10 Potential Time Bombs in Your Employment Contract

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October 22, 2015

In This Article

9. You Won't Be Able to Practice in the Area

Perhaps the most daunting barrier to leaving your job is the restrictive covenant, or noncompete clause—a typical feature in employment contracts.

Though banned in California[4] and Massachusetts,[5] courts in most states recognize the clause, which gives an employer the right to prevent a departing physician from finding work in the vicinity during a certain period after termination, typically 1-3 years.

Stadler says many doctors simply don't believe the employer would enforce this, but in fact, many employers take it very seriously. They can ask the courts for an injunction forcing you to close your offices in the restricted area. Usually the matter is resolved before an injunction is issued—often after the doctor makes a substantial payment to the former employer, he says.

Large health systems in particular, Stadler says, may designate a great deal of territory in which you won't be able to practice. For example, a health system may set up restricted areas around each of its practice sites, and also designate the entire county where the system is headquartered as off limits. The courts have generally upheld such claims, he says, as long as the restricted area isn't unreasonably large.

No authority has defined just how big the restricted areas can be. Generally, they may have a radius of 5-10 miles, but the size can vary depending on such factors as population density and the physician's specialty.

For example, Hursh represents a physician who applied for a new job 62 miles from his old job, which fell within his former employer's 65-mile noncompete zone. Even though the attorney for the doctor's would-be employer agreed that this was unreasonable, the job offer was withdrawn owing to the noncompete clause.

This situation might have been averted when the contract was first negotiated. Though you probably won't be able to remove the restrictive covenant altogether, "you may be able to chisel away some of the rough edges," Stadler says. For example, the restricted area might be reduced to within 5 miles of your former employer and limited to sites where you actually worked.

Reinstein adds that some employers may be willing to restrict the noncompete clause to certain situations, such as future employers that are direct competitors. For example, if the owners are in a small practice, they might be willing to let you go to a large health system.

You might also be able to reduce the duration of the covenant, but "I don't fight too much over the time period," Hursh says. "You're about as likely to lose your patients in 1 year as in 2 or 3 years."

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