In 2024, the Federal Trade Commission passed a rule that would have effectively eliminated non compete clauses in the United States, including for doctors. There was even some good traction and hope that this would apply to physicians as well. However, after a court case, this rule was struck down. Currently, there are no hopeful signs of it being revitalized. What this means is that, as doctors, we still have to deal with non complete clauses if we are employed in some fashion. And the trend towards employment continues within medicine as a whole….

So, we are left with a few choices. We can:

• Just accept non compete clauses as doctors and bury our head in the sand,
• Complain and do nothing, or
• Learn as much as we can about them and fight back

And the best way that you can fight back, on an individual level, is to educate yourself on strategies to minimize the impact that a non compete clause would have on you.

How does a non compete clauses work in medicine?

Like I said above, non compete clauses have become the norm in medicine as more and more doctors move to an employed model – whether in private practice, academic practice, or as hospital employed. Far and away the majority of doctors that I speak with have some form of noncompete clause in their contract. 

And these non compete clauses, also called restrictive covenants, essentially say that if/when doctors leave their current position, they cannot work within a certain radius over a certain time period. 

The advantage for employers is that if their employees leave, they can’t become the immediate competition. This is a clear advantage.

The advantage for the employees/partners under the restrictive covenant are…well, I can’t really think of any.

But are the noncompete clauses enforceable?

This is always the next question that follows when I talk about noncompete clauses. Are they enforceable? And the answer is sometimes.

However, the more important question is: Does it matter if it is enforceable? And the insert to that in my mind is a resounding no.

In legal terms, restrictive covenants range from being non-enforceable to sometimes enforceable to completely enforceable depending on the state you are in. But, even in states where they are legally non-enforceable, they still show up in contracts.

Why?

Because, they are still a deterrent to employees leaving. They still usually require some sort of arbitration to solve when there is a split. And this cost, time, money, and headaches.

So, noncompete clauses are at best an expensive nuisance and at worst a major restriction on your ability to practice medicine.

Not good either way.

My thoughts on dealing with restrictive covenants in your contract

I’ve discussed my contract in depth here. And those of you who have reviewed it may remember that I negotiated not to have a noncompete clause in my contract.

This was so important to me as I was moving home to Buffalo, NY. If my first job didn’t work out – and it has! – I didn’t want to be restricted from working in my hometown and either deciding to move away or have a massive commute.

So, can you do something similar?

3 strategies for doctors to negotiate their non compete clause

Most positions will say that a noncompete clause is non-negotiable. But remember, everything is negotiable!

1. Eliminate it completely

This is what I did. I just said that I would not accept the offer with the non compete clause in the contract.

Now, I understand that this is probably the least universally applicable strategy here. But it can still be successful. And you will never know unless you try.

In order for this to be successful, you have to have some leverage. In my case, I offered a skill set that was not yet present in the area which would and has translated into my hospital dominating a whole new patient care market (i.e. breast reconstruction). So, that was my leverage.

Your immediate thought may be that you do not have similar leverage. But there is a good chance you have just not looked at all the angles. Your job in the negotiation is to show them just how much value you bring and to use that as your leverage. And if you need some help defining your value, this post and this post and this post can help!

So, let's say that you've identified, defined, and shared your value during the negotiation and they still just won't eliminate the non compete clause. Don't worry, there are other options…

2. Compromise with something else

You can negotiate other areas of your contract to eliminate the clause. What is something in the contract that you just don't care as much about?

It could be anything. It could be the hours you are contracted to work. Or, it could even by the pay. Yes, you could even negotiate reduced pay in exchange for eliminating or weakening the clause.

Now, many doctors would recoil at this idea. And I am not saying that it is optimal. But, there are many others who will value the freedom of no non compete clause more. And there will be an opportunity to find a balance in your negotiations…

3. Reduce the terms of the covenant

Ok, let's say that you tried to get it eliminated completely and even offered some compromises but you and your employer couldn't find an agreed upon middle ground.

What now?

Well, you can work to negotiate the terms of the restrictive covenant itself rather than try to eliminate it completely.

How would this work?

A non compete clause basically restricts doctors in 2 ways that we mentioned earlier. It restricts the amount of time before a doctor can find a new job within a geographical radius of restriction. So, these are the two levers that you can negotiate within the clause itself.

Maybe they won't eliminate it completely. But you can get them to shorten the time frame by a year or more. And maybe the radius can be reduced from 10 miles to 5 miles.

Making either of these arms more in your favor is a huge win!

A quick aside on the radius of restriction

First, in any restrictive covenant, you need to make sure that the epicenter of the radius of restriction is whatever hospital, office, or center that you primarily work out of. In today's age of medicine, many of us work for huge sprawling medical systems with multiple hospitals and offices spread over a wide geographic area. It is absolutely not appropriate for a restrictive covenant to say you cannot work within, let's say, a 10 mile radius of any of these properties. Depending on the health system, this could span multiple states!

Second, negotiate the length of the radius of restriction based on your geographic area. A 5 mile radius in New York City is way more restrictive than a 5 mile radius in Buffalo, NY. The terms should fit the practical clinical situation.

4. Build in a buy-out

I think this is actually a really great strategy that not most people think of.

You can negotiate a buy out for your non compete clause. Let's say you are stuck with an employer that just won't budge or won't budge enough. In that case, create a buy out option where you, the physician, would pay, let's say for example, $50,000 to get out of your non compete clause in the event that you left before your contract ended.

Is that ideal to have to pay that much to get out of it? No, of course not. But in many cases that will be easier and less than the amount paid on legal fees from any arbitration or court involved in legally going after the non complete in the future. Plus, you may even be able to get your future employer to cover this cost.

This creates the opportunity for a nice, clean break if ever the need arises. Which hopefully it never will.

5. Pre-pre-prepare for a fight

This is probably my least favorite option. But it is still better than the alternative of doctors just accepting a non compete and then figuring they will “deal with it” in the future.

In this strategy, you can hire a lawyer for a consultation as you are negotiating your contract. In the consultation, discuss what the specific legal ramifications in your state are for breaking a non compete. What legal steps are necessary? Even if they are not enforceable, how long does the process usually take? How much do they charge to manage this process? Have they done it before?

You will have to spend a least a few hundred dollars for this consultation but at least now you will know the exact nature of the enemy you could possibly be facing. And that is better than nothing…

So, what should you do?

As doctors, our situations will be unique and therefore, so will be the strategies we use in negotiating non compete clauses in our employment contracts.

I think the most important principles are that you:

• Establish your values and what matters most in your contract to you personally,
• Define and illustrate your unique value as a physician, and
• Manage the non compete appropriately within these tangible and intangible values

There is no correct or incorrect way to do it as long as it works for your personal situation.

Actually, I take that back, the only incorrect way of dealing with a non compete for doctors is to ignore it and hope for the best. So be proactive!

And here are some other great resources to build your perfect clinical practice:

• I Found My Perfect Physician Job in 6 Steps!
• Top 10 Things to Know Before Signing Your Contract (The First or Tenth!)
• 7 Do’s and Don’ts of Building a Successful Medical Practice
• Examining the Value of Normative Physician Compensation Data
• How to Increase Your Compensation Both Clinically and Non-Clinically

And don't forget to check out my best-selling book, Money Matters in Medicine!

What do you think? Are non competes fair in medicine? What can doctors do to combat non compete clauses? How did you deal with yours? Let me know in the comments below!