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Continuing our blog series on the Top 10 Reasons Why Physicians Should Seek Legal Review of Their Employment Agreements…
5. Legal Provisions That Have Far-Reaching Effects. Physician employment agreements are full of legal verbiage and phrases, which should come as no surprise because they are legally-binding documents written by lawyers. Aside from the general organization of a contract and its components that are required to make it an enforceable contract, the actual content and provisions that directly dictate your life and career can be overwhelming.
Perhaps the most significant of these legal provisions is the Restrictive Covenant. Restrictive covenants, otherwise known as “Covenants Not to Compete,” are found in the majority of the physician employment agreements that we review. The purpose of restrictive covenants is to restrict a physician’s ability to practice medicine for a specified duration of time and in a particular geographic region following the term of employment outlined in the agreement. In other words, the employer is saying: When you’re done working for us, we don’t want you to work in X region for X amount of time. Kind of crazy, right?
Restrictive covenants are even more daunting in that they are almost always enforceable by means of injunctive relief. An agreement’s restrictive covenant provision will usually provide the employer with the right to injunctive relief in the event of the physician’s violation (or even threatened violation) of the restrictive covenant. An injunction is a remedy used in civil suits whereby a specified behavior is prohibited. Therefore, when injunctive relief is used to enforce a restrictive covenant, the employer will seek a court order prohibiting the physician from practicing medicine in violation of the covenant. The effects of this can obviously be dire, given that a physician can literally and legally be prevented from working. While some sort of restrictive covenant is found in most physician employment agreements, whether or not the covenant is enforceable is another question. The enforceability of restrictive covenants is based on state-specific law and only an attorney licensed in a given state can speak to whether or not the restriction is reasonable and enforceable. Some states are more “employee-friendly” and have very strict limits as to how an employer can limit individuals’ right to work. The only way to get a clear understanding of what a restrictive covenant means and how it will apply to your life and work is to have it reviewed and analyzed by legal counsel. Additionally, attorneys experienced in physician employment matters are familiar with negotiating these provisions, and can offer various approaches in order to satisfy the needs of the employer while simultaneously making it more favorable to the physician employee.
Physician employment agreements also often include other provisions and restrictions that, once identified and analyzed, are really not fair to physician-employees at all. Sometimes these provisions are sort of “snuck in” among other terms and therefore physicians sign the agreement without even realizing what they’ve agreed to. An example is a contract term that irrevocably assigns to the employer all rights, title and interest in inventions, discoveries, patents and ideas that the physician develops. In other words, if the physician develops any potentially money-making ideas while working for the employer, the employer will be entitled to that money and the physician will have no rights to it at all. Sometimes these provisions even extend beyond the term of employment, so that if the physician develops anything in the year or two following the contract term, those rights will still be assigned to the employer. Additionally, we have also seen such provisions attach to inventions and patents that a physician completed before even working for the employer. These types of provisions are clearly worrisome, and the cause for concern is two-fold: first, physicians often do not realize what they are agreeing to when they sign an employment agreement containing a provision like this, and; second, employers position themselves to unfairly and unjustifiably benefit from a physician’s hard work that had nothing to do with the employer.
For information about these and other physician employment contract issues, please contact us at 317-989-4833 or loneill@lauthoneill.com.
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