Non-Competition Agreements in Physician Employment Contracts Q&A

February 14, 2011
By Villanueva & Sanchala on February 14, 2011 10:07 PM |

Thumbnail image for Thumbnail image for top.lawyers.arrive.mag.2011.jpgQ: After considering several physician jobs, I just received a physician employment contract from a medical practice that I really like. However, the physician employment contract has a non-competition clause that would restrict me for 3 years after my termination of employment within a 10 mile radius of the medical office, which includes 2 hospitals. Should I sign this Doctor Employment Agreement?

A: Non-compete clauses (also known as restrictive covenants) are probably the most important facet of your physician employment contract. They should be negotiated carefully so as to decrease it scope and parameters as much as possible. The non-competition clause of your physician employment contract could mean the difference between having to move and relocate your family in the event the job does not work out. Our Physician Employment Agreement attorneys have helped physicians, medical doctors, physician assistants, nurses and other medical professionals safeguard their careers and their families by evaluating and negotiating the terms of a proper employment contract.

Often clients come to our office with the misconception that a non-compete agreement is per se unenforceable. Generally, with limited exceptions (such as working in California), non-competition clauses are enforceable to the extent that they are reasonable. There are many factors courts will consider whether the no compete clause is enforceable such as whether you are an owner or employee. Further, whether your specific non-competition agreement is too broad in time and geographic scope (and potentially unenforceable) will depend on the area that it covers and how much it limits your ability to earn a living. There is no magic restricted geographic restriction or time restriction. Clearly, a five mile radius in a densely populated area such as New York City is not the same as a five mile radius in rural Wyoming. Further, you must keep in mind that the geographic area that a not-competition agreement encompasses today may not be the same area that it covers a year or two from today. Remember that most of these clauses cover any future offices that are opened as well as hospitals joined. If the practice adds another hospital or opens up another practice 50 miles away, the scope of your restricted area will increase. Thus, if you or the practice ends up terminating the agreement, you could be locked out of practicing not just in the town you work in, but also surrounding towns depending how broad the restrictive covenant is. Many of our clients have encountered covenants not compete which not only cover the town or county they work in, but also surrounding towns and states.

Another important consideration is limiting the time on your non-compete clause in the event that the agreement is terminated sooner than set forth in your contract. This time frame should be clearly negotiated based on who terminates the contract and for what reason. For example, it is not equitable for your non-compete provision be interpreted in the same manner as if you were laid off without cause or terminated for cause. Despite what you may be told, rarely is a contract - "take it or leave it" - most times, many provisions in your Physician Employment Agreement can be negotiated. Call our experienced Physician Employment Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you negotiate the best possible contract for your needs.

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