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Backing out of a contract

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  • #16
    That's the first time I've ever heard this happening.  Know many docs who have walked away from employment contracts without any financial repercussions, except maybe a blow to their reputation in the eyes of those they blew off.  Life is complicated and it's hard to plan things out perfectly.

    There should be a termination clause in the contract, which should allow her to walk away.

    I'm not so sure about the non-compete and whether that's enforceable.  State by state variability.


    • #17
      Exactly.  Especially if group #1 is small and group #2 is large corporation.  Group #1 will seek to recover recruitment funds and lost work (or cost of coverage of said work) due to the short notice.

      One way to compromise (again under direct advice of proven counsel) that is to offer to be that Locums for x amount of months to allow for coverage and ask Group #2 to delay hire until it is completed.


      • #18
        "Group #1 will seek to recover recruitment funds and lost work (or cost of coverage of said work) due to the short notice."

        Unless this is explicitly laid out in the contract, I don't think they have grounds to seek anything.  I know, because this has happened to our group more than once.


        • #19
          To answer the questions from Donnie that my organization has been involved with (and it would be considered one of the larger type organizations) :

          They litigate non competed very aggressively. Have gone to state Supreme Court multiple times. (My own experience having worked in four states is laws are all over the place regarding enforceability)

          Yes if they have a signed their contract we have considered them to agree to terms such as noncompete. I'm not aware though of any contract we offered that didn't have a signing bonus and moving expenses provided. Even if they had not started our internal legal team's opinion has been that they agree to show up on start date ready to work when they sign the contract.

          I'm interested in hearing about other experiences because I certainly don't think mine are comprehensive.

          However if I were the small practice, yes I would think carefully about litigating it. I don't think this would involve the kaiser type group at all. Why do you think we would harass them? Because of bigger pockets? I don't think small groups have to worry about developing a reputation of suing former employees, especially if successful in court at defending the noncompete. Again this is likely very subject to state laws. I believe my larger employer would be willing to take whatever stain you think it creates as part of their longer term strategy to defend their business interests and keep patients in house if you will. Ymmv

          As a related note, My employer would not likely hire someone with an unclear noncompete situation because they would just prefer to recruit someone else. Hire locums for bridge coverage if necessary.

          I feel like in this thread I am doing all the talking and I hope others comment.


          • #20
            Cozmopak said "Unless this is explicitly laid out in the contract, I don’t think they have grounds to seek anything. "

            In my contract no damages were specified, yet my legal counsel said that the hospital system could prove damages if they were so inclined to litigate the matter, not to mention the legal costs I would incur. I didn't want to risk it, so I cut my losses, signed a termination of employment agreement with the loss of ~20K in vacation time and felt fortunate to be rid of that place and on to greener pastures.


            • #21
              What specialty? I think that matters some here.

              If she's EM/Rads/Anesth etc e.g. hosp based employee model I wouldn't be as worried for her.

              If she's a rare subspecialist being heavily recruited or a surgeon who's going to bring a book of business in with her it would be more concerning.


              • #22
                I think the specialty matters too.  In my specialty, we don't bring in any patients, essentially cogs in a machine, so it's a bit different.


                • #23
                  Portlandia: there was no termination without cause section to your contract allowing employee to leave?  This is pretty standard for all at-will employment contracts.


                  • #24
                    No, there was no termination without cause section. The contract had termination with cause for both parties-which did not apply, but was silent on cases like mine, nor did it specify any damages.

                    My new and improved employer specifies damages to the tune of ~1K/day if breaking contract without cause (fortunately I am very happy here and have no plans to test it)


                    • #25

                      loss of ~20K in vacation time
                      Click to expand...

                      Can you clarify that?  Was this unused vacation time? Not really understanding


                      • #26
                        Portlandia: Ok, that's the difference.  I assumed most contracts included a termination without cause section.  If there is such a section, then you are an at-will employee and can leave at any time.


                        • #27

                          Portlandia: Ok, that’s the difference.  I assumed most contracts included a termination without cause section.  If there is such a section, then you are an at-will employee and can leave at any time.
                          Click to expand...

                          At will is like non competes, state specific.


                          • #28
                            Not if termination without cause is allowed, then by definition it is at-will


                            • #29
                              Thanks for sharing your opinions and experiences. Her contract has a 2 year non-compete, and I'm pretty sure her contract also has a termination without cause but requires a 90 day notice. I think the contract states that the employment contract will be effective on the effective date of sometime near the end of August. Does this mean the contract isn't valid yet even though she signs? Is the non-compete valid if she hasn't even started her employment but just signed the contract?

                              I'm just helping her out I don't know all the specific details and she doesn't want me to divulge too much information on this forum but she just wanted to get a feel of what would be the right steps. She's also a surgical sub-specialist.

                              She didn't have a sign-on bonus. They paid for her DEA license and state license, and may have paid some other fees for insurance, application fees, etc. Nothing major yet.

                              The second practice  has better salary, benefits, and the style of practice along with staff and doctors she'd be working is what's attracting her. The first group isn't necessarily a horrible option, but she's realized she doesn't want to go the route of a small private practice with option of partnership and she's convinced that although she'd be content with the first group, she'd be a lot happier with the second group. The second group does know that she signed a contract already.

                              My simple advice was that if she truly sees herself happier working at the second group she should go there, call the first group up apologetically and tell them that she doesn't see a future working with them and apologize for all the trouble they had to go through. She should for sure in my opinion definitely reimburse the group for paying for her DEA and state license and other fees, and may be some other costs that may have incurred. In the end it may be better for both groups as the first group is looking for someone committed and the opportunity for partnership.

                              I know there must be tons of physicians who have signed employment contracts that have backed out last minute. Portlandia is actually the first to know that suffered a pretty big financial repercussion for backing out on a contract.

                              Thanks for your thoughts, I'll probably advise her to getting a lawyer if she decides to go through with this.


                              • #30
                                What does her contract say with the first job regarding advance notice for leaving?  Theoretically, say it's a 60 or 90 day notification, could you start the job, having already given your notification and then leave after 60-90 days?

                                Agree with advice to consult a contract lawyer in the area.  That is really the only advice that holds weight.