Contracts and restrictive covenants
Make sure you understand any expectation of signing an employment contract or non-compete agreement before accepting a new position.
This information is not intended as legal advice. Employment laws may differ greatly from state-to-state and from city-to-city. You should consult an attorney, preferably one knowledgeable in employment law, to determine which federal, state, and local laws apply to you.
Employment contract or no employment contract?
Your employer may require that you sign an employment contract as a condition of employment. Employment contracts obligate you to stay in the employ of the company for a certain length of time, usually with salary and duties clearly stated. There may be a provision for early termination of employment within the contract. You should always have a lawyer review any contract before you sign it.
Most states are "Employment-At-Will" states. Employment-at-will means that both the employer and the employee are free to terminate the employment relationship at any time for any reason, without cause or prior notice. Even with an employment contract, employment-at-will may still not be superseded. Be sure you understand how it applies to you and your situation.
If your employer does not require an employment contract, you should request an "offer letter" from your potential employer clearly stating the terms of your employment.
Restrictive covenants and non-compete clauses
An employment contract may contain restrictive covenants and/or non-compete clauses. These are highly variable and may be inserted into a contract to restrict an employee from taking another job within a certain distance from the original place of employment for a certain amount of time after employment is terminated.
- The general guideline for a restrictive covenant is a radius that encompasses 80 percent of the patient base of the practice as the geographic restriction.
- There are no set guidelines regarding the time restrictions of a non-compete agreement, although one to three years is standard.
If the clause is too restrictive, this can be a point of negotiation. Again, a lawyer should always be consulted before signing any contract.