Employment Contracts Need to Ensure Physicians are Free Agents

Physicians often have medical interests other than clinical practice. A restrictive employment agreement could quash those endeavors. Physician employment agreements play an integral role in establishing the legal, financial and operational structure of the relationship between employer and physician/employee.

One clause of particular interest to many physicians is the clause defining what a physician can and cannot do outside of providing medical services on behalf of their employer—meaning, can the physician engage in such outside activities as moonlighting, volunteering, or serving as an expert witness? Moreover, if income is generated from these outside activities, who does that income belong to—the physician or the employer?

These questions should be clearly answered in the employment agreement. And if the answers in the employment agreement do not mirror the physician’s wishes, then these terms should be negotiated with the employer and memorialized in the employment agreement.

Consult Your Contract

The first question is whether the physician is even permitted under the employment agreement to participate in activities or perform services outside of employment. Some employers prohibit engagement in outside activities and services altogether, while other employers permit certain activities that do not interfere with the physician’s day-to-day responsibilities. Physicians should be aware of requirements that give the employer the right to approve or reject outside activities. If the physician wants to be able to engage in moonlighting, expert witness consultations and testimony, speaking opportunities, volunteer efforts, teaching, research or publishing, the physician’s desired activities should be specifically identified in the employment agreement as permitted activities.

For example: Dr. A was joining a medical practice and was presented with the group’s template employment agreement. The draft agreement precluded Dr. A from participating in any medically related outside activities. In the past, Dr. A had served as a volunteer doctor for the local marathon, a medical expert witness, and was a frequent paid speaker at conferences. For Dr. A, a prohibition on outside medical activities did not align with his interests. With minimal discussion, the practice permitted Dr. A to identify the outside activities that he could conduct without violating his employment agreement:

Consult your malpractice insurance carrier to confirm whether certain outside activities are covered under the policy.

“Notwithstanding the foregoing, Dr. A shall be permitted to engage in the following activities (each a “Permitted Activity”), so long as such activities do not materially interfere with his duties under this Agreement: (i) civic, philanthropic and community service activities, including, without limitation, volunteering for the [local] Marathon and (ii) speeches, publications, lectures, expert consultations, and expert testimony which do not involve or relate to services performed by the Practice.”