Contract Penalty fee $30,000

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Hello everyone,

I am a fairly new nurse practitioner with only two years of experience. I recently got a job offer at a company that I really like. Although I agree with most contents of the contract, there is one part that I’m very cautious of. Please look at the paragraph below. Contract states three months of notice required before I quit this job. I have been hearing that the standard is two months. Moreover, I do not like the fact that if I don’t give them a three month notice, I will end up owing them $30,000. Is this normal? I have called the human resources department and ask them to remove this monetary amount. The three month notice doesn’t bother me as much as the amount that is listed in the contract. I know I will have to give 2 to 3 months notice before I quit anyways, because if I apply to a new place it takes about 2 to 3 months to get credentialed at a new place. I know the chances of something bad happening and myself owing them $30,000 just because I walked out of the facility without giving them a 90 day notice is very less then likely. But I am just trying to protect myself and trying to understand what the industry norm is.

“This Provider acknowledges that COMPANY X is relying on Provider to provide 90 days written notice of termination of the Agreement. In the event that Provider breaches this Agreement by failing to provide 90 days written notice of termination, COMPANY X will suffer substantial damages as a result. These damages include, but are not limited to, the costs of locating a replacement, the loss of services during the search for a replacement and the costs of unused facilities. Both Provider and COMPANY X agree that these damages are difficult to predict and to determine, and they have, therefore. agreed to the amount of ****Thirty Thousand Dollars ($30,000)**** as the amount of liquidated damages (not a penalty) to be paid by Provider to COMPANY X in the event that Provider fails to provide 90 days written notice of termination, as required by this Agreement.”

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Specializes in Psychiatric and Mental Health NP (PMHNP).

That seems unusually punitive. Tell them they have to give you 90 days termination notice minimum if they decide to terminate you and pay you $30k if they fail to do so!

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30,0000 K? Remove that out of the contract or dont work there....

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Specializes in Nephrology, Cardiology, ER, ICU.

3-4 months notice is standard in my area. The monetary amt is outrageous. Nope, would not sign

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Specializes in Primary Care.

I have seen this before on other contracts. In my experience 90 days notice seems to be the new normal on most NP contracts. I would insist that they remove the clause and if not then look somewhere else. If you feel this is your dream job and want to work there despite this monetary clause, ask that they add that it only applies if you leave on your own fruition. ie. if they determine you are to be let go, the clause is null and void. OR.... if you want to work for the VA... there are no contracts! Good Luck!

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On 2/3/2019 at 1:36 PM, nurselove757 said:

...at a company that I really like.

Why do you really like this company? Think, for a moment, about why they would put that particular language (about the $30,000) in the contract? Is it for any other reason than to screw the unsuspecting NP who accepts a job there then later figures out that the place sucks and decides to leave?

Whenever you approach relationships of any sort with any employer always remember one thing---they are not your friend, so keep it professional and be discretely looking out for your own interests as much as they look out for theirs (and they are ALWAYS looking out for theirs).

Do not sign that contract. If the place was so wonderful that no one would want to leave after 3 months that language would not be in it.

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Hello,

I am about to start a new contract for 3 years. I get a $10,000 bonus at the end of each year, totaling 30 grand after 3 years. If I break my contract before the 36 months or 3 yrs, I have to pay back the amounts paid to me, depending on what time frame my resignation should happen, such as 20 grand if I leave after the 2nd year. I cannot believe this practice would charge you such an amount without some type of payment or incentive for your continued employment. Are you sure they did not leave out something explaining where they came up with the 30 grand? And the termination notice of 3 months seems standard. That was in my contract as well, and I have to agree not to leave in the last 3 months of the year between Oct to Dec (for reasoning behind budgeting and fiscal year numbers I am thinking.).

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Specializes in Psychiatric and Mental Health NP (PMHNP).
20 hours ago, GraceOnly said:

Hello,

I am about to start a new contract for 3 years. I get a $10,000 bonus at the end of each year, totaling 30 grand after 3 years. If I break my contract before the 36 months or 3 yrs, I have to pay back the amounts paid to me, depending on what time frame my resignation should happen, such as 20 grand if I leave after the 2nd year. I cannot believe this practice would charge you such an amount without some type of payment or incentive for your continued employment. Are you sure they did not leave out something explaining where they came up with the 30 grand? And the termination notice of 3 months seems standard. That was in my contract as well, and I have to agree not to leave in the last 3 months of the year between Oct to Dec (for reasoning behind budgeting and fiscal year numbers I am thinking.).

Those bonuses are retention bonuses and yes, they have a legal right to demand them back if you do not honor the contract. Note the pay back only applies if you decide not to honor the contract. So if you don't think you can stay there for 3 years, don't sign the contract.

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Specializes in Vascular Neurology and Neurocritical Care.

Even so, this is a very demanding thing to put in contract, and not it isn't very common. I spoke about this with several individuals, MD, NP, and PA. No one I know, including some fellow faculty members at the local medical school have seen this. Not to say it doesn't exist, but don't accept it as industry standard either, imo. I'd seriously consider if there were any red flags before signing the dotted line. Make sure there are protections for you in there and that not everything is one sided. Otherwise keep it moving.

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10 hours ago, FullGlass said:

Those bonuses are retention bonuses and yes, they have a legal right to demand them back if you do not honor the contract. Note the pay back only applies if you decide not to honor the contract. So if you don't think you can stay there for 3 years, don't sign the contract.

FullGlass-yes, I know it is a retention bonus. That was explained in my reply to the person, Nurselove757, that wrote and started this thread above with her question of how common is it that an NP would have to repay a penalty fee. I was advising her to ask about where her potential employer came up with such as number of 30 grand without some kind of mathematical explanation, such as the example in my contract I just signed. Yearly retention bonuses sound like a fair offer to me, so figured she may have missed some explanation in her contract above. Thanks!

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Simple response is to work that out of the contract. If someone is giving me a bonus on the year for every year I complete, then I would make it clear that money stays with me and make sure it is in writing or I wouldn't sign the contract. Know your worth and only agree to contract conditions you can tolerate.

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Hello everyone. I am still in the process of negotiating... waiting to see what happens.

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