Noncompete Negotiations: Push Back Now to Protect Yourself Later
While researching this story, CVB*spoke with several cardiologists who had been burned by the noncompete clauses in their employment contracts. Many felt powerless, like victims with little leverage in negotiations with behemoth hospitals and health systems. Joel Porter, healthcare attorney with Birmingham, AL-based Maynard Cooper & Gale, P.C., says it doesn’t have to be that way. There are steps physicians can take to protect themselves. Here are excerpts from *CVB*’s conversation with Porter.
► What concrete steps can cardiologists take to hammer out a noncompete clause that won’t come back to haunt them?
Porter: First, they need to understand the rules of the state where they’re practicing. Noncompetes are not a federal rule; they’re state-specific, and there’s a lot of variability between states. I’m in Alabama, for example, where the public policy is to generally not enforce noncompete clauses against physicians. Most states, however, allow some sort of noncompete against professionals.
Second, it’s a good idea for doctors to engage the services of counsel experienced in dealing with all the issues around noncompetes and, most important, able to clearly explain them.
► What kinds of issues are open to negotiation with a hospital or healthcare system?
Porter: If a cardiology group is selling its practice to a hospital, they will usually want to negotiate the least restrictive covenant they can. For example, they may want it to apply for only one year and extend out for only a few miles. They also should try to limit the number of locations with restrictions to just one—where they provide most of their services—and not to every location where they may ever set foot. Large cardiology groups might have six or seven outreach sites, and that can result in a huge noncompete area.
They also need to negotiate the circumstances under which the noncompete will apply. This usually will be set up such that if the doctor isn’t happy with the employer and decides to leave, the noncompete still applies. But—and this is what we push for all the time—if the hospital or the cardiology group [which also may be the employer] decides to terminate employment without cause and there’s been no breach of contract, like a loss of license, then the noncompete would not apply in this situation. It also may be possible to incorporate language that voids the noncompete clause if the hospital is sold or consolidated and the physicians no longer wish to remain. If I were a doctor, I would certainly want that option.
► What is your advice for young physicians negotiating the terms of their first professional job?
Porter: Many new doctors think they’re going to be with their first employer forever, and so they don’t work through all of the possible scenarios before they sign. Even though they’re not in as good a bargaining position as established physicians, they need to be engaged in the discussions and—preferably with the help of experienced counsel—press for terms that accommodate their long-term interests.