Employment Agreements

Employment agreements for medical practicesEvery medical practice needs to have employment agreements: to protect against possible employee misconduct, to protect the practice, set expectations and give clear rules for employees.

Employment agreements usually have some fairly similar common characteristics, namely: it is a legally binding agreement between an employer and an employee, it is entered into at the time the employee is hired (although it can be entered into at anytime during the employment period), and it outlines specific terms of the employment such as the nature of the parties’ business relationship, the compensation the employee will receive, and the specific work the employee will perform.

Of course, employment agreements are as varied as the type work available in the employment market, but because it is legally binding, the main goal of an employment agreement is that it is designed to provide both parties with a certain level of security and protection. Because both employer and employee can mutually benefit from an employment agreement, all employers should take the opportunity to clearly define the general rights and responsibilities of each party and have their employees sign an employment agreement. In particular, medical offices can benefit from utilizing employment agreements in four specific ways.

Define work obligations, clarify compensation, and explain termination.

Each medical practice is unique and can sometimes need a certain about of flexibility from their employees in dealing with the needs of their patients and their practice. Having an employment agreement allows a medical practice to clearly outline their expectations for their employees in regards to their work duties, responsibilities, and schedules. In addition, employment agreements can address compensation and benefits that the employee will receive, including when and how pay raises can occur. Another important detail employment agreements can address is the grounds for termination of an employee.

Limit or reduce the effect of employee turnovers in the office.

Medical practices are a place of expertise. Clients come to a medical practice because they are in need of the specific services provided there. This means that the medical office personal and medical assistance positions usually require specific and specialized training. Finding and training a replacement can be a very costly or time-consuming process for a medical practice, but with a particular employment agreement a medical practice can limit those interruptions that hiring a replacement can cause. The employment agreement can include a section that discusses either the length of employment or what happens when the employee chooses to leave. It can lock the employee into a specific term (such as two years) or require that the employee give reasonable notice (such as 90 days) to find and train a suitable replacement. These terms can limit employee turnover, or at the very least, limit the effect employee turnover can cause.

Determine who pays Malpractice insurance.

In medical offices, having medical malpractice insurance coverage provides both peace of mind and a safety net if a client does end up brining a claim against the medical practice. Most often, medical practices carry malpractice insurance that covers all employees, including medical physicians, assistants, and office personal. However, that medical malpractice insurance does not usually cover previous employees. This means that if a client sues an employee (normally claims are brought against all parties involved in addition to the medical practice) after they have left the medical practice, that employee is normally no longer covered by the malpractice insurance provided by the medical practice. Of course, the terms of what and who is covered is determined by the agreement between the insurance provider and the medical practice. However, explaining those malpractice insurance agreement provisions in an employment agreement provides both notice to the employee and security to the medical practice should a previous client sue a former employee.

To preserve clients and practice area.

The success of a medical practice, in large part, is dependent on the clients who come seeking the services that practice provides. Employees learn confidential and sensitive information about the medical practice and clients in particular. There are three main types of clauses in an employment agreement that can help a medical practice retain their clients from previous employees. The first is adding a confidentiality clause that prevents employees from disclosing confidential information or using it for their personal gain. The second clause that a medical practice can utilize in an employment agreement is known as a non-solicitation provision. This provision most often prohibits previous employees from soliciting former patients, employees, and referral sources after their employment with the medical practice has ended. Including either a restrictive covenant or a non-solicitation agreement protects a medical practice’s investments and its relationships. The third clause that can be added is usually used for physicians who have been employed by the medical practice and is called is a restrictive covenant, which limits a former employee from practicing in the same are as the medical practice. Generally, these restrictive covenants must be limited in duration (1-2 years) and geographical scope and must also demonstrate the need to reasonably protect the medical practice against competition.

Each employment agreement can be tailored to fit the needs of the medical practice and the requirements they have for their employees. A well-crafted employment agreement cannot only clarify the relationship and duties between the employee and the medical practice and provide the employee with a clear outline of their duties, but can also protect the medical practice by limiting lawsuits and preserving their clients and information.