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L&E and Healthcare Law Alert: Restrictions on Non-Compete Covenants for Physicians

July 1, 2016

Effective July 1, 2016, a covenant not to compete for a physician is valid and enforceable only if it is: (1) necessary to protect a legitimate business interest; (2) reasonably limited in time, geographic scope and practice restrictions as necessary to protect such business interest; and (3) otherwise consistent with the law and public policy. The party seeking to enforce a covenant not to compete shall have the burden of proof in any proceeding.

Also, a covenant not to compete that is entered into, amended, extended or renewed on or after July 1, 2016 shall not restrict the physician's competitive activities for a period of more than one year, and in a geographic region of more than fifteen miles from the "primary site" where such physician practices. The "primary site" where the physician practices is the office, facility or location where a majority of the revenue derived from the physician's services is generated, or any other office, facility or location where such physician practices and is mutually agreed to by the parties and identified in the covenant not to compete.

A covenant not to compete is not enforceable if (1) the employment contract or agreement expires and is not renewed or (2) the employer terminates the employment or contractual relationship without cause.

Each covenant not to compete entered into, amended or renewed on or after July 1, 2016, shall be separately and individually signed by the physician. Also, if a covenant is rendered void and unenforceable, the remaining provisions of the contract remain in full force and effect.  Public Act 16-95

If you have any questions or would like more information, please contact Giovanna Tiberii Weller of the Labor and Employment Group at (203) 575-2651 or by email at gweller@carmodylaw.com, Domenico Zaino, Jr. of the Labor and Employment Group at (203) 578-4270 or by email at nzaino@carmodylaw.com, or Kristin Connors of the Healthcare Law Group at (203) 578-4202 or by email at kconnors@carmodylaw.com