What Physicians Should Know About Restrictive CovenantsSeptember 28, 2017
Restrictive covenants are standard practice in the medical field. The purpose of these professional agreements is to protect an employer from losing business to exiting physicians. Many new physicians must agree to sign one if they are to become employed. Enforceable in Pennsylvania and New Jersey, area physicians should know the following things about restrictive covenants.
The Purpose of a Restrictive Covenant and What is Restricted
A restrictive covenant is a non-competition agreement. These are standard practice for new physicians seeking work in an established practice, group health organization, or hospital. Because many physicians plan to eventually open their own practice, employers know that without an agreement, they can take clients and employees with them when they leave. This would harm the business which the former employer worked hard to build.
Restrictive covenants create limits to what a physician may do when leaving a practice. The most common restrictions state that the physician who leaves a practice may not operate within a certain distance from the former employer, or perhaps offer certain services in that area. In addition, these non-compete agreements are usually in effect for a specified time-period, often two to three years after leaving a practice.
Physicians should also know that these agreements are not all-inclusive. To be enforceable, a restrictive covenant must not be too restrictive, it must be reasonable. For instance, in some areas it would be impossible for a physician to open a practice if the agreement specified a fifty-mile radius. Such a restriction may require relocation to another town or city.
As for soliciting patients, a physician may be forbidden from treating patients in the new practice that they treated at the former practice. However, a patient who previously went to the former clinic, but was not treated by the physician, may be solicited. If a patient is not solicited and chooses to use the physician, the courts have upheld this to be acceptable provided that the physician does not disparage the former employer in any way.
Included in non-solicitation is the hiring of employees. A physician starting his own practice may not recruit employees from the former practice for the term of the agreement. An employee who leaves and seeks a position in the new practice could likewise come under scrutiny. However, an employee who was fired or laid-off could be hired in most cases.
Philadelphia Health Care Lawyers at Sidney L. Gold & Associates, P.C. Know Restrictive Covenants
It is not possible to include every possible scenario which could be faced under a restrictive covenant. A physician who is about to sign such an agreement would be wise to consult with an experienced Philadelphia health care lawyer at Sidney L. Gold & Associates, P.C. prior to doing so. We serve professionals in Pennsylvania and New Jersey, specifically the Cherry Hill and greater Philadelphia areas. Contact us today at 215-569-1999 or by completing our online form.