Can You Break a Noncompete Agreement?

Leigh Page

Disclosures

November 19, 2018

In This Article

The Purpose Is to Limit Competition

If you're unhappy with your job and want to look for a new position or work for a different medical group, you probably face a noncompete clause in your employment or partnership contract.

Typically, it states that for a specified number of years after leaving your job, you won't be able to work in a certain territory around your former employer. In addition, a nonsolicitation clause states that you won't be able to ask your former patients to come with you.

Together, these clauses are part of the restrictive covenant, which probably exists in most employment or partnership contract in states where they are allowed.

If you take a new job or set up a new practice that violates the covenant, your former employer or partnership can go to court to try to strip you of your new job, prevent you from practicing in the area, or make you pay money to keep your new position.

Do you have any recourse? Usually not, but under certain conditions, you might.

Your Chances of Getting Out

It is possible to get out of some restrictive covenants, according to the American Medical Association (AMA). These agreements are "a restraint of trade and therefore viewed skeptically by the courts," an AMA report states.[1]

The courts' basic reasoning is that the covenant shouldn't make it impossible for you to find a job, and that giving you as wide access as possible to work will help patients and improve competition, contract attorneys say.

However, former employers and partnerships do vigorously enforce covenants—and usually succeed, says Michael A. Cassidy, an attorney at Tucker Arensberg in Pittsburgh, Pennsylvania.

"If you've heard that restrictive covenants aren't enforceable, you've heard wrong," he says. Losing a doctor is a big blow for organizations, and the courts want to help them protect their legitimate business interests, Cassidy says.

An organization's business interests include being able to keep patients, covering recruitment costs for a new doctor, and preserving patient lists, contract attorneys say.

If your own rights outweigh the rights of the employer to preserve its business interests, you might ultimately win your case, says Ericka L. Adler, an attorney at Roetzel & Andress in Lincolnwood, Illinois.

But it could mean spending tens of thousands of dollars in lawyers' fees and possibly putting your new career on hold for years as the case goes through the courts, according to Adler. "Even if you win, you lose," she says.

And if you lose, you'd have to buy your way out of the covenant. The cost can be high—typically the equivalent of 1 year's salary or more, according to many contract attorneys.

In view of these high hurdles, most doctors who leave their job decide to obey the covenant, finding a new job outside the noncompete area and not taking their patients with them, Adler says.

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