By Jonathan Ford Hughes on January 30, 2020
Somewhere in the mountains of paperwork you skimmed and signed to begin your current job was one sneaky form that could affect your career for years. Whether you work for a hospital or a group practice, chances are you signed a non-compete agreement. This document, also known as a covenant not to compete, may limit whom you may work for, where you may work, and how long you might have to stay out of a given job market.
The time to review your non-compete is, ideally, before you sign it. To better understand these agreements and what they mean for doctors, we spoke with Jordan Fensterman, a partner in the Health Law, Corporate, Physician License defense, Litigation, and Employment Law departments at Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf, and Carone, LLP.
Understanding the non-compete major points
The basis for all non-compete agreements is to ensure that once an employee is ready to move on from a given employer, the employee does not compete with that employer. Currently, non-compete agreements or clauses are nearly ubiquitous in larger medical organizations, such as hospitals or large medical groups, Fensterman says.
Often, the two major negotiated points in non-compete agreements include the length of time that must pass in the contract before an employee can begin their own career as an independent physician or as a physician employed elsewhere, and the geographic area in which the doctor is allowed to work, according to Fensterman.
Numerous factors affect the way a non-compete agreement is negotiated between an employee and their employer as well.
“In areas where the employee pool is large, the employer might have the upper hand and be able to renegotiate or implement for the first time when the prior contract is expiring,” Fensterman says. “An employee that makes the employer a lot of money may be able to do better for themselves in many areas of a contract when the original contract is expiring.”
Breaking a non-compete
Non-competes are widespread, and as a result, doctors sometimes break them. Should you choose to break your non-compete agreement, know that the exact ramifications can differ depending on your employer, Fensterman says.
“The most common ramifications include money damages or an ability to prevent an employee from performing services in the covered geographic region,” Fensterman says. “Employers often send threatening letters from lawyers and if that does not work they would need to file a lawsuit.”
However, some employers do not enforce their non-competes as a matter of policy for financial and business reasons, Fensterman says.
If you choose to break your non-compete agreement with your employer, know that the intensity of the dispute can vary greatly, and you may be brought to court for breach of contract as a result, Fensterman says. Employees and employers can often reach a compromise outside of court, however.
Should the disagreement be brought to trial, Fensterman notes the court will likely favor the employee over the employer, although that is not always the case. Individual factors, namely whether an employee is struggling financially to support themselves or family, are also considered in court arguments.
“Courts disfavor covenants that prohibit a physician from earning a living and supporting a family,” says Fensterman.
Before signing a non-compete
Tricky as they are, non-compete agreements are likely to be an inescapable part of your career, and it’s important that you understand them prior to actually negotiating one with your employer. Before you sign your employer’s non-compete agreement, you may want to have a lawyer examine your contract to ensure it is fair to you and your employer. In particular, Fensterman says, you or your lawyer may want to look over the length of time that must pass and the prohibited practice area before signing.
Even if you’ve signed, Fensterman says that your non-compete isn’t necessarily permanent. Re-negotiation is a possibility.
“The employer/employee themselves and/or lawyers representing either side can often work out a compromise.”
- The time to review your non-compete is prior to signing it.
- It pays to have a lawyer review your non-compete before signing.
- Non-competes can restrict whom you may work for, and where you may work.
- Legal ramifications for breaking a non-compete may vary by employer. Some will take you to court, others have a policy of not enforcing them.
- Anecdotally speaking, courts tend to favor employees over employers in non-compete disputes. But there are exceptions to this.
- Even if you’ve already signed, you may be able to re-negotiate your non-compete.