Most Nurse Practitioners are familiar with non-compete clauses.
Some even have firsthand experience of how restrictive they can be, particularly when transitioning from an employed position to starting a practice.
However, for a short while, the recent FTC ban on non-compete clauses for most workers seemed to suggest that they would soon be a thing of the past.
But that’s not how it’s working out…. The FTC ruling is being challenged in several legal ways.
Recently, a federal judge in Texas blocked a nationwide ban on non-compete agreements that was set to take effect in September.
This means that current non-compete agreements will remain enforceable for the time being, and employers can still require you to sign them as a condition of employment.
While changes may come through a higher court or Congress, such developments could take years. Therefore, I think it’s prudent to learn as much as possible and find ways to deal with these agreements as best we can… because they may not go anywhere for a long time.
Essentials to consider
There are several critical aspects regarding non-compete clauses, especially when considering leaving a job to start a practice or join a competing organization.
Here is a breakdown of what NPs must know and do:
- Read the Contract
Sadly, too many people don’t read through the legal documents they are about to sign.
However, reading an employment contract (or any contract) is non-negotiable!
You must know and understand all the terms and conditions of your contract. If restrictions are included as a condition of employment, you may ask for the restriction to be removed or altered.
Might an employer remove restrictions if asked? Possibly…
Standard contracts sometimes include some non-compete that may not even be necessary.
At any rate, it doesn’t hurt to ask and negotiate for what you want. Additionally, you may consider legal representation to help with negotiations. - Understand the Terms
Non-compete clauses typically restrict where and for how long you cannot work after leaving your employer.
These agreements often define a geographic radius (e.g., within 50 miles of your current workplace) and a specific period (e.g., one or two years) during which you’re prohibited from working for a competing healthcare provider or starting your own practice in the same field.
Make sure you clearly understand the specifics of all restrictions that are part of the contract. - Review Contracts Carefully
Non-compete clauses, such as confidentiality, are sometimes hidden within other agreements.
It’s crucial for NPs to carefully review all employment contracts and consult with a legal professional to fully understand the limitations and consequences of signing such clauses.
Many professionals unknowingly sign non-competes without fully realizing their scope. - Consider Long-Term Career Impact
If you plan to grow and develop your career by moving to different practices or opening your own, a non-compete clause could severely limit your options.
Be careful about signing agreements that may restrict your ability to work freely in the future, particularly in areas where you may want to establish your own practice.
A non-compete clause could limit your ability to work in the same geographic area where you’ve built your reputation and tap into your established network.
Understanding the terms of your agreement is critical to knowing when and where you can start your practice without violating your prior employment contract. - Laws differ from State to State
The enforceability of non-compete clauses differs by state. Therefore, make sure you know the law in your state.
For example, I understand that California and a handful of other states largely prohibit non-compete agreements and impose penalties. However, states like Florida and Texas tend to enforce them.
Hence, NPs should familiarize themselves with their state’s regulations, as local labor laws may offer protections or restrictions that impact non-compete agreements. - Overly Restrictive Agreements
Employers may justify non-compete agreements as necessary to protect business interests, such as confidential patient information, specialized training, or the relationships NPs build with patients.
However, these justifications must be reasonable and not just designed to limit competition.
Potentially, courts may invalidate overly restrictive non-competes that unfairly prevent NPs from practicing. - Potential Defenses Against Non-Competes
Not all non-competes may be enforceable.
Courts may rule against non-competes that are too broad, last too long or don’t serve a legitimate business interest.
Additionally, if an employer breaks the employment contract first or cannot show that enforcing the non-compete protects sensitive business information, NPs might have grounds for challenging the agreement. - Seek Legal Advice
If you’re currently under a non-compete agreement or being asked to sign one, it may be wise to consult with an employment attorney familiar with healthcare laws in your state.
A legal professional can help interpret the contract, assess its enforceability, and advise on potential strategies for negotiating more favorable terms.
In Conclusion…
Changing employment or opening up your own practice can feel overwhelming.
Frequently, you don’t know where to start or what to do first because there are so many things to consider, learn, and do.
However, when you fully understand the implications of signing a non-compete clause, you can take proactive steps to protect yourself and make better, more informed decisions to safeguard your career and future business opportunities.
Do you have any experience with non-compete clauses? If so, what has it been like?
Please share your experience with us…
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By Johanna Hofmann, MBA, author of “Smart Business Planning for Clinicians” and regular contributor to the NPBusiness blog.