Many non-compete agreements face challenges in both execution and enforcement. Each state has its own standards for what is permissible regarding duration and scope. And many states layer on additional restrictions and requirements when imposing a non-compete on a healthcare practitioner.
Here are five questions you should consider before entering into a non-compete with a physician.
Acceptable terms within an employment agreement non-compete vary widely from state to state:
Some states, including Hawaii, New Jersey and New York, follow the same general “reasonableness” tests that they do for other non-healthcare employees.
Others have codified specific terms that must be drafted into physician non-competes (such as Texas’s requirement to include a buy-out clause), or specific exceptions where they cannot be imposed (such as Florida’s ban on physician non-competes where “one entity employs or contracts with, either directly or through related or affiliated entities, all physicians who practice such specialty.”)
In some states, such as Delaware, physician non-competes cannot be specifically enforced. Liquidated damages are the only remedy for a breach.
And in other states, including California and Massachusetts, non-competes are simply prohibited in the physician employment context.
Therefore, the state law that governs the physician’s employment agreement is incredibly important to the analysis of what...
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