Non-compete clauses coming to an end?

[GatorCHOMPions]

Proposed rule:

Non-Compete Clause Rulemaking

Overview About one in five American workers—approximately 30 million people—are bound by a non-compete clause and are thus restricted from pursuing better employment opportunities.

www.ftc.gov

Some commentary:

FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition

The Federal Trade Commission

www.ftc.gov

FTC says proposed ban of noncompete clauses would strengthen workers' hand

The agency says the rule imposed by companies when employees leave is unfair to workers and competitors, estimating the change could boost U.S. wages by nearly $300 billion.

www.nbcnews.com

As a young employed doc this feels like a big win. Curious how current practice owners with employees under non-competes feel about this?

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[Ducttape]

as an employed physician, i too think this is a win. even though my non-compete is very reasonable.....



im sure this will be hated by those who will "never love you (sic) back" - HOPD, private practice owners, physician employers, agencies.

 

[SSdoc33]

can't give credit to biden.

that wouldnt be allowed......

but this does appear to be a positive development

Biden's regulators propose banning non-competes

The long-awaited announcement is a key part of the White House’s economic agenda.

www.politico.com

 

[callmeanesthesia]

As a partner in a group, I say it’s good too. But then, I’m in CA where they’re banned in most circumstances already. We do as partners have a noncompete but even that I doubt would stand up in court if challenged.

 

[Analgesia108]

Is a reasonable non-compete ethical or its ban ethical ?

 

[drrosenrosen]

It really depends on the language. I worked at a large academic center, where the noncompete was 50 miles from any site the hospital owned for two years. That is obviously unreasonable, especially since if you went to, say, private practice, you'd be dealing with a completely separate patient population. My current one, with a small private practice, is 10 miles from any location I've seen patients for one year, which is not bad. But, it also comes with a non-solicitation clause that dings me even if patients find me of their own volition. I think that in most circumstances, eliminating non-competes evens the playing field for employees and makes it easier to leave a job without relocating.

 

[callmeanesthesia]

It really depends on the language. I worked at a large academic center, where the noncompete was 50 miles from any site the hospital owned for two years. That is obviously unreasonable, especially since if you went to, say, private practice, you'd be dealing with a completely separate patient population. My current one, with a small private practice, is 10 miles from any location I've seen patients for one year, which is not bad. But, it also comes with a non-solicitation clause that dings me even if patients find me of their own volition. I think that in most circumstances, eliminating non-competes evens the playing field for employees and makes it easier to leave a job without relocating.

Really doubt that non-solicitation clause would stand up.

What physicians need to know about restrictive covenants

The mention of restrictive covenants provokes an almost visceral reaction among most physicians. They temporarily control how physicians can practice, and how they can obtain new patients. But keep in mind these covenants are, for the most part, enforceable.

www.medicaleconomics.com

 

[Analgesia108]

It really depends on the language. I worked at a large academic center, where the noncompete was 50 miles from any site the hospital owned for two years. That is obviously unreasonable, especially since if you went to, say, private practice, you'd be dealing with a completely separate patient population. My current one, with a small private practice, is 10 miles from any location I've seen patients for one year, which is not bad. But, it also comes with a non-solicitation clause that dings me even if patients find me of their own volition. I think that in most circumstances, eliminating non-competes evens the playing field for employees and makes it easier to leave a job without relocating.

So, do they not have to prove that you 'solicited' the patient ? doesn't patient's ability to chose their provider trump this clause?

 

[drrosenrosen]

The contract lawyer I looked over it with said that it would not likely hold up/be easy to fight if I wanted to, but there were other things I wanted to address in the contract more, and he thought I could cross that bridge if I came to it

 

[nvrsumr]

I would be less likely to hire an MD. Would be less risky to stick with hiring a mlp.

 

[mid|ine]

I think its reasonable to have a non-compete. Our group spends a lot to get a new doc up and going. We are fair with new docs. If they can then just leave and take patients with them... well, that is BS.

 

[hyperalgesia]

can't give credit to biden.

that wouldnt be allowed......

but this does appear to be a positive development

Biden's regulators propose banning non-competes

The long-awaited announcement is a key part of the White House’s economic agenda.

www.politico.com

I see both sides to this. Generally competition is a good thing. At the same time, I'd rather see this regulated at the state level.

 

[GatorCHOMPions]

I think its reasonable to have a non-compete. Our group spends a lot to get a new doc up and going. We are fair with new docs. If they can then just leave and take patients with them... well, that is BS.

What does fair mean to you?

 

[mid|ine]

What does fair mean to you?

We don't make any money off of them. Its basically "eat what you kill" from the start. They are on a draw. Once that is paid off, they get 100% of their profits.

 

[GatorCHOMPions]

If only any of the PP offers I had were in the same planet as this. If this proposal goes into effect I would feel bad for groups like yours. Then again why would anyone want to leave if the job is going well for them. I don’t think you’d have much to worry about, a bird in the hand. This change is on the table because you’re unfortunately the exception.

We don't make any money off of them. Its basically "eat what you kill" from the start. They are on a draw. Once that is paid off, they get 100% of their profits.

 

[Ducttape]

i dont believe in non-competes. it is a way of limiting competition and controlling employees. it disincentivizes doctors to go in to private practice. it also might discourage owners and employers from taking positive actions to make their employee physicians happy.

however, i do agree with non-solicitation.

 

[PainDoc2025]

Very good for medicine and physicians, hope it passes.

 

[stsa84]

Anyone know what has to happen for this to go from a "proposed rule" to actual law?

 

[drusso]

as an employed physician, i too think this is a win. even though my non-compete is very reasonable.....



im sure this will be hated by those who will "never love you (sic) back" - HOPD, private practice owners, physician employers, agencies.

I don't believe in noncompetes except in narrow situations where true proprietary knowledge is at risk. And it's absolutely ridiculous that a hospital would put a noncompete on a physician. Hospitals can't practice medicine, and a doctor cannot just go across the street and open a new hospital.

Non-solicitation is different. If you want to take your ball and go home, you can but you have to leave the fans and the cheerleaders on the sidelines.

I can't decide what I'm going to enjoy more: Watching the AHA cry crocodile tears that they can't shackle doctors anymore or watching the valuations for the PE deals get f uck ed up.

 

[DOctorJay]

Lawyers don’t sign noncompetes

 

[RoloTomassi]

Anyone know what has to happen for this to go from a "proposed rule" to actual law?

There's a 60 day comment period that hasn't started. After that, they will make revisions and publish final rule. Companies have 180 days to comply with final rule. So at least 3/4 to a year until you can use it to your advantage.

 

[drusso]

There's a 60 day comment period that hasn't started. After that, they will make revisions and publish final rule. Companies have 180 days to comply with final rule. So at least 3/4 to a year until you can use it to your advantage.

Anyone who signs a non-compete or inks a PE deal in the next 56 days is a *****.

 

[PainApp2021]

Does anyone know if this will apply to contracts that are already signed? What about liquidated damage clauses?

 

[RoloTomassi]

Does anyone know if this will apply to contracts that are already signed?

Yes, as proposed, it will apply to existing contracts. Anything you signed will be invalidated 180 days from final rule publication. Employer will even be required to notify you of this.

 

[SSdoc33]

This could be a really big deal.

But these things have a tendency to drag out and then not have the teeth that we would want them to have.

Very cautiously optimistic

 

[RoloTomassi]

Anyone who signs a non-compete or inks a PE deal in the next 56 days is a *****.

An employee would be smart to actually. Let employer think employer has the upper hand. Use the fact that you're willing to sign a very restrictive non-compete to leverage better compensation. A year from now, you're free regardless. Big win for employed docs.

As a PP owner this kind of sucks. Not because I'm not fair, but there's a lot of ahole sharks out there looking to take advantage. Pain docs I've interviewed aren't all perfect, partner-material, team players who have been done wrong by the system. Plenty who would love to get their foot in the door in my desirable location, let me build up their reputation and introduce them to referral sources, then sneakily solicit patients and referrals to a shop they're opening across the street because they want to be the boss.

At the very least, there will be employed docs who aren't as bad as the above scenario but just aren't a good fit. Good physicians but don't fit the culture, are divas, entitled, arrogant, don't treat staff well, personality issues, not go-getters. Even a mutual parting can be risky to your business.

 

[deleted875186]

I think all physicians are for getting rid of non competes. Let the going rate for a physician adjust itself once they all have the ability to just up and leave to a different employer without any impact on their future employment. Salaries might go up, or perhaps hospitals will treat physicians better in other ways.

 

[bedrock]

I think all physicians are for getting rid of non competes. Let the going rate for a physician adjust itself once they all have the ability to just up and leave to a different employer without any impact on their future employment. Salaries might go up, or perhaps hospitals will treat physicians better in other ways.

Agree. Physicians will be treated better everywhere if there is the threat they can just start their own practices one mile away.

I do agree with no solicitation, though.

 

[PainDoc2025]

Lawyers don’t sign noncompetes

Pretty sure they do.

 

[Ducttape]

I don't believe in noncompetes except in narrow situations where true proprietary knowledge is at risk. And it's absolutely ridiculous that a hospital would put a noncompete on a physician. Hospitals can't practice medicine, and a doctor cannot just go across the street and open a new hospital.

Non-solicitation is different. If you want to take your ball and go home, you can but you have to leave the fans and the cheerleaders on the sidelines.

I can't decide what I'm going to enjoy more: Watching the AHA cry crocodile tears that they can't shackle doctors anymore or watching the valuations for the PE deals get f uck ed up.

you keep putting hospital. you should be stating "physician employers".

the worst noncompetes i have seen locally have been from private practices and physician employers that are not hospitals. 2 years and 50 miles.

 

[Yo GabbaPentin]

Our clinic seems to think there will be income restrictions on this. Has anyone seen any language pointing to that?

 

[callmeanesthesia]

Our clinic seems to think there will be income restrictions on this. Has anyone seen any language pointing to that?

FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition

The Federal Trade Commission

www.ftc.gov

You mean the thread topic on banning noncompetes? Or were you referring to another comment above?

 

[buddababa]

Our clinic seems to think there will be income restrictions on this. Has anyone seen any language pointing to that?

Heard something like that as well.
Knowing the hospital lobby industry - they will make sure exclusion for physicians is made - so they can keep their control and private jet etc

 

[Iamnew2]

An employee would be smart to actually. Let employer think employer has the upper hand. Use the fact that you're willing to sign a very restrictive non-compete to leverage better compensation. A year from now, you're free regardless. Big win for employed docs.

As a PP owner this kind of sucks. Not because I'm not fair, but there's a lot of ahole sharks out there looking to take advantage. Pain docs I've interviewed aren't all perfect, partner-material, team players who have been done wrong by the system. Plenty who would love to get their foot in the door in my desirable location, let me build up their reputation and introduce them to referral sources, then sneakily solicit patients and referrals to a shop they're opening across the street because they want to be the boss.

At the very least, there will be employed docs who aren't as bad as the above scenario but just aren't a good fit. Good physicians but don't fit the culture, are divas, entitled, arrogant, don't treat staff well, personality issues, not go-getters. Even a mutual parting can be risky to your business.

But that's part of being a business owner - same way that Mcdonalds and Burger King can be side by side, or car dealerships are all built one next to the other.

 

[RoloTomassi]

But that's part of being a business owner - same way that Mcdonalds and Burger King can be side by side, or car dealerships are all built one next to the other.

Yeah I realize that. I'm pro abolishing non-compete. Great step for docs taking the power back. Just saying that's a con. Means we'll have to vet our hires with more scrutiny and likely use mid levels more. No biggie.

 

[Yo GabbaPentin]

FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition

The Federal Trade Commission

www.ftc.gov

You mean the thread topic on banning noncompetes? Or were you referring to another comment above?

In terms of banning non competes. The limit I heard is if you make 100k+. Because then it’s fair and screw you rich people.

 

[pastafan]

From Medscape:

A Controversial Policy​

The American Medical Association's (AMA) code of ethics discourages covenants that "unreasonably restrict" the ability of physicians to practice following contract termination. And last year, the AMA cited "overly broad" noncompete language as a red flagyoung physicians should watch out for during contract negotiations.


But in 2020, the AMA asked the FTC not to use its rulemaking authority to regulate noncompete clauses in physician employment contracts, and instead, relegate enforcement of such agreements to each state. The American Hospital Association expressed similar views.

 

[deleted875186]

From Medscape:

A Controversial Policy​

The American Medical Association's (AMA) code of ethics discourages covenants that "unreasonably restrict" the ability of physicians to practice following contract termination. And last year, the AMA cited "overly broad" noncompete language as a red flagyoung physicians should watch out for during contract negotiations.


But in 2020, the AMA asked the FTC not to use its rulemaking authority to regulate noncompete clauses in physician employment contracts, and instead, relegate enforcement of such agreements to each state. The American Hospital Association expressed similar views.

So AMAs code of ethics suggests non competes are bad ….. yet they support non competes because the AHA likes non competes ….

Then the AMA tells physicians they are fighting for them, and asks for membership dues …

 

[Status Sciaticus]

where are yall getting the income cap/limit from? Seems B/S

 

[drusso]

where are yall getting the income cap/limit from? Seems B/S

Why would they care how much you make? If you're busting your chops, you should be rewarded.

 

[DOctorJay]

the attached document specifically looks at physician non-competes which apparently went under significant study

"For a physician with 10 years of experience in the state which enforces non-compete clauses most readily, the estimates suggest a prohibition on non-compete clauses and removing that physician’s non-compete clause would lead to a 12.7% increase in earnings, in contrast with the results of the model reported above. For the identical situation for a physician with just 1 year of experience, the increase in earnings would be 37.4%."

 

[deleted131481]

I submitted my comments. This could be fortuitous timing for me.

 

[drusso]

the attached document specifically looks at physician non-competes which apparently went under significant study

"For a physician with 10 years of experience in the state which enforces non-compete clauses most readily, the estimates suggest a prohibition on non-compete clauses and removing that physician’s non-compete clause would lead to a 12.7% increase in earnings, in contrast with the results of the model reported above. For the identical situation for a physician with just 1 year of experience, the increase in earnings would be 37.4%."

We need our specialty societies to weigh in on this.

 

[Yo GabbaPentin]

I have a feeling this isn’t going to be done quickly. Probably lots of legal challenges from hospital lobbyists money.

 

[Iamnew2]

I have a feeling this isn’t going to be done quickly. Probably lots of legal challenges from hospital lobbyists money.

it will likely pass ... in time. it's about time this non-sense of non-competes comes to an end.

 

[GatorCHOMPions]

AHA Comments on FTC Proposed Non-Compete Clause Rule | AHA

The AHA opposes the Federal Trade Commission’s (FTC) proposed Non-Compete Clause Rule in its current form.

www.aha.org

Predictable but disappointing nevertheless. Will be interesting to see how this plays out.

 

[deleted875186]

As noted, the proposed rule should be withdrawn because Congress has not given the FTC the power to promulgate it. But if the FTC chooses to proceed with a final rule, it cannot invalidate or ban non-compete agreements without far greater particularized study of the health care labor markets. At the very least, any rule that the FTC finalizes must specifically exempt physicians and senior hospital executives or, more generally, highly-skilled, highly-compensated employees using, for instance, categories that are already well-established in federal law under the exemptions from minimum wage and overtime pay provided by Section 13(a)(1) of the Fair Labor Standards Act.

What kind of argument is “FTC doesn’t have the authority”. It’s like saying, we know we can’t argue that non competes are unfair, but it’s up to Congress so we are against the proposed rule. What kind of statement is that for the AHA to make. Then they just come out at the end and say they only care about keeping non competes for physicians, but give no rationale for why that would be other than depressing wages. So disappointing.

 

[Iamnew2]

As noted, the proposed rule should be withdrawn because Congress has not given the FTC the power to promulgate it. But if the FTC chooses to proceed with a final rule, it cannot invalidate or ban non-compete agreements without far greater particularized study of the health care labor markets. At the very least, any rule that the FTC finalizes must specifically exempt physicians and senior hospital executives or, more generally, highly-skilled, highly-compensated employees using, for instance, categories that are already well-established in federal law under the exemptions from minimum wage and overtime pay provided by Section 13(a)(1) of the Fair Labor Standards Act.

What kind of argument is “FTC doesn’t have the authority”. It’s like saying, we know we can’t argue that non competes are unfair, but it’s up to Congress so we are against the proposed rule. What kind of statement is that for the AHA to make. Then they just come out at the end and say they only care about keeping non competes for physicians, but give no rationale for why that would be other than depressing wages. So disappointing.

It's sad that the AMA is not fighting for us. This is one of the best things that could happen to physicians and creates far more bargaining power for physicians.

 

[powermd]

Regarding non-solicitation... when I was leaving my group of 10 years, I had to say goodbye to a lot of patients who took it pretty hard. Due to the stupid clause in my contract, I had to be "careful" what I said to them lest it be interpreted as solicitation. One of my partners made an issue out of this. Never mind that I was headed 2 hours and more than 100 miles south... They all wanted to know where I was going. It was an incredibly awkward time and the legal BS polluted some truly poignant moments. The doctor-patient relationship is special. It's not a commercial contract. It's one of the truly magical things about medicine and should be protected. Non-solicitation should not apply in these situations. You want to keep my patients? Earn them.

 

[SeniorWrangler]

Really hoping this goes through, I don't have one but I have a lot of friends who are forced to choose between a job they hate and moving their family somewhere else.