Employment Contracts: What Residents Need to Know. JAMA. 1998;279(14):1138D. doi:10.1001/jama.279.14.1138
Prepared by Ashish Bajaj, Department of Resident Physician Services,
and Janice Robertson, Department of Young Physician Services, American Medical
As residents and fellows finish their programs and begin to seek employment,
many of them will be negotiating contracts. When signing an employment contract,
the physician agrees to all its terms. The law does not protect the physician
from unsatisfactory contracts. The American Medical Association-Young Physicians
Section (AMA-YPS) reviewed physician contracting experiences and prepared
the monograph Contracts: What You Need to Know, a
guide providing basic contract information. The following information is excerpted
from the guide.
Investigate the financial standing of the contractor.
Be prepared to negotiate the terms of your contract.
Always have an attorney review the contract. For legal referrals,
AMA members can contact AMA Solutions, Inc (800) 366-6968, a national network
of legal and business advisors.
Obtain an explanation for anything in the contract that you do
not understand and revise the contract accordingly.
Avoid provisions that allow the contractor to change rules, policies,
and procedures that you are required to follow without formally reviewing
the changes with you.
Make all exhibits, attachments, and documents referred to in the
contract a part of the contract.
Avoid verbal understandings. All agreements should be stated in
Most disputes between physicians and employers that result in termination
of employment are not related to medical competence. Usually physicians claim
that employers failed to inform them about or misrepresented working conditions,
on-call responsibilities, patient workload, potential for partnership, or
prospects for increased competition. To avoid such problems:
Discuss on-call obligations and the number of patients you are
expected to see daily.
Try to build a cost-of-living increase into any multiyear contract.
Make sure the contract pays for professional liability insurance.
Find out who provides the insurance, who pays the premiums, and whether tail
coverage (coverage for claims made after leaving the place of employment)
Be specific about duties. Do not accept wording such as "to undertake
such responsibilities as the Board of Directors may assign."
The restrictive covenant or covenants not to compete provision
means that you will not compete with your contract party for a reasonable
period of time after the contract terminates, either voluntarily or involuntarily.
This law may differ from state to state and usually applies to a period of
time and a geographic area.
Ask whether you can obtain copies of patient records if you should
leave the place of employment. Provide for access to records in case you are
sued; ensure that on patients' written authorization you will be provided
with a copy of the records.
Suggest using a mandatory arbitration clause in the employment
contract. This requires any dispute to be resolved through arbitration (a
nonjudicial proceeding using an independent, objective third party) rather
than a court of law. Specify either binding arbitration, in which 2 parties
agree that the results of the arbitration will be binding and both parties
forfeit their rights to pursue the dispute further through the courts, or
nonbinding arbitration, in which 2 parties may subsequently choose to seek
legal redress after going through arbitration proceedings. Nonbinding arbitration
is used to air parties' complaints and to determine a possible judicial resolution
of those complaints.
AMA members can obtain a copy of "Contracts: What You Need to Know"
from the AMA Department of Young Physician Services, (312) 464-4978.