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Non-compete agreements and physicians: The basics

It is not uncommon for a medical practice to expect physicians to abide by a non-compete agreement. This piece will discuss the basic elements needed for a non-compete to survive a legal challenge.

What is a non-compete agreement? A non-compete agreement is a restrictive covenant. These agreements generally have three elements. The agreement will address the field of medicine, the geographic area covered by the agreement and a specific period of time the agreement is set to last.

What is needed to mount a successful challenge to a non-compete agreement? A challenge to a non-compete agreement generally centers on these three elements. In order to survive a challenge, the employer must establish the following:

  • Legitimate business interest. The non-compete agreement must serve a legitimate business interest to survive a legal challenge. In many cases, the potential for competition within the field can suffice to meet this goal.
  • Geographic scope is fair. A challenge can also be based on the agreement's geographic scope. A scope that is too broad will not survive. These provisions generally include a radius in miles that surrounds the employer's locations.
  • Duration narrowly tailored and reasonable. These agreements must have an expiration date. Generally, a two-year duration is acceptable.

It is important to note that these agreements are creatures of state law. As such, the exact expectations will differ depending on the state. Some states also impose additional restrictions by statute on non-compete agreements for physicians. 

It is wise for those who wish to craft or challenge such an agreement to take previous cases into consideration. Precedent court cases will impact the likelihood that your claim will succeed. As such, it is wise to seek legal counsel experienced in health care matters to better ensure a successful claim.

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