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Perfect job, flawed contract

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Hi there! I'm a new graduate with a hospitalist job offer. This is truly my ideal first job and I'm elated. The location is where I want, salary is great, the hours are pretty good, the benefits are great (good health/dental insurance, malpractice insurance, $2000 for CME annually). However, the contract has a pretty bad non-compete clause. I was wondering if anyone has any suggestions as to what I can argue or if they've ever negotiated a non-compete clause out of their contracts. It just doesn't make a lot of sense to me why a hospitalist PA would need to sign a non-compete...I can't take any patients with me when I switch jobs. I understand the best thing to do would be to get a lawyer, but I obviously do not have the capital for that as a new grad.

Here are the basics of the non-compete:

1) shall not establish a financial relationship with any other hospital, health system, ambulatory surgery center, other health care provider, or any other medical related business within ~35 mile radius while working in this position

2) shall not do the above for a period of 2 years AFTER I leave the position

3) or else I'm fined $25,000

Thanks in advance for any suggestions!

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So basically you can’t be employed as a PA for 2 years after you leave the job within 35 miles?!  That’s ridiculous!  

The first thing you should do is find out if non-compete’s are even legal or enforceable in your state.  

then id talk with them about it and find out if there is any wiggle room

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Yikes, this is for ANY type of PA job within a 35 mile radius? Depending on where this hospital is, that can eliminate a lot of hospitals (especially if this is in a major city). I'd recommend changing to a lower radius depending on where you are or ask to narrow the limitation to a hospitalist position only (not just all PA jobs). It will only benefit you to question the non-compete and to change it (I expect that they anticipate this). I read somewhere that strict non-compete clauses are typical for doctors, but shouldn't be for PAs. This would be a breaking point for me if I couldn't be employed for 2 years after within 25 miles... that's asking too much. Maybe even ask to decrease that to 1 year in addition to a lower radius.

I just negotiated having a clause in my contract removed (I'm a new grad too, which stated I couldn't work at any job outside of the hospital while was working for them (I'd be doing three 12 hour shifts and would like the option to do per diem elsewhere). I asked them about the clause and what they meant, if that meant I couldn't coach a sports team, tutor, etc. They were totally willing to have that removed in the contract and just wanted me to understand that my other jobs won't interfere with my full-time job.

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Frankly I'd ask for the whole thing to be removed - the fine, the time, and the radius.  That's worse than a long term contract.  It is essentially saying 'Don't plan on leaving unless you're leaving town'.

Honestly it might be a deal breaker for me.  If it's not for you, get everything reduced as much as possible.  Also ensure that you aren't bound by that if they fire you/let you go.

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Yikes indeed. I recently had to turn down a position I was really excited about over a similar non-compete they were unwilling to budge on. It may not even be legal/enforceable. Most places have a “right to work” law that this might violate, which was likely the case in my scenario after reviewing my contract with a lawyer friend of mine. However, that’s not a headache I would want regardless. I would say it comes down to how they respond to you asking about it. In my scenario, they were unwilling to budge at all which is a big red flag to me saying they have or expect to have trouble keeping employees and feel the need to force them to stay, regardless of how good it looks on paper. Or it may just be something that flowed over from some of the physician contracts or elsewhere that they never really considered. If they are willing to change the terms of the contract to be relatively reasonable then I’d be ok with that (smaller area, limit to certain specialty, etc.). But as it stands, I find it completely ridiculous. They’re literally asking you to give up your livelihood and ability to support your family within the area you live if you ever leave them [the job, not your family 🙂 ].

I agree that non-competes for PAs don’t really make sense in the first place, so maybe they’re willing to do away with the clause altogether as I personally know some PA friends that absolutely refuse to sign any non-compete. Either way, I would base my decision on their reaction to your questioning the non-compete. No willingness to work with you or interest in keeping you, walk away. Willingness to treat you like a professional and not some sort of indentured servant (unless they’re paying off your loans or something), then sounds like a place you could enjoy working for years to come. But that’s just my non-expert opinion.  

Best of luck! Hope you don’t have to decline a great job just because they want you to potentially jepordize your career/livelihood.

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Thank you everyone for replying! It's comforting (and terrifying) that everyone I've discussed this with, online and in-person, agrees that this is bad. I spoke with HR today and they said it was non-negotiable, but they're passing me along to the president of the providers' association. I'm a bit scared because this person is going to become far more important in the hospital starting in January, so I hope I don't rub him the wrong way as I continue to stand my ground on this issue. I don't want to let this job go but this is not a trivial component to the contract.

This position is in NY and non-competes are legal here unfortunately. 

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Man, that stinks. Maybe there’s someway to explain to them that you really want the position, are excited about it, and have no intentions of leaving anytime soon. But with such a ridiculous non-compete, to sign is simply an unwise decision for any adult starting any job, regardless of field. Especially as a PA and especially coming right out of school. If you show them you’re willing to work with them for a compromise then , IMO, a good employer should show some willingness to work with you. If they’re cutthroat and unwilling to asisst you now, when they should be trying to impress you with the job offer, they sure won’t when your pretty much legally stuck to work for them. And that’s not just pay/benefit stuff but when you need something to change for the sake of  better pt care they’re not putting up good evidence of caring enough to do so. I mean they have many options, in no particular order:

-Actually explain to you the reasoning they see the the need to have a PA (not a doc) sign such an agreement.

-Reduce the 35 mile radius

-Reduce the 2 year after leaving to 1 year

-Limit the term of the non-compete for 1-2 years of employment with them, then it goes away.

-Limit the non-compete to Hospitalist positions or even primary care positions. It being overarching into any medical practice, very much sounds like they aren’t able to retain employees because they’re not a good place to work in reality and feel the need to trap them there legally. 

-They could pay back your student loans, if they’re gonna trap you into working for them then they need to give you something in return.

There’s other options too, but at the end of the day show them you’re willing to work with them if they’re willing to work with you, this isn’t a one way road. They need to at least pretend they’re interested in your career. But then again, I’ve worked in hospital systems before and they’re large machines and that makes it very difficult to make any changes in an effective/reasonable time frame. If you have the opportunity to talk to some of the docs or other PAs they’ve employed though and they absolutely love it there and it’s the perfect location for you, I don’t want you to miss out on a great opportunity. It’s just that their non-compete is a big red flag and reeks of “bad employer.” Sorry for the tricky situation...Best of luck. 

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25% business tax?  Because you are filing as an "S" Corp?  

Would be close to the same as fixing as a "c" Corp with personal taxes, although with the new tax plan I think C corps get the 20% deduction if making <$300k (or something like that).

It can be pretty lucrative to have W-2 pay that pays the first $135K/year (whether that is you or spouse I think) for the employer to pay the 7.5% (ish) SS/CMS tax, then anything you make over that as a 1099 doesn't have to pay that.

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