Contracting Tips to Protect Your Business
As an attorney, it is my job to provide each of my clients with advice that will protect the client's business interests. One of the best ways to protect your business interests is to execute a written contract with each employee and independent contractor working in your business.
Top 5 Reasons to Have a Good Contract in Place
1. Impose restrictive covenants
2. Protect confidential information
3. Protect medical records
4. Impose indemnification obligations
5. Address legal compliance issues
Restrictive Covenants
Restrictive covenants and the mechanism for enforcing them should be customized to the specific situation in order to best protect your business interests.
| Restrictive covenants can take any of the following forms: |
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Non-competition: This covenant will be enforceable if the scope, geographic area and duration are reasonable. A typical duration is 1-2 years. The scope must be narrowly crafted to protect your legitimate business interests (i.e. practice as a physical therapist). The geographic area will vary with the situation (i.e. 7 miles for a primary care physician in an urban area vs. an entire county for a surgeon in a rural area). |
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Employee non-solicitation: This covenant will prevent the solicitation of your employees, an important business asset. |
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Patient/customer non-solicitation: This covenant protects one of your most important business assets. The covenant typically covers direct solicitation (i.e. phone calls, direct mailings) and permits indirect solicitation (i.e. newspaper ads, general mailings). |
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Confidentiality: The covenant should specify the type of information you consider to be confidential to your business. |
Access to Medical Records
Medical records are typically the property of the business and a departing individual should only be provided with limited access to the records for certain purposes (i.e. malpractice suit or audit). When the departing individual is a medical professional, it is very important to specify how patients will be notified of the departure and the mechanism for transferring medical records if a patient wants to continue to see the individual at a new practice location.
Legal Compliance
The contract should specify that the individual will comply with the policies of the business and its legal compliance efforts. A business that is a covered entity under HIPAA should include in the contract a confidentiality provision in compliance with the HIPAA Privacy Standards. The contract should also provide that the contract terminates in the event any aspect of the contract becomes illegal.
Indemnification
Indemnification provisions are not typically included in employment agreements but should be included in independent contractor agreements.
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