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[Music] this is sandeep gibbani and today i will be talking about an overview of employment contracts this talk is part of the resident and fellow education symposium so as far as disclosures i have no relevant financial disclosures with respect to this talk something that should be disclosed is that i'm currently in a multi-specialty orthopedic private practice and so my viewpoint and discussion regarding employment is certainly skewed in that direction i have primarily a california experience but have looked at contracts of my colleagues from different states and so i think the general principles of what we're going to discuss apply across the board so when you're looking at an employment contract the the first sort of feeling you may immediately have is that you're overwhelmed by uh the number of pages within the contract and the in the language that is uh contained within it sort of representing the upper left picture and and what we envision uh finding a job or reviewing a contract to be is really the bottom right picture which is you sort of think to yourself well i went through all this training um you know to get specialized and i'm ready to enter into a job market i have a bunch of skills that i'd like to employ and really i'm looking for the right fit or or the right feeling right when you interact with the individuals within the practice that you're looking at you really just want to have a good fit or good vibes and our goal here is to sort of bridge the gap between those two different kinds of feelings or perspectives with respect to the employment contract so our objectives today are to break down the contract into the different sections that can be reviewed i want to make sure that you're aware of the termination clause and what that sort of means and engenders and what kind of options it gives you i want to be able to help you focus your attorney's attention if you choose to use one and understand where it is appropriate to compromise the goal is essentially to help you sign into the best possible situation and as you go through that process to make sure that you have a skilled ability to navigate a conversation about partnership with your future practice so whenever you're faced with an employment contract i think it's really important to essentially read through the contract yourself although the language at first glance might seem a bit foreign you'll quickly understand that there's some basic components to this contract uh which which you can identify and ask questions about just to clarify um so you know the basics of the contract are really that there's two parties involved yourself and the employer and you're entering into a contract for employment that begins on a certain date and in in particular lasts for a certain term so the reason that a term is defined is because it allows the opportunity for you or the employer at a future date to change those terms you know ideally that change would lead into partnership but it may not and so that's why there's a term that exists in addition it's an evaluation period for both parties where you assess the practice and determine whether it's right fit for you and they assess you as an employee and determine if they want to keep you in the long run and feel that you can help continue to grow the practice the next section to look at is the scope of work or duties and i think it's essential to read through this and understand really what they're expecting of you from a formal standpoint so you may have a conversation uh or interviews with the individuals in that practice and understand oh i plan to do this but really the contract spells out something different so make sure that you read through that and you're both on the same page this refers to clinical duties uh within the practice um obviously surgery there may be some mention of where they expect you to do the surgeries for example a local hospital one over the other and whether or not they expect you to do outpatient surgeries and in addition depending on the kind of ancillary setup that that practice may have you know if they have an urgent care center or something like that that they want you to staff you know look for those types of things in the scope of work area also it may detail call requirements and essentially where the stipends would go from the call that you take and it's important to delineate whether it comes directly to you or to the practice itself if there is outside of practice work that's expected then this is the area to delineate it as well so if you know going into that employment that you plan to do research or you want to carve out time for different kinds of work that you do so and and identify that or or line itemize it so for example if you plan to be involved with consulting or medical legal work you should up front indicate that that's what you plan to do who you plan to do it with uh and of course talk about you know where the flow of compensation will go either through the practice or individually to you so that at a later date if it comes up that hey you are involved with consulting and where's that money going you understand that up front next section is called a confidentiality section essentially the the concept here is you're an employee of the practice and when you are seeing patients even though you form a personal relationship with them and uh you know they may wish to continue to see you those patients are patients of the practice not patients of dr so and so and where that becomes important is in the event that the contract ends and you choose to go somewhere else then there are sometimes a specific uh restrictions delineated and these are called this is called either a restrictive covenant which is also called a non-compete and secondarily potential non-solicitation so what do those two terms mean well non-compete means typically that you will you agree that you will not set up your new practice within a certain mile radius of the current practice and you will not attempt to compete directly with the practice that you were part of for example in california non-compete does not hold up in court and so when i see this kind of language in a contract that i'm reviewing typically i will say to the person who handed it to me that you know this this doesn't hold up and so perhaps we can just initially remove this language from the agreement so that it doesn't ever come into question so that's one way to address that it depends on your individual state restrictions the non-solicitation component of this is that when you go to a new practice you will not solicit employees or patients from the current practice so maybe you worked with a physician assistant that is critical to your workflow in your practice well you're saying that you will not go and try to poach that physician assistant from the practice and bring them over with you and the same goes for the patients essentially patients can still come and see you after you leave the practice but there may be language reflecting the nature in which you may contact them so it may say something like the practice will send out a notice on your behalf but you're not allowed to directly uh send them a mailer and so again pay attention to that because that is important and you should sort of get a feel for how restrictive it is if your end goal is to remain in the area in the long run so remember your personal checklist if location was what drove you to the area then consider those things if they're in your contract next important section is termination so termination essentially refers to being let go from the current uh employment that you have uh there's different types of termination so there's a for cause termination typically this is if you uh created uh if you performed in such a way that resulted in a malpractice claim your party to a lawsuit you let your medical license expire and you lost your dea license those are common reasons why if you lose privileges at a hospital for some adverse event again those may be reasons for termination for cause meaning there's a reason behind which the employer has let you go there's also termination without cause meaning for whatever reason personal reasons um or um you know the the employer didn't uh was not happy with your performance they decided to let you go uh but they don't have to delay it to you why that's called termination without cause and so for each of these situations there's a duration of notice that the practice might must let you know about so for example if they're going to terminate without cause typically the duration is a little bit longer so that you have time to set yourself up in the next practice that you're going to go to and termination typically this this clause or paragraphs typically heavily favor the employer so there's a lot of talk about why they can terminate you and not so much about why you the employee can terminate the contract but that section still does exist and if you read through the reasons why you can terminate the contract and find them to be uh underwhelming or don't completely give you your rights or rights that you think you're entitled to then you may want to elaborate on this section and that's where an attorney can be particularly helpful there and then in the event that you do leave your current employment what happens as far as malpractice coverage well so it's important to understand different kinds of coverage when you're in practice you have what's called a claims made coverage so if something happens an adverse event happens while you're in practice you're covered by claims made which is the malpractice policy that the employer typically pays for once you leave the practice let's say some issue comes up that referred to treatment that you provided while you were an employee of that practice but you're no longer there well that's what a tail coverage refers to tail coverage is a policy that covers you for that particular event typically tail needs to be put in place regardless of how sort of regardless of the reason you left it needs to be put in place to cover the practice in yourself if you're terminated without cause then typically the employer will pay that tail if you're terminated for cause then typically you're left with the responsibility of paying the tail based on the contract so again read what the contract says um that that tail can be quite sizeable in terms of a financial amount that you have to be responsible for if it falls in your lap so it's important to be aware of the stipulations for when it does obviously an important part of the contract is compensation right so uh in a different talk with respect to community positions i talked about different ways that you might be compensated in year one versus year two three and four um and and this is usually spelled out in the contract the contract that you're signing typically refers to when you're an employee not a partner and so there's different versions of compensation the the one that we're most familiar with as far as what a job is considered to be is just being paid a salary so every month you get a fixed sum of money on the other hand there are productivity based contracts with respect to compensation and some people especially if you're experienced with respect to practice you might favor that over a salary it's important to consider the tax structure if you're an employee typically you're getting a w-2 and then you're subject to for example in california the state and federal tax which can be quite sizeable if you decide to be paid from the perspective of an ic or independent contractor which does exist in some practices then you receive a 1099 as opposed to a w-2 and if you have your private business you may be able to write off some of the deductions of business expense the other important part about working as an independent contractor is typically you are responsible for your own health benefits to for for the most part so that you need to consider the implications of each setup as far as bonus structure this is obviously an important part to look at as well as it was as it will factor into your compensation typically bonus structures are productivity based um and you need to consider what formula is being applied and how attainable this is sometimes they'll use benchmarking so how many patients you see in clinic how many surgeries you do per week or per month other times they will look at sort of baseline measures to compare you to the partners in the practice and determine whether or not it's reasonable to provide you with a bonus structure so common versions of this are looking at rvus per month net collections so you know you do surgeries you or you see patients in clinic you bill for those but what you build doesn't always equate to what you collect collections is the net amount that comes into the practice as a result so that's different from charges and you need to understand which of those they're basing the bonus structure on the other thing as far as you know numbers to consider what's important is look at the the numbers they're anticipating so let's say they are just for round numbers example let's say they're giving you a salary for the first year 400 000 and they say well our practice over operates at an overhead of 60 percent so to sort of mimic what a partner would be doing we're going to give you 400 000 we expect that you would cover 600 000 in overhead for a total of million in net collections so to get bonus you have to at least hit a million in net collections which is is not necessarily easy to do it may be obtainable based on where you practice and what the reimbursements are like but you should look at how reasonable it is to get to that number and then once you hit that one million they'll say to you okay whatever you make over that one million you're entitled to a percentage of so let's say 50 so you should just consider those things and look at the bonus structure and modify it if you feel like it's not reasonable you can also talk to other individuals have previously sat in the employee position and now our partners to say hey were you able to ever hit that or not so that you can modify as necessary as far as benefits so there's all different kind of benefits that are typically employ included in a standard employment contract or boilerplate contract certainly health medical dental and vision retirement 401k that might depend upon how long you've been with the practice or it might not um look at the parameters of that disability insurance depending on whether this is a larger organization or not you know typically for small smaller private practices you have to pay your own disability typically the practice will cover the professional liability component sometimes they will offer professional membership membership dues and cme reimbursement depending on how invested they are in attracting somebody to the practice look at vacation time as that's important for your personal time uh and then also they may offer a signing bonus or relocation expenses to a certain amount keep in mind that this comes to you as a lump sum and it is taxed typically it's given to you in a 1099 so again depending on whether or not you have a business you may be able to write off some of this expense uh you know if you're if you're primarily employed by the practice moving forward you may expect to only have w2s and so whether or not you invest the additional time and monies to have your own business or corporation uh will depend upon that after you receive the employment contract what do you do next so you've you've you know belabored the contract you went through the steps i just mentioned you've kind of read through things what do you do next do you simply contact an attorney and get the approval no i would i would then ask questions and reasonable questions you know things that you you sort of are now in tune with and say okay i had a question about this part of the contract and why it's written the way it is or what is anticipated by this uh clarify the expectations on the part of the practice and and if there are needs that you think are reasonable and fair then just go ahead and express those needs and that gives you kind of an immediate response from the practice standpoint it helps you gauge what they're thinking and where they're sitting in terms of what may be negotiations in the future i i this is a slide from one of my other talks again about community positions refer to your personal checklist so though working through that employment contract might be cumbersome um always refer back to this and if the practice does hit your personal checklist uh criteria then again it might be worth it to really uh drill down on the contract and figure out where you can make compromises to be able to do the things you need to do because at the end of the day personal satisfaction is huge in making sure that you're happy with the practice you join you know the employment contract is just language that hopefully can be modified to make both parties happy now as far as involving an attorney i do think it's reasonable to involve an attorney to review this these types of contracts uh it does give you peace of mind um but the question is which attorney do you involve how much is appropriate to pay them and what what um you know how frequently are they involved in this process you know i think the attorney should not be the only individual you use to make the decision uh some of this needs to be you know research you do on your own may refer to colleagues or other uh co-residents that are a few years ahead of you but the attorney can help guide the process uh avoid the sort of the situation where it's review and stamp of approval so oftentimes you will see ads for send us your contract and we'll take a look at it and tell you if it's good to go oftentimes the practice that you're interviewing with it with may offer you the services of their attorney so recognize the bias there in my situation uh the first contract i had i sent over to an attorney that was you know i was in california they were based in in boston and they took a look at the contract and approved it and said go ahead that looks pretty standard but didn't really give me any breakdown or feedback on particular uh clauses within the agreement and what to pay attention to so such as i mentioned the termination clause so i think it's wise to you know spend the right amount of money to get great feedback there are two types of attorneys that you can enlist so healthcare attorney is used to reviewing these type of contracts and maybe corporate on some level versus an employment attorney knows the rights that you as an individual have as an employee within a given state and so sometimes they pay a lot more attention to the um individual parameters of your rights within say the termination clause or the non-compete and things like that whatever you sought out so whatever you highlighted as the key issues you should point out to the attorney so that you have an active discussion about that and in the process of going through these components of the contract make sure that you discuss with them negotiating strategy and tactics that should be part of what they're giving you as payment for their time especially if you feel strongly about certain portions of the contract make sure that they hear that and then give you some degree of strategy in terms of how to navigate the conversation with them so for example if partnership is really important to you within a certain amount of time talk to them about how to include that into the conversation um for example with respect to strategy sometimes silence is one of the most important strategies you can use they throw something you're talking to the employer they throw something on the table you don't really find it to be reasonable but rather than be reactive sometimes you just absorb it it shows maturity on your part and you can always come back later and address it if it's a point of contention sort of hammer through the easy things first and again be the frontline moderator so so be the person who's comfortable talking to the employer about issues up front what it will do is also save you significant money when it comes to involving your attorney you should really only involve them with conversation with the employer or the employer's attorney when it's absolutely necessary you know negotiation tactics i think there's a separate talk on this but try to approach with mutual benefit and fairness think globally so really you know although it's easy to say well this is what works best for me think about what works best for the practice in the long run because if you're joining that practice i i would hope that your your goal is to be with them in the long run as well and so you have to consider at some point you'll be sitting in the partner's shoes and want to bring on additional employees and you know you want to want to make sure that you're being fair about the whole process keep in mind your checklist and make sure that that personal checklist is what is being emphasized in your discussion so things that are important to you should should sort of show through whatever you negotiate and they agree to make sure they put it in writing again resolve what you can and really reserve the attorney for the critical impasse so if you get you know 90 of the way there and there's some language component that doesn't really sit well with you and it is important to you before you sign then maybe that is the point at which you say okay can we have our attorneys to sit down and discuss what's going to be uh agreeable to both parties at the end of the day and it is key when you do a negotiation to interact with the decision makers avoid falling into the trap of talking mostly to an individual who may not be responsible for making the end of the line decision so really that person is the middleman feeding back to the partners if you can talk to the partners directly and have a good working relationship with them i would suggest that over working with a middle middle person for partnership you know make sure you define partnership for your situation understand what that practices fixed cost is what is their overhead sometimes a percentage is not as helpful as the dollar value per month because then you can sort of understand what you have to hit in terms of net collections as you get into practice in the first year take a look at what your reimbursements are per procedure and you'll quickly start to be able to estimate how many surgeries or what kinds of surgeries it takes to be able to meet partner status you certainly don't want to change your indications because of that but you know at least you have a fair understanding of what you need to target again ancillaries are always key when it comes to partnership as an employee you may be entitled to revenue generated from mris that you refer over to your own mri scanner you may be entitled to ancillaries that come from dme so bracing and things like that and that should factor into your reimbursement or compensation and then when you become a partner well what what's so great about becoming a partner i don't want just the title i want to know what comes with being a partner is it just that i'm responsible for the practice debt or is there something else that allows me to then jump up to the next income level think about your think about what the track record has been for that practice how long has it taken other individuals to get to partnership and is it reasonable or are you going to be stuck in the employee pool for quite some time before you make it there you know if you really feel strongly about partnership in that group and you know for sure that that's where you want to be in the long run maybe you you ought to discuss really putting some language in the contract that reflects their sincere interest in making you a partner and some of that relates to your setup you know so if the partners are putting money on the line in order to pay your salary then you know that they're invested so have them also put it in writing understand the financial implications of being a partner of course profit is great but then uh what are the certain debts loans or investments that that that group has in order to run their business and of course they're going to expect you to be part of that once you become a partner so is that reasonable for you um and finally what's the future of this practice are they is there a goal to stand alone in the community for 30 years to come or are they planning on some type some type of assimilation within a super group or instead do they wish to be acquired by private equity which is a thing of the of recent interest um so you know sort of investigate this a little bit with um practical questions uh when talking with the people who are interviewing you and i think it'll help give you perspective on on what the employment contract should represent so in summary make sure that you read through and understand the fine print and of course you know make sure that you're ready to fully commit to this practice you know that's the purpose of investing your time uh and your efforts and skill there but also understand that what your way out is if you need it and and what is involved with that termination if it needs to happen on either party side your attorney is your ally but not your crutch you know don't rely 100 on them you should be doing your own research and and be actively involved in the discussion with the employer make sure you demonstrate fairness and again take that global approach to things i think that really serves you well as far as your relationship with the partners in the long run examine their partnership model and make sure you don't you don't sign until you really understand what you're signing sometimes you feel rushed in the in the training atmosphere to get this thing done so that you have a future to look forward to but you want your future to be bright so make sure you take the time to ensure that the contract represents that you