Understanding Non-Competes

Understanding Non-Competes

This blog is dedicated to our favorite legal eagles, Bret and Jessica. It is also our sworn duty to tell our readers that we are not a substitute for legal advice and we always encourage you to seek counsel from a licensed healthcare attorney.

A non-compete clause is included in most employment contracts for the purpose of restricting the employee from: (i) working with competitors of the employer or (ii) starting his or her own practice to compete against the employer. Below are a few things about non-competes: 

  • Sometimes they have a slightly different name.
    • Restrictive covenant
    • Non-competition
    • Covenant not to compete
  • What does it include?
    • Geographical Area – The geographical area is the area in which you cannot engage in restricted activities.
      • This area is measured typically as the radius in miles from an office location, hospital, and/or dialysis clinic where the employer provides professional services.
      • The radius is often a specific mileage as a crow flies – meaning the shortest distance between two points.
        • This is different from the mileage between two points that Google Maps would suggest for driving directions.
        • The radius can vary based on whether the practice is located in a major metro area, mid-size city or rural area. For example, a Chicago practice may have a different radius as its restricted geographical area than a Dallas practice.
    • Restrictions on the work you can do – If the non-compete clause restricts you from practicing nephrology, then you may be able to work as a hospitalist within the geographical area. However, some agreements exclude the physician from practicing medicine at all. Generally, the narrower the scope of activities restricted, the more freedom you will have to practice medicine within the geographical area.
    • Term – The term is the time period the non-compete is enforceable. Generally, we see two-year terms.
    • Buy-out clause. Occasionally, the employer will allow you to buy-out the non-compete.
      • Sometimes, this amount may be pre-determined and stated in the agreement.
      • Typically, the amount may be based on what the employer believes will offset its loss if you competed against the employer.
  • Other information you might find helpful:
      • Each state may have a different take on the non-compete clause. It is important to be advised by a healthcare attorney licensed in the state where you will be working that knows the laws and enforceability.
      • The non-compete clause can still limit you even if you are fired.
      • When you transition to a partner status, there will likely be another non-compete clause in the partnership agreement.

Remember, having a healthcare attorney review your employment contract can help protect you and ensure you have a non-compete that is fair and appropriate for the scope of your practice and market in which you serve your patients.

 

2019-12-01T12:27:16-07:00 October 21st, 2019|6-9 Months before Graduation|0 Comments

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