Covenants not to compete, also known as non-compete clauses, are common in physician employment agreements, but they can be a source of confusion and concern for many doctors. You’ve spent years building your practice, developing patient relationships, and establishing your reputation. So, what happens if you decide to leave your current job and your employment contract has a restrictive covenant? Can your employer really enforce it and prevent you from practicing in the same area? Understanding the enforceability of non-compete clauses is crucial before signing any contract or making a move.

In this blog post, we’ll explore what a covenant not to compete is, how they are enforced, and what you can do to protect your professional freedom. Whether you’re a resident negotiating your first job offer or an established physician considering a career change, knowing your rights can help you make informed decisions about your future.

What is a Covenant Not to Compete?

A covenant not to compete is a clause in an employment contract that restricts you from working in a specific geographic area and/or within a particular specialty for a set period after leaving an employer. These clauses are designed to protect employers from losing patients or business to departing physicians. They can cover various restrictions, including where you can practice, which hospitals you can work at, and even what types of medical services you can provide.

While these clauses may seem daunting, they are not inherently unreasonable. They are meant to safeguard legitimate business interests, like maintaining a stable patient base or protecting proprietary information. However, the language of these agreements can sometimes be overly broad, making them potentially problematic for physicians who wish to change employers or start their own practice.

Are Non-Compete Clauses Enforceable?

The enforceability of a non-compete clause depends on several factors, including state law, the specific terms of the clause, and the context in which it was signed. Here are some key considerations:

1. State Law: Not all states enforce non-compete clauses for physicians. For instance, states like California and Massachusetts place significant restrictions on their enforceability. In states where they are enforceable, the clause must meet specific criteria to be considered reasonable.

2. Reasonableness: Courts typically assess non-compete clauses for reasonableness in three areas:

   • Geographic Scope: Is the restricted area reasonable given the employer’s reach and the physician’s specialty? A 10-mile radius might be reasonable in a densely populated area but excessive in a rural setting.
   • Duration: How long does the restriction last? Generally, anything beyond two years can be seen as overly restrictive.
   • Specialty: Does the clause prevent you from practicing in all fields of medicine or just your specific specialty? Overly broad restrictions are less likely to be enforced.

3. Protectable Interest: The employer must have a legitimate business interest to protect, such as trade secrets, confidential information, or a significant investment in the physician’s training and integration.

4. Public Interest: Courts also consider the impact on public access to healthcare. If enforcing the clause would limit access to medical care in a community, a court may choose not to enforce it.

What to Do if You Have a Non-Compete Clause

If you’re facing a non-compete clause and are considering leaving your job, it’s important to take the following steps:

1. Review the Contract Carefully: Understand the specific terms of the non-compete clause, including the geographic scope, duration, and specialty restrictions. Look for ambiguous language that might work in your favor.

2. Consult an Attorney: Seek advice from an attorney experienced in physician employment agreements. They can help you understand the enforceability of the clause in your state and potentially negotiate modifications or a release.

3. Negotiate Before Signing: If you’re still in the negotiation phase of your employment contract, this is the best time to address the non-compete clause. You may be able to limit its scope, reduce its duration, or even have it removed entirely.

4. Assess Your Options: If you’re already in a contract with a non-compete, evaluate your next steps carefully. Consider whether relocating or changing specialties could help you avoid the restrictions.

5. Document Everything: Keep a record of all communications and actions taken related to your departure. This documentation could be valuable if the issue escalates to legal proceedings.

Possible Outcomes

If you decide to challenge a non-compete clause, several outcomes are possible:

1. Negotiated Release: Often, the best resolution is a negotiated release from the non-compete. Employers may be willing to waive the clause in exchange for certain conditions, such as an agreement not to solicit patients or staff.

2. Court Challenge: If negotiations fail, you may need to challenge the clause in court. This can be a lengthy and costly process, but if the clause is deemed unreasonable, it may be invalidated or modified by the court.

3. Compliance: In some cases, you may choose to comply with the non-compete and wait out the restriction period or relocate to a non-restricted area.

Final Thoughts

Navigating a non-compete clause can be challenging, but it’s not an insurmountable obstacle. Understanding your rights and options is the first step in making an informed decision about your career. Whether you’re negotiating a new contract or considering leaving your current position, it’s crucial to seek professional advice and take a proactive approach.

Remember, while non-compete clauses are designed to protect the employer, they should not unfairly restrict your ability to practice medicine. With the right strategy, you can safeguard your professional freedom and continue to provide care where it’s needed most.

Non-compete clauses are a common yet complex aspect of physician contracts. Before making any career moves, ensure you understand your rights and the potential implications of such agreements. If you have questions about your specific situation or have a contract that includes a non-compete ensure you get a review to know what you are signing.