Running a medical practice requires more than just delivering excellent patient care—it also involves managing staff, complying with state and federal employment laws, and making daily decisions that impact operations, culture, and long-term risk. For physicians and healthcare business owners in New Jersey and New York, issues related to hiring, firing, and classifying workers are among the most common areas of legal exposure. The rules are nuanced, and without careful planning, small missteps can quickly turn into costly disputes or government investigations.

We frequently hear from providers after a situation has already escalated—an employee claims they were wrongfully terminated, or a contractor files a complaint over unpaid wages or denied benefits. These issues can often be prevented by implementing clear, compliant policies from the start and using properly drafted employment documents tailored to the healthcare setting. Our goal is to help providers understand their obligations and create safeguards that protect their practices from liability.

When bringing on a new hire, the employment relationship should begin with a clear, legally sound offer letter or employment agreement. These documents should outline the role, responsibilities, compensation, benefits, termination conditions, and—particularly important in healthcare—clinical expectations, license maintenance, and malpractice coverage. Too often, medical practices rely on generic templates or borrowed contracts, which leave room for ambiguity. And in the legal world, ambiguity is a risk. It can open the door to litigation if expectations aren’t clearly set or if a dispute arises down the road.

Even in at-will employment states like New Jersey and New York, termination must be approached with caution. While employers in both states can generally terminate employment for any lawful reason, we advise clients to keep detailed records of performance reviews, disciplinary actions, and internal complaints. These records provide critical support for employment decisions and help demonstrate that any termination was based on legitimate, nondiscriminatory reasons. Employment decisions should also follow consistent internal policies, which should be documented in an employee handbook that is regularly reviewed and updated.

Worker classification is another area where we see frequent confusion, particularly when it comes to independent contractors. Medical practices often hire part-time physicians, billing consultants, or administrative specialists as independent contractors to control overhead costs. But both New Jersey and New York apply strict tests to determine whether a worker is truly a contractor or must be classified as an employee. In New Jersey, the “ABC Test” requires that the contractor operate independently, perform work outside the usual course of business, and engage in an independently established trade. New York uses a slightly different standard but still focuses heavily on the degree of control the employer exercises and whether the worker is economically dependent on the practice.

Misclassifying workers can trigger serious consequences, including penalties, back wages, unpaid overtime, and mandatory benefits like unemployment and workers’ compensation. We work closely with our clients to assess their staffing models, draft appropriate contractor agreements, and determine whether a true independent contractor relationship exists. If not, we help transition the individual into a compliant employee role and update internal policies accordingly.

Hiring and firing decisions also intersect with a broader set of employment laws. Both states enforce wage and hour laws, family and medical leave rights, and anti-discrimination statutes that prohibit actions based on race, gender, disability, religion, and other protected categories. New York in particular has expanded employee protections in recent years, including broader harassment prevention rules and requirements for regular anti-harassment training. Healthcare employers also need to consider the enforceability of non-compete agreements, which vary by state and may be subject to federal regulatory changes in the near future.

Medical practices operate in a highly regulated environment, and employment issues can quickly disrupt operations if not handled properly. We encourage healthcare owners and administrators to take a proactive and comprehensive approach—reviewing employment contracts, updating handbooks, training supervisors, and regularly consulting legal counsel as part of their risk management strategy.

Whether your practice is hiring new staff, restructuring current roles, or unsure about the classification of a contractor, addressing employment law risks early can save time, money, and stress down the line. Our team is here to help healthcare providers in both New Jersey and New York create compliant, practical employment frameworks that support their practice’s success.