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COVID-19 and Physician Employment Contracts – Termination vs Furlough

We have received many emails from Physicians about the current COVID-19 pandemic and how it is impacting their schedule, job, and income.  We thought writing a few quick blog posts on the topics and emails we are receiving would be helpful. 

We recently received the following from a Physician:

My job has furloughed me. I was wondering, given my contract has a 90-day termination clause…can they do this without paying me the 3 months they owe me?

First off, a furlough is not normally permanent termination.  It is typically a way to avoid termination.  Terminations are permanent (unless hired back, which the agreement may prohibit for a year) and physician furloughs tend to be temporary.  Most physician contracts we review allow for a 60/90/120 day no-cause termination by either party.  Should the employer decide to terminate the physician or any employee with this in his/her agreement, they would need to provide the defined notice or pay the compensation described in the contract for the defined notice, even if the physician was not working due to the clinic closed.  If the physician is furloughed, when the clinic reopens, the provider’s job is still active and the agreement hasn’t changed unless another agreement has been signed (see future posts for contract addendums we are seeing on this).

We are seeing employers furlough physicians to avoid financial loss and bankruptcy (for instance, no revenue or 80% revenue declines means paying a Physician $20,000 to $50,000 or more per month salary may not be viable).  This assumes the practice resumes operations and the physician has a job at that point.  This current job market may or may not be the time you prefer termination with a 60-120 day payout.  It is also possible that certain provisions in your contract may provide how the employer has to handle the contract if the practice does not reopen and if that has any effect on notice periods/payments.

Of course, we are not a law firm here at Contract Diagnostics, and we do not provide legal advice.  Each agreement is distinct and separate and governed by different state laws/statues so know yours well.  Additionally, it is unclear if any laws/statues that mighty be enacted related to a pandemic could have any impact on the provisions of your contract. We suggest you also check to see if a furlough may qualify you for any unemployment benefits.  If we can help in any way, we are here.  Free consults can be booked on our main website here.  If you are seeking certain advice with respect to how specific laws/statues might affect your contract we will not be able to provide any information in this manner.