Locum Tenens Contract Clauses: What to Scrutinize Before You Sign

Treat the locum agreement as fully negotiable, even when the agency calls its terms 'standard,' and get a healthcare-contract attorney to review the high-stakes clauses before you sign. A locum engagement usually involves a 1099 independent-contractor agreement with a staffing agency, often plus a separate facility/client agreement. The highest-stakes clauses to scrutinize and negotiate are: (1) malpractice coverage type and who buys the tail; (2) indemnification / hold-harmless language; (3) non-compete / non-solicit / exclusivity restrictions; (4) termination and notice symmetry; (5) minimum-shift / hours guarantee; (6) cancellation pay; (7) scope of work; (8) on-call expectations; (9) payment timing / net terms; (10) expense reimbursement; and (11) worker-classification (1099 vs. employee) language. The single most important meta-rule from practitioners is that if it isn't written into the agreement, it isn't enforceable — get every verbal promise attached as an exhibit, and route indemnification, non-compete, and tail provisions to a licensed healthcare attorney. The checklist table below summarizes the trap, the clinician-favorable position to negotiate, and which clauses warrant attorney review.

No. There is no federal categorical ban on non-competes, and enforceability is governed entirely by the state where you work, on a case-by-case basis. On September 5, 2025, the FTC voted 3-1 to dismiss its appeals (in Ryan, LLC v. FTC and Properties of the Villages v. FTC) and accede to the vacatur of the 2024 Non-Compete Clause Rule, so the Texas court's vacatur stands and there is no federal prohibition. Do not describe non-competes as 'banned' or 'illegal.' The FTC continues targeted enforcement — on September 4, 2025 it announced an action and proposed settlement against pet-cremation company Gateway Pet Memorial Services over non-competes imposed on roughly 1,800 workers (a final order followed in November 2025) — and on September 10, 2025 it sent warning letters to large healthcare employers and staffing firms urging review or discontinuation of unfair or anticompetitive covenants, noting harm in rural areas. Restrictive covenants on true 1099 independent contractors are generally weaker and more heavily scrutinized than those on employees, but this still varies by state — never assume a blanket 'unenforceable against contractors.' Because state law controls, scrutinize the contract's choice-of-law and venue clauses and have a healthcare attorney licensed in the state where you actually work assess any non-compete, non-solicit, or exclusivity language. The table contrasts the common misconception with the current legal reality.

Whoever the contract names pays for the tail — so the policy type and the tail assignment must be confirmed in writing, and indemnification must be read as a separate, uninsured obligation. On malpractice: an occurrence policy needs no tail because it covers incidents that occurred during the policy period regardless of when the claim is reported; a claims-made policy requires a tail (an extended reporting endorsement) to cover claims reported after the assignment ends. Many agencies carry continuous blanket claims-made policies covering current and past providers, but confirm coverage type, limits (commonly $1M per claim / $3M aggregate), the prior-acts/retroactive date, and who buys the tail in writing — do not assume. On indemnification: a contractual duty to indemnify, defend, and hold harmless is generally NOT covered by malpractice insurance because it is a contractual rather than a medical-negligence obligation, and signing one can trigger policy exclusions or higher premiums. Even 'mutual' indemnification is rarely equal protection in practice: groups/employers carry few contractual duties beyond paying you, so a reciprocal clause adds little real exposure on their side, while primary negligence is almost always alleged against the individual clinician. Most physician-contract attorneys and malpractice carriers advise not signing an indemnification clause if at all possible; if it is unavoidable, make it mutual, cap exposure at your insurance limits, and narrow it to gross negligence or willful misconduct.

Demand symmetry and explicit floors so a facility cannot strand you. Termination/notice clauses are frequently asymmetric — for example, the clinician must give 60 days' notice while the agency or facility can cancel with little or no notice; push for symmetric notice (the without-cause industry norm is roughly 30 days written), define 'for cause' precisely, and cap evergreen auto-renewals or attach a rate escalator so renewals do not lock in stale rates. Cancellation pay protects you when a facility cancels late after you have already declined other work and traveled: in one documented case described by a healthcare attorney, a clinician lost close to $20,000 when shifts were cancelled with less than a day's notice while they still owed 60 days' notice to terminate. There should always be a provision addressing what happens if the facility cancels — negotiate a cancellation-pay or kill-fee provision, a notice window (e.g., 30 days), and reimbursement of non-refundable travel. Add a guaranteed minimum number of shifts or hours, with pay for scheduled time even if patient volume is low. Spell out on-call frequency and extra pay for call, callback, holidays, and shift differentials. Finally, specify payment timing — how soon after submitting time you are paid, required documentation, and recourse for late pay; many agencies pay weekly via direct deposit, which is faster than checks.

Almost always 1099 independent contractors — which means no employer benefits and self-employment tax plus quarterly estimates, so confirm the contract's classification language matches the working relationship. As a 1099 IC you owe self-employment tax of 15.3% (12.4% Social Security on net earnings up to the 2026 wage base of $184,500, plus 2.9% uncapped Medicare; the SE base is 92.35% of net profit, with a one-half-SE-tax deduction above the line) and must pay quarterly estimates (2026 due dates: April 15, June 15, September 15, 2026, and January 15, 2027). You also arrange your own benefits and retirement. One common misconception worth flagging: the §199A Qualified Business Income deduction is largely a $0 lever for most full-time locums, because physicians, CRNAs, and AAs are a specified service trade or business (SSTB) and the deduction fully phases out above $276,750 (single) / $553,500 (MFJ) under Rev. Proc. 2025-32 (do not use the stale pre-OBBBA $276,750 / $553,500 figures). Note too that forming a single-member LLC is, by itself, a disregarded entity that provides no tax savings — its benefit is liability separation — and an LLC does NOT shield you from personal malpractice liability. Detail on entity choice, S-corp elections, and the W-2-vs-1099 trade-off belongs in the dedicated guides; here, the contract action item is simply to make sure the classification language is not ambiguous and does not contradict reality.