Pennsylvania Governor Josh Shapiro has signed the “Fair Contracting for Health Care Practitioners Act” (House Bill 1633), which restricts the ability of employers and healthcare practitioners to enter into non-compete agreements. The Act goes into effect on Jan. 1, 2025.
The Act represents a significant shift in the employment landscape for healthcare practitioners in Pennsylvania and is part of a growing trend of greater scrutiny of restrictive covenants, especially in the healthcare industry.
Aiming to retain and attract healthcare talent, improve patient access and care, and foster a more competitive healthcare market, the Act makes void and unenforceable any non-competition covenant that “has the effect of impeding” certain healthcare practitioners’ ability to treat or accept new patients. Practitioners covered by the Act include physicians, osteopaths, certified registered nurse anesthetists, certified registered nurse practitioners, and physician assistants.
However, non-compete covenants that do not exceed one year in length remain enforceable when the healthcare practitioner voluntarily terminates employment. But such non-competes are unenforceable if an employer involuntarily dismisses a practitioner for any reason. There is no apparent exception for terminations for cause.
The Act also provides that:
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