Most physician employment contracts contain a non-compete clause as a condition of employment. A non compete clause is very important to consider when starting your own practice, seeking new employment, or transitioning with a retiring physician.
Non-compete agreements are often signed in conjunction with physician employment contracts, or when a physician joins a practice group as an owner. These agreements typically prohibit a doctor from competing against his or her former practice within a specific region for a specific amount of time after the relationship with the practice has ended.
A non compete clause can be as narrow as prohibiting the restricted physician from practising within one square block, or they can be as far reaching as preventing a physician bound by the restriction from practising medicine within any of the state.
Enforceability:
The legal enforceability of a physician restrictive covenant varies widely by state, is almost always highly factually based, and frequently relies on a reasonableness standard.
State courts generally disfavour employment non-competes as a “restraint of trade” and decline to enforce them against employees absent a showing by the employer of a need for protection as defined by state case law or statutes.
As a general rule, in the United States, a non compete clause is thought to be a restraint of trade and disfavored.
Why do physicians sign in a Non compete clause?
Physicians, particularly those who transfer from one place to other , are less likely to have business contacts and patients of their own. Thus, they have little leverage or power in negotiating the conditions of employment. For this reason, many physicians are willing to sign any agreement placed in front of them.
In order to protect themselves from competition from departing employees, most employment contracts contain some form of non-compete clause put in place by the doctor who is hiring.
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