The 411 of Employment Contracts

A Special Thank You to:

Dr. David M. Yousem, M.D., M.B.A.Professor, Department of RadiologyVice Chairman of Program DevelopmentDirector of Neuroradiology

Johns Hopkins Hospital

for allowing the use of his material/content in this presentation

Dr. Yousem’s online lecture series can be viewed at:http://webcast.jhu.edu/mediasite/Catalog/pages/catalog.aspx?

catalogId=7e18b7d5-9c63-487e-aaf1-77a86f83b011

Dr. Yousem’s project was funded through an RSNA Educational Grant

Employment Contracts - The Basics

• Contract– an agreement between two or more parties in which an offer is made and accepted, or which creates and obligation to do or not to do specific things things that are the subject of the agreement– Although a written contract is not always a necessity, written

contracts are more easily enforced• Read and understand the fine print

– You may need to hire a lawyer or other contract negotiator for this purpose

• Most common contract dispute– Non-compete clauses

Beware Oral Agreements

• Can lead to confusion or uncertainty of the contractual terms• Difficult to enforce• Some groups avoid written contracts and instead rely on verbal

promises– Allows the group members greater flexibility

Written vs. Verbal Contracts

• Oral contracts:– If you have discussed an arrangement and it is not in the written contract, it

will be hard to enforce• Written Contracts:

– More readily enforceable, but often very complicated– Contra Proferentem – if a contract clause appears ambiguous, it should be

interpreted against the interest of the party that insisted on its inclusion in the contract

• Does not apply when both parties wished to include the ambiguous clause• Courts more often side with corporations over individuals

Scope of Practice

• Clear job description– What are you responsible for:

• Types of studies/procedures• Administrative duties• How work is assigned• Hiring and firing of additional radiologists and support

staff

Salary• Compensation is typically based on specialty and location• Salary types

– Fixed salary

– Productivity (volume) based salary

• more work = more pay

– Fixed salary with productivity based bonus combo

– Benefits are based on SALARY, not bonuses

• i.e. benefits will be based on the 100K salary, not the 250K bonus or the 350K total income

– This could have major effects on your health and life insurance, vacation, retirement and disability benefits.\

Partnership

• Is it an option?• If so, what is the timing?• Is it guaranteed or is it based on performance?• Is there a buy in?

– If so, do you have to take out a loan or will it be deducted from your pay?

Malpractice Insurance

• Who purchases and pays for insurance– Sometimes paid for by group, not always

• May or may not cover the radiologist for locums or external employment

• Is tail coverage provided?– Tail coverage protects against claims that arise from services

rendered while the claims-made policy was active, but was filed after the termination of the policy

Common Contract Components

• Comrades - Exclusive employment with the group

• Competitors – Restrictive Covenants

• “Canability” - Grounds for termination

• Collateral damage - Co-termination of rights

Comrades - Exclusive employment within the group

• Does the group expect you to work only for them or will they allow you to participate in other employment opportunities simultaneously?

• Fully discuss this type of clause as it may effect locums, nighthawk, ER moonlighting, etc

• Intention of the clause is generally to keep individuals from working for competing radiology groups

Competitors

• Most common source of litigation between radiology groups and former members is the non-compete clause

• Intent is to restrict the employee from directly competing with their former employer

• Geographic and time based restrictions (how long after hired, how long after leaving)

• Prevents insider’s knowledge being used• Prevents poaching of fellow employees• Prevents diversion of patients• Must be fair and reasonable

“Canability” - termination with and without cause

• Notice of termination differs depending on whether or not there is a state cause– Termination without cause (downsizing, loss of contract, etc.)

• Typically 90 to 180 day notice– Termination with cause generally less notice

• Sexual harassment, fraud, unethical behavior• Beware of phrases that are subjective in nature, i.e.

“inappropriate behavior” – What does that mean and is it open for interpretation by those who would fire you?

Collateral Damage – AKA Co-termination of Rights

• It is important to research the full ramifications of being terminated, even if you think it will never happen

• Potential loss of hospital privileges upon termination

• Will you lose access to medical/financial records?

Breach of Contract

• If the group breaches: – The burden of proof (i.e. the responsibility to prove or

disprove the claim) is on the radiologist

• If you breach:– There can be significant consequences

• Financial• Extra night/weekend call• Loss of vacation time• Termination

Summary

• Get it in writing

• Read the fine print

• Have a contract expert (likely a lawyer) read over the details

• Invest part of your personal development time in learning more about radiology business practices