Common Physician Employee Contract Pitfalls and How to Avoid Them - Floyd Lee Locums


Common Physician Employee Contract Pitfalls and How to Avoid Them

Common Physician Employee Contract Pitfalls and How to Avoid Them

As a young physician, searching for a job is source of excitement and fear. You are excited that you finally get to make “good money” so that you can begin to not only pay down your educational debt, but to begin to enjoy the fruits of your labor. Searching for your first job as an attending can also be a time of fear. Fear of not knowing the whole job search process, fear of not knowing whether the job offer is a good deal, and fear of not knowing whether you are making the right decision.

Throughout almost 12 years of experience as a Critical Care Physician, I have had both permanent jobs as well as locums jobs. As a result, I have learned a great deal about and have had first had experience regarding several physician employee contract provisions that all physicians must be aware of.

Several of these employee contract provisions are “benefits” that they add to make the position more lucrative and to “sweeten the deal”, so to speak. However, these perks have a downside that you must be aware of. Other contract terms, however, are designed solely to protect the interest of the employer.

  1. Sign-on bonus. Many employers offer a sign-on bonus as a part of the employment contract. These bonuses can range anywhere between $10,000 and $50,000. Obviously, these are very enticing. However, most employment contracts have a provision that the sign-on bonus must be repaid if you leave the job before the contract is finished. This has very real financial consequences because if you must repay your sign-on bonus, this must be paid back in after tax dollars. Your employer can’t just with hold the amount from your subsequent paychecks. You will have to pay them back from your after-tax earnings.
  2. Relocation expenses. Many employers offer to pay your relocation expenses. They may either pay your moving company upfront, or may reimburse your expenses after you start working there. As in the case of the sign on bonus, you may have to repay this money if you leave the job before the contract is up.
  3. Student Loan Repayment. This is a huge benefit for obvious reasons. However, many employers that offer student loan repayment are employers located in “less than desirable” places to live. In addition to that, the length of the contract may be longer than other contracts. Many contracts offering student loan repayment are 3-5 year contracts. Five years is a long time to be stuck at a job you don’t like. Furthermore, jobs that offer student loan repayment, especially jobs with government agencies, have dire consequences for not working for the full term of the contract.
  4. Some employers offer to pay you a stipend during your residency or your fellowship in exchange for your working for them after you have completed your training. Once again, if you decide not to work for the employer or you do not work for the full terms of the contract, you must repay the stipend money.
  5. Malpractice Insurance. Nearly all employers provide malpractice insurance. However, you need to know whether the malpractice insurance is claims-made or occurrence-based. In the case of a claims-made policy, you must get “tail coverage” when you leave your job and terminate the policy. Tail-coverage can be very expensive and many employers will not provide the tail policy.
  6. Restrictive Covenants. These are also known as “no-compete” clauses. These clauses essentially restrict you from practicing medicine within a certain mile radius of your employer for a certain period after you no longer work for the employer. Because of the restrictive covenant, you may be forced to relocate to another town at the end of your employment.
  7. Intellectual Property Clauses. Many employers are now adding clauses to their contracts not only restricting the kind of work you can do when you are off duty, but also claiming the rights to any intellectual property you create while working for them. If you have any outside interests, you must make sure you are not prohibited from engaging in them under the terms of the employment contract.

These are just a few things included in physician employment contracts that you must be aware of. There are several steps you can take to ensure that you negotiate the right employment contract.

  1. Take your time. Don’t be in such a rush to start making money, that you sign the first contract that comes along.
  2. Read your contract. Although this seems obvious, many physicians don’t read the complete contract. They just look at the salary and the vacation time. Then, they are shocked when they find out what the contract really says.
  3. Hire an attorney. Hire an attorney that specializes in health care law to review your contract. The money that you invest in this service has the potential save you tens of thousands of dollars over the course of your contract.

So, what happens if you need a job but don’t want to deal with the hassles of an employment contract? Or what should you do if you need to start making money now and don’t have time to wait to find the right permanent position?

You should consider working as a locums physician!! Working as a locums physician offers several benefits.

  1. Higher pay. Locums jobs typically pay a higher hourly rate than employed positions
  2. Independent Contractor Status. Working as a locum tenens means you work as an independent contractor, therefore, there are none of the restrictions that come with an employment contract.
  3. You can work as much or a little as you want. You also determine your own schedule. There are no restrictions on what you do during your off-time

Contributed by: Dr. Stephanie E. Freeman

Stephanie E. Freeman, MD, earned her Medical Degree from the University of Alabama School of Medicine. She completed her Internal Medicine Residency at Wake Forest University Baptist Medical Center and her Critical Care Fellowship at the University of Pittsburgh Medical Center. Dr. Freeman also completed a Geriatrics fellowship at Wake Forest University Baptist Medical Center. She obtained her Masters of Business Administration at Auburn University.

Contact Floyd Lee Locums at to find out more about working as a locums physician.