Physician Employment Agreement Attorneys In Texas

Physician Employment Contract Lawyers for Texas Healthcare Providers

Whether you’re considering offers at the end of residency, need to hire a doctor for your new medical practice or existing group, or are facing any matter involving the employment of a physician in Texas, the contracts you execute define the future of employment relationships, and have major implications for practitioners and practices alike.

At Hendershot Cowart P.C., our physician contract attorneys have extensive experience in matters of medical contracts and health and medical law. We have been reviewing and negotiating physician employment agreements since 1987, and regularly counsel physicians, hospitals, and practice managers as they consider employment offers or devise agreements critical to their practice. 

Our attorneys review physician employment contracts and advise you against pitfalls that could have unintended consequences. Call (713) 783-3110 or contact us online to speak with a physician contract attorney.

On This Page:

• Physician Employment Agreements
• Independent Contractor Agreements for Physicians
• Texas Physician Non-Compete Agreements
• Physician Non-Solicitation Agreements
• Knowing Your Worth in the Physician Job Market
• Understanding Bonus Structures and Productivity Formulas
• Understanding Professional Liability Insurance Coverage
• Navigating Hospital Recruitment Agreements
• Understanding Termination Provisions and Dispute Resolution
• When a Dispute Arises: From Contract to Litigation
• Consult a Texas Physician Employment Agreement Attorney Before You Sign
• FAQs About Physician Employment Agreements

Physician Employment Agreements

Once presented with your employment agreement, the healthcare lawyers at Hendershot Cowart can step in to quickly review the contract, redline suggested revisions, provide a competitive analysis of your compensation, and negotiate on your behalf, as requested.

While compensation is often a top priority, our attorneys also look to eliminate other pitfalls, such as vague language (i.e., “…at the practice’s discretion”), bonus thresholds that are not clearly defined, and overly restrictive non-compete agreements. We can also help ensure that verbal agreements made during the recruitment process are clearly reflected in writing.

The health law attorneys at Hendershot Cowart P.C. generally consider these questions when reviewing or negotiating an employment agreement on your behalf:

• What are the physician’s duties and responsibilities? How many hours is the physician expected to work? How many days per week? How many hours/shifts on call?
• Are the employer’s duties and obligations recorded in the agreement? Employer obligations, such as maintaining sufficient staff and compliant billing practices, can impact your productivity and compensation.
• What is the base salary? How is it calculated? How is bonus or productivity compensation calculated? What happens if the physician misses productivity targets? Are base compensation and bonuses calculated in compliance with regulatory laws?
• For collections-based incentives, are the productivity formula, amounts, and methodology clearly defined? Does the physician have access to books and records if compensation is based on net collection rate?
• For compensation based on measurement, how are work units generated?
• Will the scheduling of patients be equitable?
• What is included in the benefits package (health, vision, dental, life, retirement, continuing medical education, etc.)? When do benefits commence? How much vacation time is offered?
• What type of professional liability insurance is offered? Claims-made or occurrence? If tail insurance is necessary, who covers it if the employment contract is terminated?
• Is there a non-compete or non-solicitation provision? What are the restrictions? Is there a buy-out provision? Does it comply with Texas law?
• What is the term of the employment agreement? Does it automatically renew?
• What is cause for termination? Can the physician be terminated without cause? Will the physician get notice and an opportunity to cure?
• Who owns intellectual property a physician may develop while employed?
• Does the physician need consent to “moonlight”? Will the physician be expected to share the revenue from outside activities?
• Is there an indemnification clause? Is there mutual indemnification? Be mindful of any provision that broadly requires you to indemnify or hold harmless your employer under any circumstances.
• Do you need a buy-in clause? Some medical groups may choose to offer physicians the opportunity to buy into the group, or become a partner, after a period of time or certain benchmarks have been met. These types of agreements can be drafted separately from initial employment agreements.

Independent Contractor Agreements for Physicians

Not every physician contract is an employment agreement. Many physicians practice as independent contractors instead – through a direct arrangement with a hospital or group practice, a locum tenens placement, or a staffing company. In Texas, that's not unusual: Due to the state's corporate practice of medicine doctrine, independent contractor status is the default way physicians can provide care for non-physician-owned organizations.

A well-drafted physician independent contractor agreement should clearly establish:

• A fixed term. Texas courts view a defined contract period as more consistent with genuine independent contractor status than an open-ended relationship.
• Compensation paid outside payroll, with the physician responsible for their own taxes and benefits.
• Control over clinical means and methods. The agreement should affirmatively state that the physician – not the contracting entity – determines how care is delivered, consistent with the physician's own professional judgment.
• Malpractice and liability insurance obligations. Texas employers generally aren't liable for an independent contractor's malpractice claims. The agreement should require the physician to carry adequate coverage and should allocate liability clearly.
• Indemnification provisions that reflect a realistic division of risk between the parties.

Note that having an independent contractor agreement does not mean that the working relationship automatically qualifies for that status. Texas courts and the Texas Workforce Commission look past what the agreement says and ask who actually controls how the physician practices. Misclassifying a physician as an independent contractor in Texas can trigger multiple serious legal consequences, including administrative fines, tax penalties, and corporate practice of medicine violations – a criminal offense.  

Texas Physician Non-Compete Agreements

A physician non-compete agreement, or a restrictive covenant clause, protects both individual practitioners and provider organizations. Non-competes provide practices and hospitals with the ability to invest in new physicians and offer practitioners legal protections to continue in their field when an employment relationship ends.

Enforceable physician non-competes in Texas must comply with the Texas Covenants Not to Compete Act, which generally requires that the agreement is:

• "Ancillary to or part of an otherwise enforceable agreement" entered into at the same time (such as an employment agreement); and
• Reasonable in scope of work, duration, and geographic area, imposing no greater restraint than necessary to protect the employer's goodwill or other business interest.

Non-compete agreements relating to the practice of medicine have additional, specific protections for licensed physicians in Texas. These protections were significantly strengthened with the passage of Senate Bill 1318, effective September 1, 2025. Agreements entered into or renewed on or after that date must also satisfy these requirements:

• One-year maximum duration. The non-compete cannot extend more than one year past contract or employment termination – no exceptions.
• Five-mile geographic cap. The restricted area cannot exceed a five-mile radius from the location where the physician primarily practiced.
• Buyout capped at annual salary. The agreement must allow the physician to buy out of the restriction, and the buyout amount cannot exceed the physician's total annual salary and wages at the time of termination.
• Plain-language terms. All restrictions must be clearly and conspicuously stated in writing – vague or legalistic language can render a covenant unenforceable.
• Void if terminated without good cause. If the physician is involuntarily discharged for reasons unrelated to performance or conduct, the non-compete is void.
• Access to patient list. The physician must retain access to a list of patients seen or treated within the year before termination, along with patient records (with patient authorization), and must be permitted to continue treating any patient through an acute illness even after termination.

A narrow administrative exception exists. SB 1318's restrictions apply only to non-competes tied to the practice of medicine – not to roles that are purely administrative, such as certain medical director positions. Because most medical director roles blend clinical oversight with administrative duties, this distinction is often unclear, and physician executives should have their individual agreements reviewed to ensure their legal rights are protected.

Non-Compete Clauses in Independent Contractor Agreements

If your independent contractor agreement includes a non-compete clause, Texas law treats it the same as a non-compete in an employment agreement – the physician-specific requirements under the Texas Business and Commerce Code apply regardless of how the relationship is labeled. 

Physician Non-Solicitation Agreements

A non-solicitation agreement restricts a departing physician from soliciting the practice's patients, referral sources, or former colleagues for a defined period – without prohibiting the physician from practicing medicine elsewhere. 

Physician non-solicitation agreements are governed by the same Texas law as non-competes. This means a physician non-solicitation provision tied to your healthcare practice must satisfy the same requirements outlined above: a one-year limit, the salary-capped buyout, patient access protections, and plain-language terms.

Solicitation typically covers two categories:

• Patient solicitation – directly or indirectly encouraging patients to follow you to a new practice, such as through targeted outreach or announcements.
• Employee and referral source solicitation – recruiting former colleagues to join you, or redirecting referral relationships to your new practice.

One protection cannot be waived by contract: patients always have the right to choose their own physician. A non-solicitation agreement cannot penalize you for treating a patient who sought you out on their own, without any solicitation on your part.

Knowing Your Worth in the Physician Job Market

How do you determine what is fair and reasonable compensation within your market?

At Hendershot Cowart P.C., we can conduct a comprehensive compensation analysis and advise if your offer falls within the 25th, 50th, 75th, or 90th percentile range for your specialty. This knowledge can provide powerful leverage when negotiating your compensation package.

Factors we consider when analyzing your compensation offer include:

• Academic or private practice
• Geographic region
• Your years in practice
• Single specialty group practice or multi-specialty group practice
• Practice type (single specialty or multi-specialty group)
• Hospital-based vs. private practice compensation differences

We maintain extensive data on physician compensation trends, including wRVU values across specialties, enabling you to negotiate from a position of knowledge rather than uncertainty.

Understanding Bonus Structures and Productivity Formulas

When reviewing employment agreements, we pay careful attention to how bonus calculations are structured. The two largest areas of physician employment litigation involve non-competes and compensation disputes.

Key considerations for productivity-based compensation:

• Ensuring bonus formulas are clearly defined with transparent calculation methods
• Securing your right to inspect applicable books and records to verify compensation calculations
• Establishing fair reconciliation processes for both underpayment and overpayment situations
• Defining appropriate wRVU values for your specialty with benchmark comparisons
• Ensuring equitable patient scheduling that supports your productivity goals

Understanding Professional Liability Insurance Coverage

The type of malpractice insurance provided in your employment agreement significantly impacts your future liability. 

We evaluate: 

• Claims-made vs. occurrence-based coverage
• Tail coverage requirements and who bears the cost if employment terminates
• The financial implications of each insurance type for your specific situation

Navigating Hospital Recruitment Agreements

Recruitment agreements between hospitals and physician practices can create unexpected tax implications for physicians:

Key considerations include:

• Understanding how recruitment funds flow through the practice to compensate you
• Planning for potential tax liability from forgiven loan amounts (typically reported on a 1099)
• Ensuring joint liability between you and the practice for any repayment obligations
• Negotiating protection if your employment is terminated for reasons outside your control

Understanding Termination Provisions and Dispute Resolution

Many physician employment agreements specify how disputes will be resolved, which can impact your rights and options:

Types of dispute resolution:

• Arbitration: A private process where disputes are resolved by one or more arbitrators rather than through public court proceedings
• Mediation: A facilitated negotiation where a neutral third party helps the parties reach a mutually acceptable resolution
• Litigation: Traditional court proceedings with established rules of civil procedure

Each approach has different implications regarding cost, confidentiality, appeal rights, and timeline. We help physicians understand these differences and negotiate favorable dispute resolution terms.

When a Dispute Arises: From Contract to Litigation

Most physician contract disputes fall into a few recurring categories: 

• Non-compete fights – over missing buyout provisions, geographic scope, or whether the restriction was ever actually violated in the first place. 
• Compensation disputes – over collections guarantees, productivity calculations, bonus formulas, and whether a practice's losses justified termination. 
• Contract formation issues – whether credentialing was complete before employment began, whether a physician was properly classified as an employee or contractor, and whether liquidated damages or arbitration clauses apply as written.

These disputes are rarely simple breach-of-contract questions. They turn on statutory requirements specific to physicians, the precise language of compensation formulas, and how Texas courts have interpreted similar provisions in the past.

When a healthcare dispute reaches the point of litigation, arbitration, or a formal demand, we represent physicians and practices in:

• Non-compete and restrictive covenant enforcement and defense
• Compensation, collections, and bonus disputes
• Contract formation and classification disputes
• Termination and credentialing disputes

If your agreement is the subject of a dispute, call us at (713) 783-3110 before you respond to any demand.

Consult a Texas Medical Contract Attorney Before You Sign

For similar reasons a surgeon wouldn’t operate on themselves, physicians and providers should be wary of reviewing or drafting their own employment agreements without the help of knowledgeable and experienced health law attorneys. At Hendershot Cowart P.C., we can identify and resolve issues before they impact your career or practice. We negotiate, draft, and review all aspects of physician employment agreements in accordance with state and federal laws, and with our client’s unique circumstances in mind.

Call (713) 783-3110 or contact us online to speak with a Texas healthcare attorney about a physician employee agreement review, compensation analysis, or our negotiation services.

Frequently Asked Questions About Physician Employment Agreements

Can I negotiate for part-time hours in my physician contract?

Yes, you can negotiate for part-time hours in your physician employment agreement, though the feasibility depends on the employer's needs and flexibility. Many practices and hospitals are increasingly accommodating part-time arrangements to attract and retain talented physicians.

When negotiating for part-time hours (such as 80 percent of full-time):

• Clearly define what "part-time" means in terms of hours per week, days per week, or patient encounters
• Understand how compensation will be prorated (including base salary, bonuses, and benefits)
• Clarify call coverage responsibilities, which should ideally be proportionate to your part-time status
• Discuss how productivity targets and bonuses will be adjusted for your reduced schedule
• Consider how part-time status might affect partnership track timelines, if applicable

Remember that even large organizations may be willing to accommodate part-time arrangements for the right candidate. The key is to discuss your needs early in the interview process to determine if there's a potential fit before proceeding to contract negotiations.

Is there a gender pay gap in physician contracts? How can I ensure fair compensation?

Yes, gender pay disparities do exist in physician employment contracts, though the gap has been decreasing in recent years. Several studies have documented persistent compensation differences between male and female physicians across most specialties, even when controlling for factors like productivity, experience, and practice setting.

A healthcare attorney experienced in physician contracts can evaluate whether your offer is competitive and help negotiate improvements. 

Who pays for my tail insurance if I leave the practice?

The responsibility for tail insurance coverage when a physician leaves a practice depends entirely on the terms negotiated in your employment agreement. This is a critical item to address during contract negotiations, as tail coverage can cost tens of thousands of dollars.

Since claims-made malpractice policies only cover claims reported while the policy is active, tail coverage (also called "extended reporting endorsement") is essential to protect against claims filed after you've left the practice. 

Given the high cost, this should be a key negotiating point in your employment agreement.

What should I know about intellectual property provisions in my contract?

Intellectual property (IP) provisions in physician employment contracts govern ownership of innovations, research, publications, and other creative works you develop during your employment. These provisions deserve careful attention, especially if you engage in research, writing, or developing new medical procedures or technologies.

Key considerations include:

1. Work-for-hire provisions: Many contracts contain "work-for-hire" provisions stating that anything you develop using employer resources or during work hours belongs to the employer
2. Existing IP protection: If you've been in practice for a few years and already developed your own intellectual property, make sure this pre-existing IP is specifically "carved out" of the agreement, especially if there's a work-for-hire doctrine included.
3. Separate development: If you engage in research or innovation outside your employment, include provisions to ensure that intellectual property developed separately from your employer and without using employer resources remains your property.

For physicians with significant research interests or entrepreneurial aspirations, intellectual property provisions can be as important as compensation terms. Having these provisions reviewed by an attorney with experience in both healthcare and intellectual property law is essential.

What are common physician employment contract mistakes to avoid?

The most common and costly contract mistakes physicians make include:

1. Accepting vague language: Ambiguous phrases like "duties as assigned at the employer's discretion" or "reasonable call schedule" can lead to unexpected obligations.
2. Neglecting to get promises in writing: Verbal assurances made during recruitment about the location of the medical office where you’ll be assigned, schedule flexibility, or support staff must be documented in the contract to be enforceable.
3. Accepting overly restrictive non-compete clauses: An attorney can help you negotiate non-compete terms that are fair and reasonable to you and still protect the goodwill of your employer.
4. Getting stuck with more than your fair share of on-call duty: As the new kid on the block, you may get assigned to be “on call” outside business hours more often than your peers. Don’t leave the assignment of on-call services at the sole discretion of the medical director. Your attorney can help you negotiate a limit or include the required hours of on-call services in the agreement.
5. Your ability to exercise independent medical judgment is impeded: Our attorneys can examine your contract to identify any provisions or arrangements that may result in inappropriate control over the practice of medicine, and help you establish clear boundaries to protect your medical decision-making.

Contact our healthcare law firm today to schedule a physician employment agreement review. Our goal is to help you avoid costly mistakes that could impede your career and interrupt your ability to serve your patients.