The employment contract should clearly identify the parties and the exact nature of their employment relationship. The nature of the employment relationship can have significant impact on personal rights or responsibilities in relation to the employment. Employment relationships are typically classified either as an employer/employee relationship or the individual is an independent contractor for the employer. An employer/employee relationship typically exists when the employer has a significant amount of control over the work of the employee in terms of hours, including vacation time, location, equipment used, and fees charged. Conversely, an independent contractor completes work on a contractual basis with the employer and is subject to less control by the employer.

The distinction between an employee and an independent contractor is important in determining what the employer must provide to the employee. In an employer/employee relationship, the employer is responsible for taking taxes out of the employee’s compensation. Furthermore, the employer must make payments for workers’ compensation, unemployment insurance, disability insurance, and social security on behalf of the employee. Employers are also required by law to comply with minimum wage and overtime requirements, provide for lunch and rest breaks, and provide benefits for those employees who are eligible under the employer’s benefit plan. On the other hand, if you are employed as an independent contractor, the employer will not take any taxes out of your compensation and the independent contractor is responsible for remitting taxes from that compensation. Additionally, an independent contractor will not be eligible for unemployment benefits, since nothing will have been paid into the unemployment fund on their behalf.

However, employers wanting to structure their practices with independent contractors rather than employees need to be careful. Following the economic recession in 2008, many employers have been seeking to find creative ways of decreasing their expenses. One way employers have sought to cut costs has been to classify workers as independent contractors rather than employees—by doing so they are no longer responsible for providing health-care benefits and employment taxes. However, since this is a way of avoiding taxes, the classification of workers has become highly monitored by the Internal Revenue Service (IRS) and the Department of Labor. If an employer is found to have misclassified its workers as independent contractors rather than employees the employer becomes vulnerable to an imposition of fines, penalties, and back-taxes, which has the potential to cost an employer large sums of money. Factors which the IRS and the Department of Labor will look to in determining whether certain individuals have been misclassified include the permanency of the employment relationship, a longer or open-ended commitment indicates an employer/employee relationship; whether the employer provides tools or reimburses the worker for work related expenses, if so it is indicative of an employer/employee relationship; whether the employer provides any sort of training or instructions on how the work should be performed, if so the worker will be classified as an employee; and whether the worker realizes a profit or loss for the work being performed, if so the worker is more likely to be classified as an independent contractor .

One of the most important impacts of the type of employment is who will be held liable in the event of a malpractice claim. If you are an employee, rather than an independent contractor, the employer can be vicariously liable for medical malpractice suits. However, there are still some instances where the employer will be liable even if you are an independent-contractor.

The duration of an employment contract can provide employment stability. However, the longer the term of the employment contract, the more thought that must be given to the proper compensation over the course of the term—both the amount of compensation and the type of compensation (i.e., salary, bonus increases, and equity interest purchase rights). It is common to have a situation where the entering pathologist will be offered only a probationary contract having a fixed term of 12–24 months. In this case, it is appropriate for the pathologist to ask for a representation regarding a future contract. The pathologist can ask for an outline of the terms of the future contract. However, typically the employer will not commit to any future contract.

The employment contract may dictate how the pathologist’s work coverage will be managed. The pathologist should consider whether responsibility for coverage on nights, weekends, and holidays, if applicable, is shared equally. Most employment contracts will set a minimum amount of hours the pathologist is expected to work, but often will not set a maximum number of hours. The pathologist may want to consider whether he or she will be allowed to participate in certain career-related activities that are not directly related to the employer, such as medical-legal testimony, speeches, and writings. If the employment contract does allow the pathologist to engage in such extracurricular professional activities, it should also address how the resulting income from these activities will be handled—will the employer or the employee be entitled to the income?

Since many medical practices now operate from several different office locations in order to cover larger geographic areas, the employment contract should address the employer’s expectations for the pathologist as to which office(s) the pathologist will work from. Even if this is not expressly stated one way or another in the employment contract, it is something that the pathologist should be aware of prior to signing an employment contract. If it is not addressed in the employment contract the pathologist may want to inquire as to whether his or her primary work location could be changed without consent. The pathologist and the practice also need to make sure the pathologist is compliant will all legal requirements and is licensed or certified to practice in each of the locations at which he or she will be working. If one location happens to be across state borders, the pathologist will need to be aware of whether he or she is legally able to practice at that location.

Now that the parties have agreed upon where the pathologist will be working, he or she should also consider the conditions of the actual office space itself. While it is not common, the employment contract could include a requirement that the employer provide suitable office space, supplies, equipment, and personnel. The pathologist may want to ensure that the employment contract provides that he or she has access to any necessary medical equipment.

The employment contract should be specific as to what compensation will be paid to the pathologist, how often it will be paid, and when it will be paid. If compensation is based on a formula, that formula should be specified in the employment contract. It is important to consider whether the employment contract should include a provision addressing raises. If the contract is for a term that is longer than a year, or includes language which causes it to automatically renew, it is advisable to address raises.