there something in the fine print I missed, should I have clarified a clause, what happens if I break a clause or cannot fulfill the contract obligations?

I spoke with Andrea Liberatore, JD, to navigate these questions and explain what to look for in a contract. 

Disclaimer: Andrea Liberatore is an attorney licensed to practice in North Carolina. The following question and answer session does not create an attorney-client relationship. For specific legal advice, you should consult with an attorney.  

What are the top 3 things I should be aware of when signing a contract? 

First and foremost, you should consider consulting an attorney. Something as important as a physician’s employment contract is often worth having a trained attorney review. An attorney can help you catch any problematic provisions, negotiate your contract, and understand your obligations under the contract. Hiring an attorney on the front end can usually prevent you from having to hire an attorney when things go sour because either you or your employer did not fulfill your obligations under the contract. 

Prior to signing an employment contract—or any contract for that matter—you should read the entire agreement. By signing a contract, you are agreeing to be bound by the terms contained within that document. So, you should ensure that you agree to those terms and are able to perform the contract prior to signing. Be wary of employers that tell you that the contract is “standard.” There is really no such thing. Contracts are unique and even if the contract is a “typical” or a “standard” form that an employer uses, you should still read the entire agreement carefully. Also, be aware of documents that are referred by or incorporated into the contract, as those documents may be considered part of the contract. For this reason, you should request a copy of every document referenced in the contract to review.

After reading the contract in its entirety, consider whether there are terms that you would like to negotiate. Everything in a contract is negotiable. To that end, if you enter into negotiations with a potential employer, make sure your final employment contract reflects your negotiations. Any changes that are made to a contract should be separately signed or initialed by the parties. 

What are red flags/pitfalls in a contract?

Because every contract is different, it is impossible to capture all of the potential red flags or pitfalls in a contract without reviewing the specific contract. However, there are a couple of provisions in an employment contract that you will likely want to pay extra attention to:

Termination Provisions – depending on your contract and the state law governing your contract, you may have to provide a certain amount of notice to your employer prior to terminating your contract. Additionally, the contract may require you to give your employer notice and an opportunity to cure any breach to a contract. This means that even if your employer breaches the contract, you may be required to give notice and wait a certain period of time before leaving the position. 

Restrictive Covenants – these are provisions that restrict your ability to compete with your employer or solicit customers or employees from your employer during and for a time after your employment.  Many states limit the enforcement of restrictive covenants so you should consider whether the provision is enforceable under the applicable state law. In fact, the FTC recently proposed a rule to ban all noncompetition agreements from employment contracts. This rule is still in the comment period and is not yet in effect. Generally, restrictive covenants must protect a legitimate business interest to be enforceable. You should pay close attention to these restrictions and consider whether it is something you might want or need to negotiate. 

Arbitration clause – many contracts provide that if there is a dispute that arises out of the contract, it must be settled in an arbitration. Arbitration is not court—it is an agreement by the parties to settle their dispute outside of court and before a neutral third-party decision maker. If this provision is in your contract, make sure you understand and are okay with giving up your right to resolve any disputes in court. 

Governing clause – these clauses provide which state law governs the contract. Even if the contract was issued in a particular state, the governing law clause could provide that a completely different state’s rules apply. All states have different laws regarding employment contracts so these provisions matter. 

What do doctors usually miss when they review their contracts themselves?

The biggest risks in reviewing contracts without an attorney are failing to read the entire contract, failing to understand the provisions of the contract, and failing to negotiate the contract. All three of these failures could result in the physician accidentally breaching the contract down the line and being exposed to legal liability or may result in the physician being unhappy and dissatisfied with the terms of their contract. 

What should you do if you or your employer cannot fulfill the obligation of the contract? 

Because every contract is different and state law on contracts differs, it is extremely difficult to answer questions like this with specificity. Anytime a physician is in a scenario where they think they might have to or want to breach their contract, or they believe that their employer has breached their contract,  they should contact an attorney to understand their options before taking action. 

If a person finds themself in a situation where he needs to leave the place of employment (could be micro-aggression, lack of promotion, etc) do they have an obligation to stay the full 3 months or 6 months as dictated by the contract after giving notice? Or is there a way around this? 

Unfortunately, it is impossible to answer a question like this with specificity because the answer depends heavily on the actual contract involved, the state law that applies, and the unique facts of the scenario. Anyone that finds themselves in this scenario should contact an attorney before taking any action to understand their options and the consequences that might occur should they decide not to give the full amount of notice.

How do I find a contracts lawyer?

Any physicians with specific questions regarding an employment contract (or other contract) should contact a licensed attorney. To find the right licensed attorney, physicians should consider asking for a referral from a trusted source—i.e., a friend or family member that went through a similar issue and was represented by an attorney, or another attorney. For folks in the North Carolina area, the North Carolina Bar has an excellent referral website: https://www.ncbar.org/public-resources/find-an-nc-lawyer/