Healthcare Employment Law: What Employers and Physicians Must Know

A physician employment agreement must address compensation structure, the term and termination notice required, call coverage obligations, which party pays malpractice tail insurance, and the scope of any non-compete. A physician who signs without careful review frequently discovers later that a vague termination clause, an ambiguous bonus formula, or a broad non-compete prevents them from practicing near their home after leaving.

Employment litigation and consulting and healthcare compliance and regulatory counsel can advise on required physician employment agreement provisions and develop the drafting and negotiation strategy.

D&O and professional liability and healthcare laws counsel can advise on key contractual provisions and develop the contract review and risk mitigation strategy.

Non-compete clauses restrict the physician from practicing within a defined area for a defined period after the relationship ends, and their enforceability varies by state, with some refusing to enforce them at all and others enforcing them if reasonable in scope, duration, and geographic reach. A physician evaluating a non-compete should assess whether the restricted area is proportionate to the employer's actual patient catchment area and whether exceptions exist for patients who seek out the departing physician.

Restrictive covenants and employment litigation and consulting counsel can advise on the enforceability of non-compete clauses for healthcare providers and develop the drafting or challenge strategy.

Physician compensation must reflect fair market value for services actually performed, independently of any referrals to the employer's facility, and a compensation arrangement that cannot be justified at fair market value creates legal exposure for both parties. Common structures include a base salary with a wRVU productivity bonus, a pure wRVU model, and a salary plus quality incentive model, and each must be evaluated for Stark Law and Anti-Kickback Statute compliance.

Healthcare compliance and regulatory and healthcare fraud counsel can advise on Stark Law and Anti-Kickback Statute requirements for physician compensation and develop the compensation structure and documentation strategy.

A physician's classification as employee versus independent contractor depends on the actual working relationship, and a provider who works exclusively for one employer, follows its protocols, and uses its equipment with no independent profit opportunity is almost certainly an employee regardless of the contract's label. Misclassification exposes the employer to tax liability, benefit claims, and potential Stark Law compliance issues.

Employee misclassification and independent contractor agreement counsel can advise on classification standards for physicians and locum tenens and develop the compliance and contract structure strategy.

Healthcare workers who report patient safety, billing fraud, or regulatory concerns are protected from retaliation under the False Claims Act, ACA whistleblower provisions, OSHA protections, and state analogs, and an employer that adversely affects a worker whose protected reporting was a motivating factor faces liability for reinstatement and back pay. Healthcare employers should document independent legitimate business reasons for any adverse action against an employee who has recently made a compliance report.

Whistleblower and wrongful termination counsel can advise on whistleblower protections for healthcare workers, assess whether an adverse action constitutes retaliation, and develop the protection or defense strategy.

A healthcare provider may have a wrongful termination claim when the termination violates a written employment agreement, violates a statute such as the ADA, Title VII, or FMLA, or violates public policy such as terminating a nurse for refusing care that would endanger a patient. Hospitals and medical groups terminating providers who have recently filed compliance complaints, requested FMLA leave, or engaged in NLRA-protected activity should consult employment counsel before finalizing.

Wrongful termination lawsuit and workplace discrimination counsel can advise on wrongful termination grounds in a healthcare context and develop the claim or defense strategy.

Credentialing is the process through which a facility verifies a provider's education, training, licensure, board certification, and malpractice history before granting permission to practice, and it is a prerequisite for a physician to admit patients or bill under the facility's provider number. A provider whose privileges are denied or revoked has a right to a fair hearing under the medical staff bylaws before the decision becomes final.

Healthcare practice management and healthcare compliance and regulatory counsel can advise on credentialing and privileging obligations and develop the credentialing program and peer review strategy.

Healthcare employers face complex wage and hour obligations because clinical staff work twelve-hour shifts that complicate overtime, pre-shift and post-shift activities create off-the-clock risks, and states such as California impose nurse-to-patient ratios whose violation results in regulatory action and penalties. Healthcare employers should audit overtime methods, meal and rest break compliance, on-call classification, and applicable staffing ratio requirements.

Wage and hour and labor laws counsel can advise on wage and hour requirements for the healthcare employer and develop the compliance and audit strategy.