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Non-Competition Agreements in Healthcare - YouTube
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When we negotiate physician employment
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contracts, one of the questions that
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arises most frequently is about
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non-competition agreements or
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non-competes. I'm Erin Jackson with
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Jackson LLP Healthcare Lawyers. As
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attorneys who advise physicians, other
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providers, and small practices about
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employment issues and employment
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contracts, specifically, something that
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comes up so often is, "Is my non-compete
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enforceable?" Or, when we negotiate a
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contract for a physician with a new
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hospital or practice group, "Can you do
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anything to limit or change this?" So when
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we negotiate a contract on behalf of a
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provider, we look at the full spectrum of
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the contract. We never just negotiate or
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look at just one piece, even though
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sometimes we're asked to, because no piece
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of the contract exists in isolation from
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the others. So, when we're looking at a
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contract, one of the things we look at is
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the non-competition agreement. And in
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order for it to be enforceable, generally,
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this means it needs to be reasonable in
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both time and scope. So, "reasonable in
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time" means that it doesn't say, "You
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shall not compete for a period of 25 years
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or as long as your practice, your license
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to practice remains viable." Two years,
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five years, these all depend on what kind
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of compensation the practice is giving you
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and what sort of consideration you're
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receiving in exchange for signing this
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non-compete. Now, scope is a little
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trickier. So there's a few different
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aspects of scope. One is geographic, the
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radius around the practice, in which
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you're promising not to compete with your
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future employer. So, this becomes trickier
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for physicians who are working with larger
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hospital systems who will ultimately end
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up spending anywhere from 5% to 80% of
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their time actually working at other
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locations. Or it can be an issue for
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someone who begins work at one location
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and then is transitioned to another
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location. The non-competition agreement
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was negotiated with an eye towards the
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intended initial place of employment. So
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if you only draw a radius around that, the
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employer who may be you or maybe your
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future employer may say, "Well, that's not
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fair. You've actually been working out of
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this other location for the past two
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years, and so you can't compete with this
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location." So the contract should really
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spell this out. It's also possible that
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the radius will intersect with state
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lines, county lines, municipalities,
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various things, so we would want to look
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at it to ensure that it's fair for both
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parties, that it keeps the employee from
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directly competing with the employer to be
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for a limited amount of time during the
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post-employment period. Now, another way
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to look at scope is the scope of those to
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whom it applies. So is it competing if a
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gastrointestinal surgeon leaves the
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employment of a large hospital system to
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instead operate a cash-based bariatric
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surgery practice within the geographic
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radius? Well, it's possible that if that
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individual was seeing, primarily, Medicare
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patients for ulcers or other gastric
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issues at the hospital and now wants to
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see an entirely different subset of
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patients, that this wouldn't be
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competitive in terms of the scope of
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patients being seen. Again, it's really
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important to consider these things and to
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consider, if you're a provider, where you
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envision your future and career and
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opportunities being. So when representing
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a physician, we try to narrow this as much
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as possible. Obviously, we are also
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representing practices. So when we
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represent the practice, we work to make it
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as expansive as possible because
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protecting the practice's interest means
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limiting competition from former
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employees. Another detail to be mindful of
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is what could trigger its application. So,
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if the employee is terminated for cause,
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or not for cause, maybe for a budget
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reason, if they leave voluntarily, or if
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they're called to military service, or any
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other variety of outcomes, it's important
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to consider the circumstances that would
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actually trigger the application of the
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non-competition agreement and then if
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there's circumstances in which neither
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party would want it to apply. So, this is
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not even a deep dive into one of the
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really important clauses in most
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healthcare providers' employment
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contracts. To learn more or to chat with
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our attorneys about both how we can help
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you negotiate your own employment contract
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or how we can help your practice establish
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comprehensive, enforceable employment
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contracts for your providers.
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Visit our website JacksonLLP.com and book
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a free consultation.
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