As you navigate the job market, numerous considerations and preparations must be made, and non-compete agreements (NCAs) might be on that list depending on your desired location and specialty. It’s imperative to understand the nuances of non-compete clauses in employment contracts, as they are designed to protect employers’ interests and they can significantly impact your career trajectory and professional autonomy. Beyond the brief overview below, we highly suggest engaging a medical employment contract lawyer to ensure your contract is suitable for you to sign.

Physician Non-Compete Agreement Overview

Physician non-compete clauses typically restrict physicians from practicing for another medical provider (or creating their own competing practice) within a certain geographical area and/or for a specified period after leaving their current position. Medical employers argue that these restrictions help protect intellectual property, prevent their patients from moving to a competitor’s practice, and reduce costly physician turnover. While these clauses are common in many physician contracts, it’s crucial to scrutinize the terms to ensure they are not overly restrictive for the future of your career. Confirm that you understand the specific parameters, including the radius of the restricted area and the length of the non-compete period.

Are Non-Compete Agreements Negotiable?

While some aspects of non-compete clauses may be non-negotiable, such as protecting legitimate business interests, oftentimes the aforementioned terms can often be negotiated. For example, you may negotiate for a narrower geographic restriction or a shorter duration of the non-compete period.

How to Negotiate a Non-Compete Clause

Engaging a contract lawyer specializing in physician employment contracts is advisable, especially when navigating non-compete clauses. A legal expert can review the contract comprehensively, identify any potential pitfalls, and negotiate favorable terms on your behalf. It’s also suggested to review the non-compete clause early in the job search process. Waiting until after receiving a job offer may limit your ability to negotiate, as the employer may be less inclined to amend the terms at that stage.

Other Non-Compete Considerations

Some states including California, Colorado, Minnesota, North Dakota, and Oklahoma have virtually outlawed NCAs, so if you’re looking for a position in those states, you can disregard any NCA preparation. In other states like Indiana, Primary Care Physicians are no longer subject to new non-compete agreements as of July 2023. Additionally, the Federal Trade Commission has proposed a national ban on NCAs across all industries, though a ruling has yet to be made. Each state will have different restrictions than others and you’ll want to check the latest developments for NCAs in your desired state.

UPDATE 4/24/2024: The FTC voted on April 23 to ban noncompete agreements which would begin later this year. The vote currently does not impact nonprofit entities, such as hospitals with nonprofit status, but the FTC may evaluate an entity’s status. The AMA estimates that 35%-45% of physicians are bound by noncompete clauses. The rule is expected to be challenged by the U.S. Chamber of Commerce.

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