All contracts, whether complex or simple, establish rights and obligations of the parties to the agreement. In most situations, the parties do not enter the negotiations or relationship with equal strength or bargaining power. Often times the entity in the superior position offers a contract that attempts to allocate a disproportionate amount of risk or obligation to the other party or parties. This is often the case in a situation in which a young or new professional is offered an employment agreement by an established business. Often times the young (or at least new) professional is leaving school or training and is eager to get their “first job” with “real market pay.”
The young professional should not expect to achieve equal footing or negotiating leverage with a large or established business in these situations. Most often that is not realistic. However, there are a number of things that can be done to help with negotiations. While many professionals are at-will employees with or without a written contract, many professionals do have an employment contract. This is especially true in the medical community, and for this reason several of the following examples will, for illustrative purposes, be in the medical context.
One of the key areas for negotiations is regarding contract termination clauses. Although not always, professional employment agreements often contains a termination clause that allows the business to terminate the employment agreement “for cause.” The proposed employment agreement often will allow the employer to terminate the agreement for cause based on several standards. The key is to make sure these standards are objective and not subjective.
Whenever a subjective standard is used, the professional is essentially employed at the discretion of the employer. In those situations the termination of the professional could depend on only the opinion of those in charge with little or no regard for an objective standard or test to the situation.
One way to help avoid this situation is to make sure that the employment agreement uses objective standards in the termination clause. This can be done by either insisting on objective standards, or tests that are maintained outside the direct control of the employer.
The following chart lists some of the language commonly used in employment agreements and then a suggested change that may be more appropriate.
Subjective language |
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Objective language |
Agreement may be terminated due to “professional misconduct” |
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Specify that “professional misconduct is something that results from the violation of the Texas Medical Practice Act, or equivalent. This replaces the standard from the subjective opinion of the practice or hospital to a finding by the Texas State Medical Board. |
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“Physician diminishes the reputation or status of the practice” |
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Conviction of a felony by the physician. |
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“Failure to become credentialed on a managed care provider panel” |
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Add the additional language “Failure to become credential on a managed care provider panel, except for economical credentialing.” This additional language protects a physician from the inability to get on a panel solely because their specialty is over represented – which could unfairly result in employment termination. |
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“Suspension of staff privileges” at a facility where the medical practice admits patients. |
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Add the language “except a suspension caused by failure to comply with medical record keeping obligations, unless such a suspension continues for more than thirty (30) consecutive days.” Otherwise suspension of staff privileges for minor medical records violations could trigger an employment termination. |
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“Termination for a material breach” |
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Modify this language so that the termination is allowed only after the physician is notified in writing and given sufficient time and opportunity to cure the alleged breach. |
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May be terminated “for an act of moral turpitude” |
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Delete completely or replace with “conviction for a felony”. |
Regardless of the employment setting, if there is a written agreement, future disputes should be easier to manage if the contract contains objective vs. subjective terms.
Brad is a partner at Martin, Disiere, Jefferson & Wisdom, LLP, and h is practice includes civil litigation, insurance coverage, and health law.
