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Employment Contracts 101: Paving the Path before Walking Down It

One of the most common adventures I navigate with my advanced practice nurse (APN) clients is the negotiation of employment contracts.  Long before an APN signs an employment contract, it is important to consider the interaction of personal and professional goals.  To examine these areas, the APN may ask questions such as: (1) Is this geographic location desirable for me (and my family)? (2) What type of work environment is attractive?  (i.e., hospital, clinic, private practice with a physician, an APN practice, etc.) (3) Is the monetary compensation adequate to meet my needs? (4) What is the employee retention rate at this practice?  Is there high employee turnover?

After determining whether the work environment will be a good fit, we come to the basic contract components.  Whether looking at first job offers for recent or soon-to-be APN graduates or helping an experienced APN evaluate new professional growth opportunities, there are several key components to employment contract negotiations that remain constant.  Most importantly, please remember that if a term is not set forth in the employment contract, there is no evidence of an agreement between the parties on that matter if an issue arises later.  Thus, it is important to fully understand the terms of the contract prior to signing it.

In general, every employment contract should have terms outlining compensation, length of duration (term), benefits, ownership opportunities, and post-termination restrictions.

  1. Compensation – There are several ways to structure APN compensation.  Some employers offer set salaries, while others offer hourly wages.  Some employers use production based models, meaning that the APN is paid the excess of her collections for services rendered over expenses attributed to her services.  Finally, other employers offer a blended option which combines the above examples (i.e., salary/hourly wage and production bonus combination).
  1. Term – The duration of an employment contract may be for a specified length or may be perpetual until a party terminates the arrangement.  More importantly, the parties should define how the contract can be terminated.  There are generally two types of termination: “for cause” and “without cause.”  “For cause” specifies specific instances that lead to termination and “without cause” defines how the parties can end the relationship without a specific reason.
  1. Benefits – While not exhaustive by any means, the following is a list of common benefits to consider when negotiating an employment arrangement: vacation time, continuing education budget, malpractice insurance (including “tail” coverage), professional memberships and dues, health insurance, disability benefits, life insurance, cell phone/pager, subscriptions to professional publications, retirement plan, moving expenses, etc.
  1. Ownership Opportunities – If the potential employer offers the opportunity to become an owner of the practice, these terms should be negotiated prior to employment.  Buy-in terms include responsibilities to be completed prior to buying into the practice, the buy-in price, assets included in the practice, etc.
  1. Post-Termination Restrictions – As important as what happens during the contract is what happens after the employment ends.  An employment contract may include terms setting forth restrictions on an APN after the contract terminates, these may include a non-compete provision temporarily restricting future employment with competitors, non-solicitation provisions restricting an APN from recruiting the employer’s patients or employees, and confidentiality provisions restricting disclosure of information gained from the employer.

This article has briefly described key employment contract components.  To fully aid an APN in understanding and negotiating an employment contract, the APN would be wise to seek legal review by a healthcare attorney.  Paving the path set by an employment contract before walking down the employment path is essential to protecting an APN and his/her livelihood by setting clear employment parameters before embarking on the journey.

Article by Jeana M. Singleton, Esq. taken from Ohio Association of Advanced Practice Nurses March 2009 Newsletter

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