Physician Noncompete Agreements Are Enforceable…Usually…

Noncompete agreements are enforceable, and can avoid employees leaving to work for your competitors. If you are an employee, non-competes can very much restrict your ability to make a living elsewhere, should you choose to leave your current employment. But for physicians, recent law changes to how noncompete agreements work with physicians have changed the playing field-at least, in some areas of Florida.

New Law Affects Rural Areas

In June of 2019, a new law was passed altering the enforceability of noncompete agreements for doctors. The law says that if an employer employs all of the specialists in a particular medical field that are in a given county, the employer cannot prevent any doctor from leaving to work elsewhere in the same county. Any provision in any contract or noncompete agreement that says this is unenforceable. The law even voids pre-existing agreements that may contain any restriction that is contrary to the new law.

If at any point another physician enters the county in the same medical specialty, the noncompete provision is still void for another three years. In other words, a specialist entering the county does not suddenly make the otherwise unenforceable noncompete provision enforceable.

Why Was the Law Passed?

The law was passed for a few reasons. The first is so that patients have choice, especially in smaller counties that may not have access to a lot of doctors. You can imagine that if a county had 3 dermatologists, and all were subject to noncompetes, when those 3 dermatologists wanted to leave to start their own practice, they would all have to leave that county, leaving the people who live there with no dermatologists.

Additionally, many doctors, when faced with noncompete agreements, choose to retire. The legislature felt that doctors retiring to avoid noncompete agreements was just bad public policy.

Law Survives Legal Challenge

The law actually was immediately challenged after its passage. An employer that employed all the oncologists in lee county, all of whom were subject to a noncompete agreement, sued when they all left to start their own practices in the county. But the Supreme Court.

The law doesn’t affect all noncompetes, and will likely only affect those in rural counties, where there are few specialists.

Remember that noncompete provisions that restrict healthcare providers are generally enforceable to the extent that any others are.

That means that they have to serve a legitimate, rational business purpose, not be overly restrictive, and comply with statutory time and geographical requirements. The more severe and restrictive the noncompete is, the more closely, and harshly, a court will judge it.

That means employers should try to balance the need for a broad noncompete, with the need for it to be enforceable if challenged in court down the road-and noncompete agreements should always be drafted with the assumption that someone, sometime, will try to challenge it in court-these agreements, do, after all, affect someone’s ability to make a living.

Call the West Palm Beach business litigation lawyers at Pike & Lustig for help today if you have a business law dispute.

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