Here’s all you really need to know about the enforceability of covenants not to compete in physician employment agreements.
(Feel free to skip this section. As noted below, the legality of a covenant not to compete in your physician employment agreement is all but meaningless).
Most lawyers will tell you that, depending on state law, covenants not to compete in physician employment agreements are generally enforceable if they are reasonable in time and distance. In other words, if a court finds that the covenant restricts you for a reasonable amount of time, and only covers a reasonable distance, then the court will enforce the covenant. Sometimes, depending on the agreement and the state, the court may “rewrite” a covenant not to compete in a physician employment agreement such that the court finds that (by reducing the time or distance, or both) the covenant is now reasonable in both time and distance, and will be enforced as rewritten.
Millions of words have been written analyzing specific cases, teasing out the elements of enforceability, and generally demonstrating how very brilliant the authors of these sage words truly are. Studying these tomes, posts and articles is generally more socially acceptable than perusing porn, and less likely to lead to divorce if discovered by your spouse. In addition, if you purchase The Final Hurdle – A Physician’s Guide to Negotiating a Fair Employment Agreement, you will provide much-appreciated income to the Hursh family. These reasons alone may justify your time in exploring the topic in great depth.
If you’re in a hurry, though, all you really need to know about physician covenants not to compete is below.
Do you spend your life wishing you had more interaction with lawyers? Do you feel you haven’t done enough recently to ensure a wealthy life for your favorite physician’s lawyer? I didn’t think so. Here’s a news flash – any potential employer feels the same way.
What this means in the real world is that if you have a covenant not to compete in your current physician employment agreement that isn’t clearly inapplicable (e.g., it prohibits the practice of medicine in Manhattan, and your new employer is California), a potential employer isn’t going to want to go the Supreme Court to find out if it is really enforceable.
In my book on physician employment agreement negotiation I wrote about an actual example of a negotiation, in which a very experienced and respected physician had a covenant not to compete for 65 miles from his current employer. A hospital about 62 miles away wanted to hire him. The hospital’s general counsel and I agreed that (1) a court would almost certainly not enforce the covenant under these circumstances, and (2) the current employer would be crazy to bring suit, which could end up invalidating all of its covenants with all of its employed physicians.
The result? The hospital hired another physician. Why? It just didn’t want to deal with potential litigation, even remotely possible litigation.
When negotiating your physician employment agreement, you have to look very closely at the covenant not to compete language. Don’t spend any time at all trying to figure out if it is enforceable. If the language as written is so broad that, if a court enforced the covenant, you would have to leave the area and start over if you leave this employer, you must assume that you will have to leave the area and start over if you leave this employer.
The bottom line on covenants not to compete in physician employment agreements is that the market will enforce the covenant as written, even if a court almost certainly wouldn’t. You have to negotiate language that you can live with, or you will probably end up living someplace else when you leave that employer.
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