Avoid Staff Benefit Issues at Your Medical Practice

November 5, 2014

Five recommendations to help ensure your medical practice has clear, consistent staff benefit and compensation policies that comply with state law.

Although lawyers often work with physician practices to provide guidance on handling compensation, paid time off, and similar matters related to physician members of a practice, many practices tend to have administrative staff handle benefit issues for nonphysicians.

While this often works out fine, if thought is not given to the procedures and policies the practice has in place for its nonphysician staff, over time this can lead to significant issues. Sometimes this becomes apparent when new leadership is brought on board and a review of the practice’s policies is conducted.

In one instance in which I am involved, a practice contacted me regarding its staff of 35 nonphysician employees. It appeared the prior practice manager had put some policies in place which were now creating issues:

1. The amount of PTO being offered was excessive. Staff with the practice over 10 years received 44 paid days off per year and most of the staff had been there that long.
2. Staff was allowed to carry over 1.5 times their annual accrual amount. Many employees were carrying over 300 hours of accrued PTO!
3. The practice was obligated to buy-back one week of PTO each year, although “weeks” were not defined.4. Employees working different numbers of hours each week appeared to be compensated and treated the same for all purposes, creating overtime computation issues and inconsistency in PTO accrual calculations (among other issues).

There are any number of concerns presented by the above facts. Most medical practices are unable to afford such a generous PTO policy and every practice must consider what might be owed to employees upon termination (and whether it is affordable) and what liability the practice might face if its policies are unclear and legally contested at some point in the future.

My general recommendation for practices (subject to state law) is the following:
1. Be reasonable about the amount of PTO offered per year.
There are other ways to reward loyal employees that do not require an endless number of PTO days that increase every year. Cap the maximum number of PTO days that can be accrued and look for alternatives ways to reward employees.

2. My preference is that accrued time should be used or lost in the employment year, unless state law prohibits this approach. In extenuating circumstances, management can make a different decision but the policy should really be enforced.

3. Make sure compensation for employees is standardized and clear. Try to be consistent regarding whether an hourly or salary approach will be used in the practice and make sure employees are paid consistently based on their full-time equivalent status. Make sure overtime laws are always followed (when applicable).

4. Be sure your policies are clear: Is a doctor note needed for a certain number of sick days? How much notice is needed to terminate (if any)? What holidays are paid? How is time off handled around major holidays?

5. It’s a good idea to review your practice’s policies regularly. Make sure any changes that are made to your policies follow written guidelines the practice may have regarding changes to its policies (such as the time of year changes can be made). Have every employee sign off that they have received the new policies that will apply.

Some employees may not be happy with changes that are put into place, so try to find ways to ease the transition, perhaps by applying changes over time or offering new perks that are more affordable, but appealing. Work with your financial and legal advisers to find a creative plan that is appropriate for the practice and best protects all of the parties involved.