Physician Employment and the Non-Compete Agreement

The dual growth in physician employment and doctors changing jobs frequently has led to an increase in medical facilities requiring the doctors to sign non-compete agreements. Such agreements have been around for decades, but not until recently have they become such a big part of medicine.

As a doctor, it is important that you understand non-compete agreements as they relate to your employment. Learning more about them may give you pause about moving from private practice to employment. On the other hand, you may already be employed. You need to know how non-compete agreements affect your employment.

Basics of Non-compete Agreements

A non-compete agreement is essentially an agreement added to an employment contract to protect the employer. In exchange for employment, the employee agrees to not go to work for a competing employer and/or divulge protected information for a particular period of time.

The typical non-compete agreement for doctor stipulates that he or she will not take a job at a different facility located within a certain distance from the current employer for at least a couple of years following termination of employment. An example would be one that states a doctor in New York cannot work in a competing facility within 10 miles until two years after the end of that doctor’s current employment.

Enforcement of Non-Compete Agreements

Non-compete agreements are sticky wickets from a legal standpoint. Reams of information have been written about them based on individual state laws. The big problem with these agreements is that there are no uniform standards. States are allowed to adjudicate disputes between employers and employees based on their own regulations.

Enforcement of a non-compete agreement is very difficult in many states. In California, such agreements are not allowed at all except when selling a business. When a California healthcare facility requires a doctor to sign a non-compete agreement, they are hoping the doctor abides by the agreement on the honor system. It cannot be enforced.

On the other hand, there are other states that allow for strict enforcement. The only two instances a non-compete agreement would be unenforceable in such states are:

  • when a doctor is terminated without cause; or
  • when a physician terminates his or her employment due to a material breach on the employer’s part.

The fact that standards differ from one state to the next should motivate doctors to learn about state laws before signing any employment contract. Such contracts can also be looked at by attorneys. In fact, attorney review is always a good idea.

Locum Tenens Physicians

Tiva Healthcare, a company that specializes in locum tenens physician staffing, says that non-compete agreements are usually not a problem for locum doctors. Locum tenens staffing is temporary, contract staffing meant to plug staffing holes that might be the result of physician retirement, maternity leave, etc.

The nature of locum tenens work is such that employers understand doctors move from one assignment to the next over the course of their careers. They expect that some doctors are going to be working at competing facilities in the same general area, but that those doctors will only be around for a short time. As a result, it is rare for locum doctors to be subject to restrictive non-compete agreements.

Any physician looking to change jobs or get that first job out of residency needs to be cognizant of the non-compete agreement. Non-compete agreements that seem unusually restrictive should be reviewed by attorneys to ensure the best interests of the doctor. And in cases where a doctor signs a non-compete, that individual should be prepared to abide by it.

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