Navigating contract negotiations as a medical professional can be overwhelming and confusing. This can be intensified when a prosecutive employer proposes the inclusion of a non-compete clause in your contract. A non-compete clause restricts your ability to seek employment when leaving your job by geographic area or duration of time, or both. When accepting a new position, it may seem far-fetched to think of what will happen when you leave. Still, it is important to address that possibility during your contract negotiations rather than when it is too late.
Does My State Allow Non-Compete Clauses?
Not all states are created equal with respect to their non-compete clauses. Due to this, it is important to have an attorney representing you who is familiar with the intricacies of each state’s noncompetition clauses.
Some States Will Not Enforce a Non-Compete Clause
If you are looking at a job in California, North Dakota or Oklahoma, the good news for you that covenants not to compete are unenforceable in those states.[1]
In other states the law is not so clear cut. For example, the District of Columbia recently passed an almost total ban on the enforcement of non-compete agreements; however, it explicitly excludes “medical specialists” from this ban. This does not mean everyone in the medical field is within this category, either. In order the be excluded you have to be a licensed physician, have completed a medical residency, AND have a total compensation of more than $250,00 per year.[2]
Other States Exempt Medical Professionals
To keep you guessing, some states allow the enforcement of a covenant not to compete but exempt some medical professionals from that enforcement. Arkansas does not allow a covenant not to compete to be enforced against licensed medical professionals.[3] Colorado and Delaware also fall into this category but allow a physician to be liable for damages resulting from competition in certain instances.[4]
A covenant not to compete in an employment agreement with a physician in New Hampshire or Massachusetts is void.[5] This is also the case in New Mexico and it is extended to dentists, osteopaths, podiatrists, and certified registered nurse anesthetists.[6] However, this does not apply if you are a shareholder, owner, partner or director of a practice.[7] Rhode Island also allows a covenant not to compete when there is a sale or a purchase of a practice, but not for the average physician contract.[8] Texas also exempts physicians in certain circumstances.[9]
The law continues to be in flux in South Dakota where a recent bill was introduced to now allow a covenant not to compete for any physicians, physician assistants, certified nurse practitioners, certified nurse midwifes, certified registered nurse anesthetists, and registered nurses.[10] This bill recently passed the House and Senate and has gone to the South Dakota governor to (hopefully) be signed.[11]
States that Allow Restrictive Covenants
What if you find yourself looking for a job in one of the other 30+ states that allow employers to enforce covenants not to compete against physicians and other medical professionals? It is important to know that not all geographic and duration limits are created equal as some states allow for larger limits while others are more restrictive.
Interestingly, Idaho only enforces covenants not to compete against “key employees or independent contractors.”[12] If a key employee, then the covenant cannot exceed 18 months.[13] Illinois only allows the enforcement of a covenant if there is at least two years of continuous employment prior to the time it is to be enforced.[14] In Missouri, it is presumed that a covenant of not more than 1 year is reasonable.[15] Montana says they are enforceable as long as reasonable in time and place, based on consideration, and afford reasonable protection.[16]
Some states allow for covenants of non-compete to generally be enforced but have certain requirements for their enforcement against physicians. In Connecticut, a covenant not to compete after July 1, 2016, cannot restrict a physician’s activities for more than a year or more than 15 miles.[17] In Florida, there is an exception regarding physicians that voids a covenant not to compete if “one entity employs or contracts with, either directly or through related or affiliated entities, all physicians who practice such specialty” in the same county. These are void for three years after the entry of a second employer into the same geographic market.[18] In Tennessee, a restrictive covenant in a physician contract is reasonable if it is for less than two years and a 10-mile radius.[19]
Physician Buy-Outs
In Indiana, a recently enacted law allows covenants to be enforced against a physician as long as it meets certain requirements including the ability of a physician to continue treatment of a patient if the patient requests.[20] It also requires the agreement to include a provision that would allow a physician the opportunity to “buy out” their noncompetition agreement.[21] Texas also requires that a physician be given an option to buy themselves out their noncompetition agreement.[22]
As you can see, the landscape of restrictive covenants as it relates to medical professionals can be stressful and shifting. No matter where your job search takes you, you will want an experienced attorney to represent your interests. For more detailed information regarding the law in your respective state, use our interactive map.
[1] Cal. Business and Professions Code, section 16600; 15 OK Stat § 15-219A (2014), N.D.C.C. § 9-08-06 (2019).
[2] D.C. ACT 23-563 (2020).
[3] AR Code § 4-75-101 (2017).
[4] C.R.S. § 8-2-113 (2018); 6 DE Code § 2707 (2012).
[5] NH Rev § 329:31-a (2016).
[6] NM ST § 24-1l-2 (2015).
[7] NM ST § 24-1l-2 (2015).
[8] RI Gen L § 5-37-33 (2017).
[9] TEX. BUS. & COM. CODE ANN. § 15.50 (1991).
[10] SD HB 1154 (2021).
[11] SD HB 1154 (2021).
[12] ID ST § 44-2701 (2008).
[13] ID ST § 44-2704 (2016).
[14] Fifield et al. v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327.
[15] R.S. Mo. § 431.202 (2001).
[16] Wrigg v. Junkermier, 265 P.3d 646 (Mont. 2011).
[17] Conn. Gen. Stat. § 20-14p (2016).
[18] FL ST § 542.336 (2019).
[19] TN ST § 63-1-148 (2008).
[20] Ind. Code § 25-22.5-5.5-2 (2020).
[21] Ind. Code § 25-22.5-5.5-2 (2020).
[22] TEX. BUS. & COM. CODE ANN. § 15.50 (1991).
