The first physician employment contract a new attending signs is, in financial terms, the single largest document of their career to date. It commits the next two to five years of income, defines what happens if the job ends — voluntarily or otherwise — and contains language that, if accepted without negotiation, can quietly cost six figures over the contract term. The contract is also drafted by the employer's lawyer for the employer's benefit. That is not unusual; it is the default. The error new attendings make is treating the document as a take-it-or-leave-it offer letter rather than the negotiable legal instrument it actually is.
This article is a working red-flag checklist. It walks through the seven clauses that most often hide cost, ambiguity, or risk in a 2026 physician employment contract, lists the specific language to look for, and points to public, primary sources where you can read the law and policy yourself. It is written for the new attending or graduating fellow signing their first post-training contract, and is intentionally framed around process — what to look at, in what order, and what to ask — rather than around dollar figures, which vary by specialty and state. Numerical specifics in compensation negotiation belong in a separate review; this is about contract language.
The fundamental rule before we start
Get a physician contract attorney. The total cost is typically one to three thousand dollars. The downside of skipping that review is the cost of a non-compete you didn't negotiate, a tail-coverage clause that shifts an entire malpractice premium onto you on the way out, or a partnership-track promise that never materializes. The math is not close. Most physicians are now employed rather than self-employed — meaning the contract is increasingly the central financial document of a medical career, not an exception. Treat it accordingly.
This checklist is the document you bring to the attorney. Going in with specific questions reduces the attorney's billable time and surfaces the issues you care about, rather than letting the review default to a generic markup.
Red flag #1 — Non-compete (restrictive covenant)
The single most expensive clause for a physician is usually the non-compete. A typical version restricts you from practicing within a defined geographic radius of any office where you saw patients for a defined period after the employment ends. The cost of that restriction depends entirely on the geography — a 25-mile radius around a single suburban office is meaningfully different from a 25-mile radius around every office in a multi-location health system, which can effectively cover an entire metropolitan area.
What to read for: the geographic definition ("any location at which Physician practiced" is more restrictive than "the primary location of practice"), the duration (one year is the rough industry norm; two years should be pushed back on), and the scope of "practice" (does it cover only your specialty, or any clinical practice).
State-by-state matters. The AMA's policy on physician restrictive covenants opposes them on access-to-care grounds. Enforceability varies sharply: California's Business and Professions Code § 16600 generally voids non-competes statewide; Minnesota and North Dakota have similar broad prohibitions; Oklahoma severely limits them. Many states enforce them with limits on duration and scope. Federal action also remains in flux — the FTC's 2024 rule attempted a near-total ban on non-competes nationwide and was subsequently challenged in federal court; the state of the federal rule should be reconfirmed with counsel before you rely on it.
What to negotiate: a buyout option (a defined dollar amount that voids the non-compete if paid on departure), a carve-out for employer-caused terminations (if they fire you without cause, the non-compete drops), and a tighter geographic definition tied to your primary practice site rather than the entire employer footprint.
Red flag #2 — Tail coverage (malpractice insurance after departure)
Most physician employment contracts include claims-made malpractice insurance, meaning the insurance covers claims filed during the policy period regardless of when the underlying incident occurred. When the policy ends — usually at the same moment the employment ends — claims filed after that date are no longer covered unless tail coverage (an extended reporting endorsement) is purchased.
Tail coverage is expensive. A common rule of thumb is one to three times the final-year annual premium, paid in a lump sum at the moment of departure. For a specialty with a $30,000 annual premium that is a $30,000–$90,000 line item exactly when you are also trying to relocate, possibly buy a house, and possibly fund a new partnership buy-in. The single most important clause-level question in this section: who pays.
What to read for: language specifying whether the employer pays, the physician pays, or the responsibility shifts based on the reason for departure ("if Physician resigns without Good Reason, Physician shall be solely responsible for the tail coverage premium"). The last form is most common and is the one to negotiate hardest. Reference: American College of Physicians guidance on practice insurance distinguishes claims-made from occurrence policies and is a useful primer if the contract language is unfamiliar.
What to negotiate: employer-paid tail coverage in all cases except for-cause termination; or, if that fails, employer-paid tail after a defined tenure (e.g., the employer covers tail if you have worked at least three years), with cost shared on a sliding scale before that.
Red flag #3 — Compensation structure and RVU thresholds
Modern physician employment contracts increasingly tie compensation to wRVU (work-relative-value-unit) productivity. The structure is usually a base salary plus a per-wRVU bonus above a defined threshold, or a straight per-wRVU conversion factor. The red flags here are subtle.
What to read for: the wRVU threshold (is it the median of the specialty per MGMA productivity data, or is it set high enough that the bonus rarely triggers?), the conversion factor (the dollar amount per wRVU above the threshold), and the timing of bonus calculation (annual? quarterly? on a trailing twelve-month basis?). Also: how are wRVUs counted on shared procedures, surgical assists, and supervision of advanced practice providers? If the contract is silent on these, ambiguity at year-end becomes the employer's interpretation.
What is missing matters more than what is included. Contracts often omit a "no-claw-back" clause — language stating that earned wRVU bonuses cannot be retroactively adjusted downward. Without it, a sudden mid-year coding audit or threshold reset can erase quarters of bonus you thought was paid.
What to negotiate: a defined wRVU threshold pegged to a public benchmark (MGMA 50th percentile is conventional); a clearly-specified conversion factor at or above the MGMA conversion benchmark for your specialty; and a no-clawback clause on earned wRVU bonuses.
Red flag #4 — Partnership-track and buy-in language
If you are joining a private group with the expectation of becoming a partner, the contract should describe the partnership process with specifics — not aspirational language. "Eligible for consideration after two years of employment" is not a track; it is a sentence that lets the group never offer partnership at all without breaching the contract.
What to read for: a defined timeline (you become eligible for partnership review at month X), defined criteria (productivity, board certification, citizenship-in-the-group behaviors), a defined buy-in cost methodology (book value? a multiple of revenue? appraised market value?), and a defined ownership share at full partnership. A contract that says "partnership terms to be negotiated at the time of offer" is asking you to take a meaningful pay cut for two years on the strength of a future promise the group has not made.
What to negotiate: all four of the above in writing. If the group will not specify the buy-in methodology or timeline, weigh that as a meaningful piece of information about whether partnership will actually happen.
Red flag #5 — Termination clauses (with and without cause)
Termination language defines the exits. Read for symmetry: both the employer and the physician should be able to terminate without cause on the same notice period (typically 90–180 days). An asymmetric notice provision — the employer can fire you on 30 days, you must give 180 days to resign — is a flag.
What to read for: the definition of "Cause" (broad definitions like "any conduct the employer determines is detrimental" give the employer wide latitude to terminate without paying severance, without triggering tail coverage relief, and while keeping the non-compete in force), notice periods on both sides, and the consequences attached to each type of termination (severance, tail coverage, non-compete enforcement, bonus prorating, accrued PTO payout, partnership-track standing).
What to negotiate: a narrow, enumerated definition of Cause (loss of license, felony conviction, exclusion from federal healthcare programs, gross misconduct as defined) rather than an open-ended one; symmetric notice; and severance equal to at least the notice period if the employer terminates without cause.
Red flag #6 — Restrictive covenants beyond non-compete
Beyond the non-compete itself, contracts frequently contain three related restrictions that survive employment: non-solicitation (you can't recruit the employer's patients, staff, or referral sources after you leave), non-disclosure (around confidential information, including patient lists, fee schedules, and operational data), and assignment of inventions or intellectual property created during employment.
What to read for: the duration and scope of each. Non-solicitation of patients is a thinly-disguised non-compete in many physician practices — if you can't accept patients who follow you, the practical effect is the same as a geographic non-compete. Non-solicitation of staff is usually narrower and more defensible. IP assignment language for physicians is sometimes drafted from templates designed for software engineers and may sweep in pre-employment patents, side businesses, or unrelated inventions; this is worth tightening explicitly.
What to negotiate: a defined and limited duration on non-solicitation (12 months is typical); a carve-out for patients who initiate contact with you (rather than the other way around); and IP language that is limited to inventions made in the scope of employment, using employer resources.
Red flag #7 — Call schedule, on-call coverage, and "other duties"
Call obligations are often the least-quantified part of physician contracts and the most variable in lived experience. A contract that says "Physician shall participate in the call schedule on a rotating basis equitable among the practice" is doing none of the work to protect you against being assigned a disproportionate share of weekend, holiday, and overnight call.
What to read for: a defined call frequency (1-in-X), defined compensation for call above a baseline (per-night stipend? per-call bonus?), and language around backup or unassigned call (what happens if a partner is out on extended leave — does the call burden distribute equally or fall on the most junior physician?). Also: "other duties as assigned" language. In a physician contract, this clause should be tightly scoped to clinical duties of the kind described elsewhere in the contract, not a generic catch-all.
What to negotiate: a defined maximum call frequency, additional compensation for call beyond that frequency, and a narrowed "other duties" clause.
How to actually run this review (the order matters)
The order in which you raise issues in negotiation matters. Lead with the items that have the largest financial impact and the strongest counter-arguments, and the rest become easier. A working sequence:
- Tail coverage: employer-paid in all cases except for-cause termination. This is the single largest specific dollar line item and most employers will agree to it for a desirable specialty.
- Non-compete: narrowed geographic scope, defined buyout, carve-out for employer-caused termination.
- Cause definition: enumerated and narrow.
- Compensation: wRVU threshold pegged to MGMA median, no-clawback clause.
- Partnership track: dates, criteria, buy-in methodology, ownership share — all in writing.
- Notice symmetry and severance: equal notice periods, severance equal to notice if employer terminates without cause.
- Call frequency and "other duties": defined and capped.
Each of these is a negotiating ask. None of them is "asking too much." Reputable employers expect contract negotiation. If you are being told the contract is "non-negotiable," that itself is information about how the employer will operate when there is a future dispute.
What this article is not
This checklist is intentionally focused on the legal-structural side of the contract and not on compensation benchmarking, retirement and benefits, signing bonuses, or relocation packages. Compensation benchmarking by specialty and region is covered well in the MGMA DataDive Provider Compensation report and the various specialty-society compensation surveys; treat any single article (including this one) as a starting point and verify against current data with a contract attorney and a physician-finance advisor. The clauses described above are the ones that most commonly produce six-figure surprises after the fact — the financial value of catching them is independent of the headline salary number.
FAQ
Do I really need a contract attorney? Yes — and specifically one who reviews physician contracts in your state. A general business attorney will miss specialty-specific issues, and a friend or family member who happens to be a lawyer is the worst possible choice. Plan on $1,000–$3,000 for a full review.
Is a non-compete really enforceable? It depends on state law, the specific language, and the facts at the time of dispute. In some states, courts will rewrite an overbroad non-compete to make it enforceable; in others, an overbroad clause is unenforceable as a whole. Never sign a non-compete you'd be unwilling to honor — you may be the test case.
What if I'm already signed and didn't negotiate? You can usually still raise issues — the contract will have a renewal or amendment process. Time it to coincide with a productivity milestone, a partnership-track checkpoint, or another natural opening.
Should I sign on the spot during orientation? No. Take the contract home, take it to an attorney, and respond on a written timeline. Any pressure to sign immediately is itself a red flag.
Sources and further reading
- AMA — Restrictive covenants for physicians (policy and resources)
- AMA Research — Employed physicians now exceed self-employed
- MGMA DataDive — Provider Compensation and Productivity
- American College of Physicians — Practice insurance (claims-made vs occurrence)
Disclosure: This article is educational only and is not legal, tax, or financial advice. Physician employment contracts are state-specific, specialty-specific, and employer-specific. Always consult a licensed contract attorney experienced in physician agreements in your state before signing. MD Passive Income is published by Jaceal, LLC; we may earn affiliate commissions when readers sign up through links to third-party services. Affiliate links do not affect the rankings or recommendations in our articles.