Are My Recruiting Strategies Damaging My Practice?

By Daniel J. Schulte, JD, MSMS Legal Counsel

Almost three years following the start of the COVID-19 pandemic, employers are still facing tremendous difficulty hiring and retaining employees. In fact, according to recent surveys, approximately 85% of healthcare facilities continue to experience healthcare staffing shortages.

Due to these shortages, many employers are increasing their recruiting and retention efforts; however, such efforts are not without legal risk. Although employers are encouraged to speak with legal counsel prior to implementation of any strategies, we have summarized a list of common retention/recruitment strategies and the accompanying protections that employers should consider.

Sign-On Bonus. Many employers are offering sign-on bonuses to new employees. However, there is a risk that new employees may accept the sign-on bonus but resign shortly thereafter, leaving the employer still needing to fill the role, but with less funds to do so. In addition, existing employees may become upset regarding growing pay disparities, or seek out other employment opportunities to obtain their own signing bonuses.

If an employer is offering a sign-on bonus, the employer should require the employee to enter into an agreement, by which the employee agrees to pay back a portion of the bonus if they do not remain employed by the employer for a certain period of time. The employer should consider requiring employees to execute a Confession of Judgment to reduce issues arising with collection efforts. Employers offering sign-on bonuses may also wish to offer retention bonuses to their existing employees. As with sign-on bonuses, an employer should require employees to enter into an agreement defining the terms and conditions of the bonus and specifically advising the employee that such bonus does not impact their at-will status or otherwise constitute employment for a term.

Restrictive Covenants. To encourage new employees to accept employment, many employers have decided to eliminate or modify restrictive covenant agreements for new employees. There are pros and cons to this approach. Restrictive covenants (such as non-compete, non-solicit, and confidentiality provisions) operate to protect the confidential and competitive business interests of the employer. By employing individuals who owe no legal obligations to the employer following termination of employment, employers may open themselves up to significant losses in the form of patients and employees transitioning to other practices. However, from a practical perspective, it can be difficult and expensive to enforce restrictive covenant agreements.

Rather than eliminating the agreements entirely, employers may wish to consider modifying existing agreements to reduce geographic scope and/or duration. Alternatively, and especially for lower-level employees and for those employees who do not have significant patient interaction, employers may consider removing the non-solicit and non-compete provisions and requiring only a robust confidentiality agreement.

Remote work. Since 2019, the number of US employees working remotely has tripled; however, for the healthcare industry, remote work is rarely an option. Rather than remote work opportunities, many employers are considering job sharing, compressed work weeks, and flex-time arrangements for those employees who must be physically present in the workplace. Unfortunately, allowing only certain employees to have flexible arrangements could lead to discrimination claims. In addition, some employers have complained of reduced productivity in workers with more flexible arrangements.

To reduce the associated legal risks, employers adopting flexible arrangements should institute written policies which clearly delineate an employee’s eligibility to work flexibly, performance and productivity standards, work rules, working hours, and the conditions under which the flexible arrangements will be terminated.

Overall, the most effective retention/recruitment strategy for your practice will depend on your specific workforce. Employers are encouraged to speak with legal counsel to evaluate retention and recruitment efforts best suited to their particular workforces. 

Daniel J. Schulte, JD, MSMS Legal Counsel is a member and managing partner of Kerr Russell.