Non-compete agreements are a double-edged sword.

For employers bringing on new employees, they invest in their new hires. They want their new hire to succeed. They do not want that person to build a practice, then leave, go across the street, and compete.

For employees, the non-compete agreement is very limiting. If the job does not work out, they have to leave. Often, they have to sell their house, yank the kids out of school, find a new dry cleaner. Moving is stressful. Doesn’t matter if you move 20 miles away or across the country.

Non-compete agreements are addressed by state law. Some states, like California, make physician non-compete agreements unenforceable. Other states, like Texas, incorporate a formula allowing a physician to “buy his way” out of the agreement. Other states, like Missouri, fully enforce such agreements.

In states where the agreement is enforceable, the terms must be reasonably necessary to protect the employer’s business interests. It cannot be more restrictive than necessary to protect the employer’s business interests. So, the geographic limitation cannot be too wide. The time restriction cannot be too long. Finally, if you are the only person providing services in the region, for example, pediatric oncology, special circumstances will likely apply. You cannot deprive an entire region of valuable follow-up care.

Over the past several months, the Federal Trade Commission has been considering a nationwide federal mandate. In January 2023, they issued a proposed rule that would ban all non-compete agreements. The proposed rule was published with the expectation that comments would be submitted.

26,000 comments were received. That’s a lot.

Under the proposed rule, not only will employers be prevented from entering into non-compete agreements with their workers, but they will also have to tell their former workers that their noncompetes are null and void.

Anyway, the Federal Trade Commission will address this again at a special meeting on April 23^rd. Importantly, there has been a lot of blowback. From the US Chamber of Commerce, the anti-trust section of the American Bar Association, and even the American Medical Association.

FTC will first vote whether to authorize the public disclosure the proposed final rule. If the vote clears, they will present the final rule to the public, and then will vote on whether to approve the final rule.

Even if the FTC approves the mandate, it will likely would take time to go into effect. And expect litigation to ensue in jurisdictions favorable to non-competes.

It’s too soon for employers or employees to break out the champagne and declare victory.

What do you think?

Medical Justice provides free consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. If you are navigating a medico-legal obstacle, visit our booking page to schedule a free consultation – or use the tool shared below.

Jeffrey Segal, MD, JD

Chief Executive Officer and Founder

Dr. Jeffrey Segal, Chief Executive Officer and Founder of Medical Justice, is a board-certified neurosurgeon. Dr. Segal is a Fellow of the American College of Surgeons; the American College of Legal Medicine; and the American Association of Neurological Surgeons. He is also a member of the North American Spine Society. In the process of conceiving, funding, developing, and growing Medical Justice, Dr. Segal has established himself as one of the country’s leading authorities on medical malpractice issues, counterclaims, and internet-based assaults on reputation.

Dr. Segal was a practicing neurosurgeon for approximately ten years, during which time he also played an active role as a participant on various state-sanctioned medical review panels designed to decrease the incidence of meritless medical malpractice cases.

Dr. Segal holds a M.D. from Baylor College of Medicine, where he also completed a neurosurgical residency. Dr. Segal served as a Spinal Surgery Fellow at The University of South Florida Medical School. He is a member of Phi Beta Kappa as well as the AOA Medical Honor Society. Dr. Segal received his B.A. from the University of Texas and graduated with a J.D. from Concord Law School with highest honors.

In 2000, he co-founded and served as CEO of DarPharma, Inc, a biotechnology company in Chapel Hill, NC, focused on the discovery and development of first-of-class pharmaceuticals for neuropsychiatric disorders.

Dr. Segal is also a partner at Byrd Adatto, a national business and health care law firm. Byrd Adatto was selected as a Best Law Firm in the 2023 edition of the “Best Law Firms” list by U.S. News – Best Lawyers. With over 50 combined years of experience in serving doctors, dentists, and other providers, Byrd Adatto has a national pedigree to address most legal issues that arise in the business and practice of medicine.