What’s in YOUR Contract?

The commercial asks, “What’s in YOUR wallet?” We say the answer depends largely upon what’s in YOUR contract!

Malecki Brooks Ford Law Group, LLC reviews many physician employment contracts from employers all over the United States.  This allows us to see what is happening in the physician employment market not only related to compensation but also to specific legal terms of employment agreements. Although we always incorporate what we learn into our advice to clients, we wanted to give you a “heads-up” of the following examples of specific changes we observed over the past year that you should be aware of:

Increase in the number of Force Majeure Clauses

We observed an increase in the frequency of Force Majeure Clauses which are geared toward allowing employers to terminate their duties based upon acts of nature including pandemics. Force Majeure Clauses should not be glossed over as boilerplate language in contracts. Force Majeure Clauses should be scrutinized, negotiated, and documented appropriately. It is of utmost importance to ensure that early termination protections still apply in the event the Force Majeure Clause is triggered. Also, be especially cautious and seek legal advice if you are presented with an Amendment to your current contract that asks you to agree to a new Force Majeure Clause. See also All Boat, No Rudder: Force Majeure Clauses (mbhealthlaw.com)

Disparate notice periods in Termination Without Cause Provisions

We observed an increase in the frequency of early termination without cause notice provisions that are not equal in the amount of days’ notice that must be provided to the non-terminating party. As an example, most of the time contracts state, “Either party may terminate this Agreement upon ___ days’ notice to the other party.” The number of days needed for notice is almost always the same for either party (60 or 90 days being common but there is no legal requirement). Over the past year we saw clauses requiring the employee to provide more notice than the employer. Why does this matter? Because the number of days’ notice required will govern the amount of pay the employee receives if the employee is asked not to work during the notice period. In these situations, we ask for equal notice.

Ongoing Changes in Requirements for Restrictive Covenants

Illinois enacted changes in Noncompete Provisions effective 1/1/23. See also Illinois Changes the Legal Landscape for Non-Compete Agreements (AKA Restrictive Covenants) (mbhealthlaw.com) Recently the FTC proposed a rule that would outlaw all restrictive covenants claiming they are an unfair labor practice. Stay tuned for whether the rule is approved. In the meantime, they still must be carefully reviewed and negotiated to minimize risk. Aside from compensation, the effects of a Restrictive Covenant can be detrimental to an employee post termination.

For further information contact us.