While getting out of non-compete restraints is not always possible, some of the most common ways that employees – and employers that want to hire them – can overcome such agreements include the following: (1) lack of consideration; (2) unreasonable restraints; (3) no legitimate business interest, and other defenses.
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.
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.
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.
In Texas, client non-solicitation agreements are subject to the same rules as the non-compete agreements. Therefore, they must be “reasonable” and “not impose a greater restraint than is necessary to protect the goodwill or other business interest” of the employer.
While the enforcement of non-compete agreements around the country remains strong, the courts are looking closer at whether an employee will suffer “undue hardship” if his or her non-compete is enforced. Thus, employers should avoid taking unreasonable positions in court and be prepared to explain why enforcing a particular non-competition agreement will not prevent an employee from earning a living.