When entering into an employment or partnership agreement, physicians in California must carefully review their contracts to protect their financial interests, professional goals, and legal rights. Physician contracts can be complex, involving terms that affect compensation, work-life balance, liability, and more. Given California's unique legal landscape, physicians must understand state-specific regulations and common contract pitfalls.
Contact us by using our online form or calling 414-253-8500 for experienced legal assistance with your physician contract review.
Why Physician Contracts Matter
A physician's employment contract lays the foundation for their professional relationship with a healthcare provider. These contracts detail obligations, compensation, working conditions, and post-employment restrictions. Key reasons to review your physician contract include:
- Protection of rights: Ensures your legal and professional interests are safeguarded.
- Compensation clarity: Outlines how and when you'll be compensated, including bonuses and incentives.
- Work-life balance: Defines on-call responsibilities, leave policies, and workload expectations.
- Avoidance of unfair clauses: Identifies restrictive covenants or termination clauses that could limit your future opportunities.
Key Elements of Physician Contracts in California
1. Compensation and Incentives
Physician contracts in California often contain detailed compensation structures, which may include:
- Base salary: This can vary depending on your specialty, location, and experience.
- Productivity-based compensation: Commonly calculated using RVUs (Relative Value Units).
- Bonuses: Retention, signing, and performance-based bonuses may be included.
- Benefits: Health insurance, malpractice insurance, retirement plans, and continuing medical education (CME) stipends.
Important Consideration: California law prohibits certain commission-based physician compensation models that could be seen as fee-splitting or incentivizing unnecessary services.
2. Work Hours, Call Schedules, and Duties
Physicians must be vigilant about provisions related to their work schedule:
- Standard workweek: Ensure the expected hours align with industry norms.
- On-call requirements: Understand how often you're expected to be available and how compensation for call duties is handled.
- Moonlighting clauses: Determine whether your contract allows additional employment outside of your primary role.
3. Malpractice Insurance Coverage
California law requires physicians to have adequate malpractice coverage. There are typically two types of malpractice insurance:
- Claims-made policies: Coverage only applies if the policy is active when the claim is made.
- Occurrence-based policies: Covers claims for incidents that occurred during the policy period, even after it ends.
Tail coverage: If you leave your employer and have a claims-made policy, ensure you understand who is responsible for purchasing tail coverage.
4. Restrictive Covenants and Non-Compete Clauses
Unlike many other states, California does not enforce non-compete clauses in physician contracts. This means healthcare employers cannot restrict physicians from practicing within a certain geographic area after leaving the practice. However, other restrictive provisions—such as non-solicitation agreements (which prevent you from recruiting patients or employees)—may still be enforceable.
5. Termination and Severance Provisions
Your contract should clearly outline termination terms:
- Without cause termination: Determine how much notice is required and whether severance is included.
- For cause termination: Review what circumstances allow the employer to terminate your contract and whether you have opportunities to address any alleged deficiencies.
6. Relocation Assistance and Loan Repayment
Many physician contracts offer relocation assistance or student loan repayment. Verify:
- The amount and repayment terms if you leave the job early.
- Whether repayment is tied to a specific work period (e.g., two or three years).
Table: Key Clauses in a Physician Contract and Their Purpose
| Clause | Purpose | Key Considerations |
|---|---|---|
|
Compensation Clause |
Outlines base salary, incentives, and bonus structures |
Ensure clarity in RVU-based pay and bonus triggers |
|
Malpractice Insurance |
Specifies type of malpractice coverage (claims-made or occurrence-based) |
Verify if tail coverage is included or who bears the cost |
|
Work Hours and Call Schedule |
Defines standard hours and on-call responsibilities |
Review for excessive call duties and fair compensation for extra shifts |
|
Termination Clause |
Details terms for ending the contract, with or without cause |
Confirm notice period and severance pay for without-cause termination |
|
Restrictive Covenants |
Limits post-employment actions such as patient solicitation |
Ensure non-compete clauses are excluded as they are unenforceable in CA |
|
Relocation Assistance |
Provides financial support for moving expenses |
Check for repayment obligations if the role ends early |
California-Specific Employment Laws Impacting Physician Contracts
California employment law provides additional protections for physicians:
- No enforcement of non-competes: Employers cannot limit your ability to work for competitors.
- Meal and rest breaks: Physicians, like other employees, are entitled to meal and rest periods under certain conditions.
- Whistleblower protection: California law protects physicians who report unsafe or unlawful practices from retaliation.
Independent Contractor vs. Employee Status
Your contract should specify whether you are an independent contractor or an employee. The distinction is crucial:
- Independent contractors: Do not receive benefits like health insurance or paid leave but may have more flexibility.
- Employees: Receive benefits and are generally subject to the employer's control over work hours and tasks.
California's AB5 law imposes stricter rules on classifying workers as independent contractors. Ensure that the classification in your contract complies with the law to avoid legal complications.
Negotiating Your Physician Contract in California
Negotiation is often possible for:
- Compensation structure adjustments
- Modifications to on-call responsibilities
- Tail coverage inclusion
- Bonus structures and repayment terms
An experienced attorney can help you avoid unfavorable terms and identify opportunities for a stronger contract.
Common Mistakes Physicians Should Avoid
- Not reviewing compensation formulas: Understand productivity metrics, especially RVUs, to avoid discrepancies in pay.
- Overlooking malpractice coverage: Ensure you're protected and understand whether tail coverage is required.
- Accepting ambiguous termination terms: Clear language around termination rights prevents future disputes.
For more information on protecting your financial future, check out our detailed guidance on trusts and powers of attorney.
Checklist for Physician Contract Review in California
Below is a helpful checklist to ensure you review all the essential aspects of your physician contract:
-
Compensation Details:
- Base salary and bonuses clearly defined
- RVU formula or productivity metrics explained
-
Work Schedule and Call Duties:
- On-call expectations and compensation specified
- Maximum work hours detailed
-
Malpractice Insurance:
- Type of policy (claims-made vs. occurrence-based)
- Tail coverage provisions clarified
-
Termination Clauses:
- Notice period for termination without cause
- Grounds for termination for cause
-
Restrictive Provisions:
- Confirm no illegal non-compete clauses
- Review non-solicitation agreements
-
Independent Contractor vs. Employee:
- Classification complies with California AB5 regulations
-
Relocation and Loan Repayment:
- Relocation stipend and repayment obligations specified
-
Legal Protections:
- Discrimination, whistleblower, and leave provisions outlined
When to Seek Legal Assistance
A contract review attorney experienced in physician agreements can help you:
- Identify ambiguous or unfavorable clauses
- Ensure compliance with California-specific employment laws
- Negotiate better terms related to compensation, work duties, and benefits
- Clarify complex legal language, especially concerning malpractice insurance and tail coverage
The Risks of Skipping a Contract Review
Physicians who sign contracts without a legal review risk agreeing to:
- Unclear compensation structures: May lead to unexpected pay discrepancies.
- Excessive non-solicitation clauses: Could restrict interactions with former patients or colleagues.
- Inadequate termination protections: Might allow for sudden job loss without appropriate notice or severance.
An attorney can help ensure your contract supports your long-term career goals.
Conclusion: Contact a Physician Contract Review Attorney in California
Your physician contract is one of the most critical documents in your career, dictating your financial security, job satisfaction, and professional growth. By conducting a thorough review, you can identify issues that may affect your future and negotiate more favorable terms.
At Heritage Law Office, we provide comprehensive legal support for California physicians navigating complex employment contracts. Contact us online through our contact page or call us at 414-253-8500 to schedule a consultation and protect your career.
Frequently Asked Questions (FAQs)
1. What is the importance of RVUs in physician contracts?
RVUs, or Relative Value Units, are a key metric used to calculate productivity-based compensation in physician contracts. They measure the value of services provided based on factors like time, skill, and intensity of care. Understanding the RVU structure ensures that physicians receive fair compensation for their work, especially if their pay includes bonuses or incentive-based earnings. Misunderstanding RVUs could lead to unexpected pay discrepancies.
2. Are non-compete clauses enforceable in California physician contracts?
No, non-compete clauses are generally unenforceable in California. Under California law, employers cannot restrict physicians from practicing within a specific geographic area after their employment ends. However, some employers may include non-solicitation clauses, which can limit a physician's ability to recruit former patients or staff. It is important to review these clauses carefully to understand their enforceability and impact.
3. What is tail coverage in a malpractice insurance policy?
Tail coverage is an extension of a claims-made malpractice insurance policy that provides coverage for claims made after the policy ends, as long as the incident occurred during the policy period. In many physician contracts, the employer provides claims-made coverage but may or may not cover the cost of tail coverage. Physicians should confirm whether they are responsible for purchasing tail coverage when leaving their employer to avoid gaps in protection.
4. Can I negotiate the terms of my physician contract in California?
Yes, physician contracts are negotiable. Key areas for negotiation include base salary, incentive compensation, call schedules, relocation stipends, and malpractice insurance terms. Physicians should not assume that the initial offer is final. Working with an experienced attorney can help identify negotiation opportunities and ensure the contract aligns with your financial and professional goals.
5. What should I do if my contract classification lists me as an independent contractor rather than an employee?
If your contract classifies you as an independent contractor, review the agreement carefully to ensure it aligns with California's AB5 law. AB5 imposes strict rules for classifying workers as independent contractors and requires that independent contractors meet specific criteria. Misclassification can lead to legal and financial issues, such as missed benefits and tax complications. Consulting with an attorney can help determine whether your classification is correct and compliant with the law.