What is a Reasonable Geographic Area for Physician Non-Compete Agreements?

There is no “rule of thumb” about what geographic non-compete restraints in physician contracts are reasonable, and medical practices need to consider what geographic restraints they need to put in place in order to protect a legitimate business interest, such as confidential information, trade secrets, goodwill, or patient base.

Physician Non-Compete Clauses

Whether a medical practice can bind a physician with a non-compete agreement depends on where the medical practice is located and which state’s law governs the contract. Some states – California, Oklahoma, Alabama, North Dakota, Massachusetts, and Rhode Island – either prohibit all employment non-compete agreements or physician employment non-competes specifically. Meanwhile, Texas, New Mexico, Colorado, Indiana, Tennessee, West Virginia, District of Columbia, Connecticut, and Delaware have special rules regarding physician non-competes.

Which States Allow Blue-Penciling of Non-Compete Agreements?

States around the country vary in how they approach the enforcement of unreasonable non-compete agreements. While the majority of states allow their courts to “blue pencil” or rewrite restrictive covenants to make them reasonable, three states do not permit such reformation, and four states have no clear legal guidance on whether blue-pencilling is permitted, leaving employers in limbo.

Texas Non-Compete Law: Confidentiality, Just Like Beauty, Is In the Eye of the Beholder

In non-compete disputes in Texas, employers often argue that everything that they provided to employees was confidential, while employees argue that nothing that was provided to them was confidential. As the result, the issue of confidentiality often ends up being an ultimate “fact issue” that must be resolved by a judge or a jury.

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