Introduction
This article summarizes some of the key components of Washington physician employment contracts. This article is not legal advice. For questions concerning your contract, you should consult with a Washington physician contract lawyer.
Please also note that, in addition to MDs/DOs/NDs/DVMs, I provide contract review and advice for a wide variety of other health care professionals including assistance with the following:
- Washington Nurse Practitioner employment agreements;
- Washington Physician’s Assistants employment agreements;
- Washington dentist employment agreements;
- Washington optometrist employment agreements;
- Washington mental health professionals;
- Washington independent contractor practitioners;
- and other licensed professionals
The full range of licensed healthcare professionals in Washington State is indeed substantial. See this list from the Washington Department of Health (“DOH”) of 94 professions, from “Acupuncture and Eastern Medicine Practitioner” to “x-ray technician.”
These “other healthcare professional” contracts will typically include many of the same provisions discussed in this article.
Please note that the headings below are simply examples of terminology used to caption employment agreement topics/sections. Other verbiage may be used in the captions you will see in your contract, and sometimes section headings are not used.
Preamble / Recitals
The initial section of most Washington physician employment agreements will contain rote verbiage stating that the employer wishes to employ the physician employee and the employee physician agrees to work for the employer. Of course, this section of your contract will vary depending upon whether your employment agreement is with a medical group, governmental or academic entity, or a non-profit entity such as a hospital. Regarding the latter, as of 2020, Washington had at least 90 hospitals, including 44 non-profits, 40 state or local government owned, and 7 for profit facilities. Certain of this prefatory language may relate to non-profit status and/or Stark Act exemption requirements.
This provision encompasses a mutual expectation that the employment relationship will be of a substantial duration, whether that be for a single year or a multiple-year period. However, this commitment will also be subject to an important qualification, which will provide that the employment term will be fulfilled only if neither party terminates the contract for reasons set forth later in the Termination section of the agreement. Those reasons will generally include a “without cause” option, by means of which either party may unilaterally terminate the contract; if the without cause notice period is 90 days, then a 1-year contract can theoretically be a 90-day contract. Because of the time and expense of recruiting and hiring physicians, your employer will be unlikely to exercise this option without careful consideration. Losing an important contract with a healthcare facility, which in turn reduces demand for an employer’s services, is an example of an event that could result in a without cause termination.
Conditions precedent
This, or a similarly-entitled provision, will contain the various licensing, certification, and privileging requirements of the physician, including a valid Washington medical license, medical staff privileges as needed at designated healthcare facilities, a valid Federal Drug Enforcement Agency number, and may provide that the physician will self-query the National Practitioners Data Bank (“NPDB”) and provide the report to the employer. Board Certification or Board Certification eligibility will also generally be required (close to 90% of American physicians are Board Certified).
Physician duties
These provisions will generally specify the employment status of the physician – whether full-time, part-time, or perhaps independent contractor (in which case an independent contractor agreement should be utilized, not an employment agreement) – and require that the physician’s best efforts be applied on behalf of the employer, consistent with applicable medical standards of the American Medical Association and other regulatory bodies. Likewise, the employer will not interfere with the physician’s best judgment in the practice of medicine, a Stark Act requirement and consistent with medical ethics and avoidance of corporate practice of medicine.
Your Washington physician employment agreement will also likely indicate that the physician will work a certain amount of hours per week, or shifts per month, whether that be in a clinic, hospital or elsewhere, and will be available as needed for call coverage. Call coverage is a topic that is often addressed in only generic terms in a physician contract, i.e. the contract will simply state that call coverage is shared equally among the other physicians in the group/workplace. You will certainly (and should) address the topic of call coverage during the interview process or in other discussions with the employer before you ever receive a draft employment contract.
Washington physician employment contracts may include a specific schedule, e.g. office hours are 9 to 5 Monday through Thursday with 4 hours on Friday allocated to administrative duties. Other contracts may simply state that, e.g., X number of hours of patient contact per week is expected, without specifying the days or hours the employer requires the physician to be in “the office.” Or the contract may specify, e.g., 15 shifts per month, pursuant to a schedule assigned by the employer. If you have specific requests or requirements concerning scheduling or geographic location where your services are performed, you should address them with the employer before signing your contract.
Many other issues may also be addressed under the “physician duties” category of an employment agreement. One example is “administrative” duties – there will typically be a reference to admin time, which won’t be spelled out in detail, and is rarely subject to additional compensation. You may also have duties relating to supervision of employees or, depending on your setting, medical residents, fellows, or students.
Physician’s representations
The provisions of this section may be included elsewhere in the agreement, including in the Recitals or in Physician’s duties sections. In any event, most Washington health care professional contracts will require that the physician verify certain representations concerning qualifications, disciplinary and malpractice matters. Many contracts will also request a verification that the employee is not subject to any agreements with third parties, e.g. a noncompete agreement, that would prohibit or otherwise interfere with your employment.
Employer duties
Another important section of your contract will provide in general terms the duties of your Washington physician employer. Many of the topics addressed in this area are obvious, e.g., the employer will provide facilities and support staff along with adequate equipment for the physician’s practice area. If there is a significant investment required of the employer – such as the purchase of expensive equipment or hiring of certain skilled personnel – you may want that obligation spelled out in the contract, or perhaps in an addendum, to avoid delay or misunderstanding later. The contract will also reserve the right to the employer to establish the physician’s work schedule and location of employment.
Compensation
From a guaranteed base salary to a compensation plan based exclusively on productivity, e.g. measured in RVUs or fees collected, there is a wide range of possible compensation arrangements for employed Washington physicians. While the body of the contract will contain at least a placeholder provision addressing compensation, the details of the compensation package in a Washington healthcare provider employment contract is often found in an Exhibit, Addendum or Attachment, with a cross-reference to same in the body of the Employment Agreement.
Many physicians begin their careers with a guaranteed base salary. This makes sense for many reasons. One benefit to a guarantee is that new practitioners often have financial obligations (read: student loans, but also in many cases young families) that require a predictable income for budgetary purposes. In addition, new practitioners may experience a lighter caseload until their panel or patient base is full. There are certainly exceptions to the ‘light caseload’ concept, however, as physicians may also step into a very full schedule, particularly if they are replacing a retiring doctor or practice in an underserved geographic or practice area.
There are myriad forms of incentive compensation and productivity bonuses. These are sometimes very clear, and occasionally not clear at all. Some physicians are paid with a percentage of collections received for their work, with perhaps a quarterly bonus based on other factors.
You are already familiar with wRVUs, which many employers will use to determine productivity compensation. RVU-based compensation is favored by many as it rewards and incentivizes full schedules and efficiency, and generally allows practitioners some flexibility in terms of income. A detailed discussion of productivity compensation is beyond the scope of this article.
Your physician compensation may also be based on a per-shift rate, whereby the more shifts you work, the greater your income will be.
Signing and Relocation Bonuses, and Student Loan Repayment Assistance
Signing bonuses and relocation reimbursement are a form of compensation in that they are, or may be, taxable. Likewise, your employer may provide student loan repayment assistance. Questions concerning the effective tax treatment must be addressed with a tax attorney or tax adviser.
Each of these additional forms of compensation and/or benefits, however you prefer to designate them, is often subject to repaying obligations if the employee does not stay employed for the duration of the contract term. These repayment obligations are also often subject to forgiveness on an amortized basis over the life of the contract term.
Benefits
The good news is that benefits available to you in your new employment position as a physician are apt to be quite good. Differences from one employer to another may be minimal in some areas from one employer to the next. For example, CME reimbursement and CME days off may vary, but not drastically; and the same is true for health, disability, and life insurance – there is some variability but generally the benefits offered will be within market and commercial reasonableness).
Note that time off is an important consideration and this is one area that often varies significantly among employers. Another consideration is the workplace culture in terms of whether your peers tend to use all their available vacation. This is not a contractual issue per se, and is something you will likely pick up during the interview process and in discussion with your prospective colleagues.
The specifics of benefits may be set forth in the body of a physician employment contract, but more often are addressed in an attachment cross-referenced in the contract body. Sometimes the specifics of benefits are left entirely to a separate document such as a “benefits sheet” or “benefits summary,” with the contract simply stating that your benefits will be the same as other similarly-situated employers in your workplace.
Professional liability (malpractice) insurance
Malpractice insurance obligations will be set forth in your Washington physician employment contract. The most common approach is for your employer to provide malpractice insurance to its employees during employment. Some contracts will spell out the limits, e.g. $1 million per occurrence and $3 million aggregate are common minimum amounts. Generally, however, your contract will simply state that the employer will provide you with the same malpractice insurance provided to your colleague practitioners.
Tail coverage is required for “claims made” policies, but not for “occurrence” policies. When you leave employment, responsibility for tail coverage if you have been covered under a “claims made” policy varies significantly. While either the employer or employee may have sole responsibility for tail coverage, in other contracts you will find a contingent allocation of responsibility. Considerations as to how responsibility is apportioned may include whether the physician terminates the contract for cause, or if the employer terminates the relationship without cause; and in some cases tenure will play into the analysis, with the employer paying for part or all of the tail insurance, depending upon how long the physician remains employed. In any event, tail coverage can be an expensive obligation and it’s important to understand how your employment agreement governs tail coverage and also to consider whether there is room for negotiation on this topic.
Termination provisions
Your Washington physician employment agreement will generally contain a list of grounds for immediate termination with cause. These tend to be fairly standard, and include, for example:
- loss of medical license or privileges
- malpractice uninsurability
- commission of fraud or serious crimes
- exclusion from Medicare or other third party payors
- breach of the contractual terms
- substandard performance or anything endangering patient safety.
With regard to alleged breach of contract, the termination provisions ideally will also contain a “right to cure” provision. The gist of such a provision is that if the employed physician believes the employer is not fulfilling its contractual obligations under the agreement, the employee must provide written notice to the employer of the alleged breach, and the employer is provided a brief period of time, e.g. 30 days or 14 days, in which to correct the problem. The contract may also include a comparable right to cure option in the employee’s favor, whereby the employer must provide notice to the employee if a breach of contract is allegedly, e.g. that performance expectations are not being met; the employee is then given a short period of time in which to cure or correct any perceived deficiencies.
Your physician employment agreement will also generally include a “without cause” provision (although those magic words may not be, and need not be, used). Pursuant to this provision, either party may terminate the employment relationship upon providing notice of termination; typically, the notice period will be from 60 to 120 days. The “without cause” provision will also likely give the employer the option to mandate that the physician cease working prior to the end of the notice period, provided that the employer pays the compensation due for the full notice period.
Washington restrictive covenants are briefly addressed in the following section, but a point apropos to both termination and restrictive covenants is that, under Washington Law, RCW 49.62.020(1)(c), if your employment “is terminated as the result of a layoff,” the noncompetition covenant is “void and unenforceable . . . unless enforcement of the noncompetition covenant includes compensation equivalent to the employee’s base salary at the time of the termination for the period of enforcement minus compensation earned through subsequent employment during the period of enforcement.” This unique provision of Washington law introduces a mandatory and welcome element of fairness to the employment relationship. In other jurisdictions, I often counsel physicians to attempt negotiation to persuade the employer to agree that if the employer terminates the doctor’s employment “without cause,” then the employer agrees not to enforce any noncompetition restriction.
In any event, when it comes time to consult with a physician contract lawyer Washington law has many nuances and I would be happy to answer any questions you may have concerning your Washington employment contract.
Restrictive covenants
Restrictive covenants are the favorite topic of . . . almost no one. Nonetheless, restrictive covenants are among the most important and potentially controversial provisions found in a Washington physician employment contract. Generally, restrictive covenants include: noncompetition, nonsolicitation (of customers or employees), confidentiality and nondisclosure provisions, trade secret protections, and invention assignments.
“Washington State’s new anti-noncompete law, Wash. Rev. Code § 49.62.020, was enacted based on the legislature’s finding that ‘workforce mobility is important to economic growth and development.’ Wash. Rev. Code § 49.62.005. Chapter 49.62 applies retroactively to all cases filed after January 1, 2020, regardless of when the cause of action accrued. Wash. Rev. Code § 49.62.100.” Robins v. NuVasive, Inc., 2020 WL 7081588 (E.D. Wash. Dec. 3, 2020).
The requirements for an enforceable non-compete agreement under Washington law include:
(1) the requirement of a noncompetition provision as a condition of employment must be disclosed to the employee in writing no later than the acceptance of an offer of employment;
(2) the employee must earn at least $100,000 annually (which will be adjusted annually as set forth in RCW 49.62.040); and
(3) the permissible noncompete duration will be 18 months or less, although this is a rebuttable presumption which the employer may counter by “proving by clear and convincing evidence that a duration longer than eighteen months is necessary to protect the party’s business or goodwill.”
As mentioned above, RCW 49.62.020(1)(c) also includes a provision to the effect that if the employee is “terminated as the result of a layoff,” the noncompete provision may be enforced only if the employer provides continuation of base salary for the period of enforcement, minus any income earned in subsequent employment (not for a competitor, of course). There will almost certainly be judicial interpretations of this provision as to what exactly will be considered a “layoff” under the statute.
Nonsolicitation and confidentiality provisions are not included within the reach of Washington’s noncompete statute. Confidentiality provisions are universal in physician contracts, and include not only the typical HIPAA requirements but also address issues of access to and control of patient medical records, which will reside with the employer in nearly all cases, until and unless the patient requests the records be provided to another entity or provider.
Although one might expect a certain uniformity in the language of nonsolicitation agreements, nonsolicitation agreements come in an endless array of formulations. In many contexts. A broad nonsolicitation can be as nettlesome as a noncompete provision, so review yours closely and consult with an employment attorney if you have questions about the scope of the restrictions imposed.
Dispute resolution
You will want to pay attention to the form of dispute resolution mandated by your employment agreement. Healthcare provider employment contracts are no exception to the multi-decade trend toward arbitration in the U.S. A Washington physician contract lawyer can explain the pros and cons of arbitration, but note that arbitration provisions are almost never a subject for negotiation; in other words, if your employer utilizes an arbitration provision in its employment contracts, the employer will not be inclined to make an exception for an individual employee.
See Burnett v. Pagaliacci Pizza, Inc., 196 Wash.2d 38 (2020), in which the Washington Supreme Court held that an arbitration provision contained in an employee handbook was not enforceable because it was not a separately signed agreement and was not even presented to the employee prior to signing the documents employee did sign.
The Burnett Court also found that even if an agreement did exist, it would be both procedurally and substantively unconscionable.
Besides the trend toward arbitration in American jurisprudence and healthcare employment contracts specifically, you may find a requirement for the parties to engage in mediation prior to proceeding to arbitration (or litigation). Mediation is often helpful in resolving legal disputes, provided both parties participate in good faith.
Notice
Your Washington physician employment agreement will include a statement of how, and to whom, any official notice must be provided.
Black-letter boilerplate provisions
Like most other written employment contracts, Washington physician employment contracts will generally conclude with a set of black-letter law provisions, placed before the signature block and attached exhibits, addendums, or schedules.
These provisions may include:
- Integration clause
- Severability clause
- Governing law
- Forum selection clause
- Assignment clause
- Counterparts provision
- Attorney’s fees provision.
Shareholder eligibility
Employment contracts for employees of a physician-owned or physician-governed practice group may address eligibility for shareholder or partnership status. For example, the contract may state that the employed physician is on a two-year track to shareholder status, which will be subject to review and approval by the group and the physician at that time. There are typically no guarantees that the specific time-frame will be binding upon the group. Other Washington physician employment agreements will not address the issue of shareholder/partner status, and will reserve the topic, if relevant, for discussion with the physician employee candidate outside the parameters of the initial employment agreement.
Washington Physician Contract Review Consultations
I handle Washington physician employment contract review and consultation on an hourly or flat fee basis. I have a keen appreciation for the fact that most residents and fellows have been living on tight budgets and most often have significant student loan obligations. While that will change for you, in time, that is generally the status quo before your first full-time employment position when you are reviewing a job offer or offers. For this reason, I try to provide reasonably-priced employment contract consultations. If you expect that there may be additional work beyond the contract review and consult, e.g. negotiations or drafting revised contract language to propose to an employer, I’m happy to help. But most young physicians I work with find that with some assistance understanding the legalese, they are able to carry to conclusion whatever negotiations with the employer are necessary or possible.
The consultation process, including a close review of the contract and related documents (offer letters, benefits summaries, perhaps some correspondence with a recruiter or Medical Director, etc.) generally takes from 90 minutes to 2 hours, but the consult itself, generally by phone, or video if you prefer, between attorney and client typically will take no more than 1 hour. I would be happy to help with a contract review and can be reached at:
