As a physician, your employment contract can have wide-reaching effects. Non-compete clauses and other restrictive covenants can limit long-term career opportunities if you are not careful. While avoiding these clauses entirely may not be realistic, you do have negotiating power and the ability to pursue fair and reasonable terms that mutually benefit you and your employer.
Taking the time to fully understand the terms in physician non-compete clauses can also help you maintain control over what you are signing. Learn what to watch out for in doctor restrictive covenants and how a healthcare attorney can support you.
Understand These Key Elements of Non-Competes Before Signing
Healthcare employers often include non-compete clauses in physician contracts to protect themselves. These clauses can prevent you from taking your patient base with you to your next practice, stop you from bringing your skills and experience to competitors, or even limit you from starting your own practice within a specific geographic area.
Be sure to evaluate the following elements of a non-compete to understand how it would impact your career both now and in the future.
Enforceability
The enforceability of non-competes in New York and New Jersey depends on the "reasonableness" of their terms. While the definition can vary, this generally means that a contract must:
- Not deprive the public of essential medical services
- Be limited in time and geography
- Not violate state laws restricting non-competes
Geographic Limits
Physician non-compete agreements usually limit the geographic scope in which a doctor can practice after leaving the current organization. Non-competes that cover more than a 20-mile radius are often considered unreasonable outside of rural, low-density areas, while a 10-15 mile radius is more likely enforceableBe sure to assess the geographic limits in your restrictive covenant for your specific geographic area and understand how that may impact your career prospects.
Duration
Restrictive covenants should only affect a physician's career opportunities for a specific, reasonable period after leaving the current employer. A duration of between six and 12 months is often considered reasonable, but 18 months may be acceptable in some markets. Durations of 24 months or longer are often scrutinized.
Scope of Activity
When reviewing non-competition clauses, you should understand the scope of activity being limited by the contract. Reasonable restrictions should only cover your specific specialty and not prevent you from practicing medicine as a whole or participating in other roles like teaching or research.
Trigger Events
Also understand what events would trigger the non-compete to go into effect. Generally, these clauses become active when a doctor leaves a practice voluntarily or an employer fires them with cause, but many apply when a physician is terminated without cause.
Buyout Clauses
Some non-compete clauses include a buyout option that would allow the physician to pay a certain amount to be released from the restriction. Review any buyout terms and consider whether they would be reasonable. The buyout amount is often negotiable before signing.
Red Flags To Watch Out For in Physician Non-Compete Clauses
When reviewing a physician non-compete clause, looking for a few red flags can help you quickly understand when a restrictive covenant may not be in your best interests. Any of the following terms could have negative implications:
- Vague or ambiguous definitions of "competitive activity"
- Excessive durations that extend past two years
- Overly broad geographic restrictions that would force relocation
- Geographic restrictions that apply to all of the practice's facilities or any location the employer may open in the future, not just locations where you worked.
- Enforcement in instances of a without-cause termination
- Non-solicitation terms that prevent you from informing patients of your new location
Tips for Negotiating Restrictive Covenant Terms
If, upon initial review, you find that a restrictive covenant is unfair or unreasonable, you may have the opportunity to negotiate its terms. A healthcare employment lawyer can help you review the contract thoroughly before signing, at which point you may still have leeway to modify it.
These tips can help you effectively negotiate a non-compete:
- Ask to reduce terms rather than eliminate them.
- Compromise on terms that are less important to you in favor of modifying other terms.
- Request a more reasonable buyout option.
Your attorney can also help you understand the legal ramifications of breaking a non-compete and the process of enforcing it if you are unable to negotiate any of its terms. Some contracts have liquidated damages provisions that could allow you to "break" the non-compete by paying pre-agreed monetary penalties.
Schedule a Legal Consultation for Physician Contract Negotiation
If you are reviewing a physician non-compete clause or restrictive covenant, turn to Empower Healthcare & Legal Solutions PLLC for a thorough contract review and representation during negotiations. Contact us today at 845-286-9418 to request a consultation.