Non competes

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WASHINGTON—The Federal Trade Commission on Tuesday banned employers from using noncompete contracts to prevent most workers from joining rival firms, achieving a policy goal that is popular with labor but faces an imminent court challenge from business groups.

The measure, approved 3-to-2 along party lines, marks the first time in over 50 years that FTC officials have issued a regulation to mandate an economywide change in how companies compete. The commission has historically operated like a law enforcement agency, investigating and suing individual companies over practices or deals deemed to violate the law.

The rule prohibits companies from enforcing existing noncompete agreements on anyone other than senior executives. It also bans employers from imposing new noncompete contracts on senior executives in the future.
The rule restores rights to Americans that corporations have taken by imposing noncompete clauses in the workplace, FTC Chair Lina Khan said Tuesday. “Robbing people of their economic liberty also robs them of all sorts of other freedoms,” she said.

The Biden administration pushed for a regulatory assault on noncompetes in 2021, when the White House issued a blueprint for stricter enforcement of the antitrust laws. The rule is the capstone of a larger set of moves at the FTC that have elevated the interests of workers in antitrust enforcement.

Noncompete clauses violate a 110-year-old law that prohibits unfair methods of competition, the FTC says. The restrictions hamper competition for labor, the agency says, and result in lower pay and benefits for workers.

The practice has grown more prevalent in the U.S. economy and now affects nearly one in five American workers. Even lower-wage workers such as restaurant employees and hair stylists, who lack access to intellectual property or trade secrets, have been subject to them.

Sales staff, engineers, doctors and salon workers are among the most common types of workers affected by litigation of noncompete clauses, according to research published by Cornell University professor Matt Marx in 2022.
 
No carve out for physicians? I thought the hospital lobby was trying to get a carve out with some emotional appeal to protecting public health by needing to keep doctors locked down or some bs.
 
HolySmokes said:
Definitely will be challenged. Anyone have an educated guess on the timeline before resolution?
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Hard to say. The rule will be enforced in four months without an appeal. It will likely go to the Supreme Court. 99% chance they will kick it back to the States.

But from the WSJ article:

Nonprofit healthcare employers also are exempt from the rule’s reach.
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As such you can probably forget about it.
 
I knew it was too good to be true

Edit: Actually, reading the rule I think there is a glimmer of hope here even for those of us employed by non profit hospitals

"For instance, the Commission has exercised jurisdiction in a section 5 enforcement action over a physician hospital organization because the organization engaged in business on behalf of for-profit physician members. That organization, which consisted of over 100 private physicians and one non-profit hospital, claimed tax-exempt status as a nonprofit."

"Second, the Commission disagrees with commenters’ contention that all hospitals and healthcare entities claiming tax-exempt status as nonprofits necessarily fall outside the Commission’s jurisdiction and, thus, the final rule’s purview"

"the Commission notes many workers at hospitals, including those that claims tax-exempt status as a nonprofit or government-owned hospital, contract with or otherwise work for a for profit entity, such as a staffing agency or physician group. Although some of these individuals may work at an excluded hospital, the final rule applies to their employer—the staffing agency or for-profit physician group—because it is covered by the final rule."

It certainly comes across as them doing their best to provide justification for this to be adopted in nearly all settings.
 
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"non-profit"

Abusing your employees is ok as long as you don't have shareholders.

Sad they got the carveout, but I am not surprised.
 
MidwestRadOnc said:
"non-profit"

Abusing your employees is ok as long as you don't have shareholders.

Sad they got the carveout, but I am not surprised.
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kffhealthnews.org

As Nonprofit Hospitals Reap Big Tax Breaks, States Scrutinize Their Required Charity Spending - KFF Health News

Nonprofit hospitals avoid paying taxes if they provide community benefits such as charity care. More states are examining that trade-off, scrutinizing the extent of hospitals’ spending on their communities.
kffhealthnews.org kffhealthnews.org

Hopefully we start to see the tides turn
 
The ftc doesn’t have jurisdiction over non profits so this isn’t surprising, so maybe it’s not a specific carve out and hopefully we will something at the federal level perhaps through the irs to reign in abuse by non profits.
 
MidwestRadOnc said:
The ftc doesn’t have jurisdiction over non profits so this isn’t surprising, so maybe it’s not a specific carve out and hopefully we will something at the federal level perhaps through the irs to reign in abuse by non profits.
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The AHA isn't happy. Ultimately this will be tested in multiple lawsuits before it all shakes out.
 
temujim said:
The AHA isn't happy. Ultimately this will be tested in multiple lawsuits before it all shakes out.
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1713917390991.png


These last several years where they have been able to leverage non-compete agreements to improve their real world experience must have been like... what is it Sameer says... nirvana?

I wonder if Rad Onc's self proclaimed premier physician organization will hire another hospital lobby executive again.
 
Will be curious to see how all this shakes out. Lot's of variables.

I think overall it's a net win for docs but there may be pockets of second and third order effects where in some situations it may not be helpful.

I think it will exacerbate this phenomenon in rad onc where employed rad oncs that are busy will be pushed to take on another doc because admins for whatever reason would prefer more docs, each less busy, than less docs but each one busy. We've discussed this phenomenon before on here.

Not necessarily rad onc related, but I also wonder whether it will drop starting salaries in some situations. In theory, someone wouldn't want to "invest" in starting a new doc up and getting their practice rolling quickly then having them leave. Seems like it would be a slower build to eliminate early sunk cost potential.
 
medgator said:


Sounds like equity PP partners will be exempt as well.
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On what planet would an equity PP partner immediately jump to be a W2 employee at the hospital across the street because his non-compete was no longer chaining him to the burden of managing technical reimbursement? In a pro-only group, the hospital could always cut your PSA contract if you don't do what they say and employee directly. There's a med onc group in VA that just blew up this way. This is a completely bizarre take.
 
MidwestRadOnc said:
On what planet would an equity PP partner immediately jump to be a W2 employee at the hospital across the street because his non-compete was no longer chaining him to the burden of managing technical reimbursement?
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Probably more common with the surgeons I would imagine when the hospital is willing to pay up to get their surgical program off the ground.

Have heard of instances of specialists getting peeled away from groups with smaller ancillaries like a lab or a couple scanners etc.

At least someone thought to think of this issue. HOPPS has been killing the Medicare physician fee schedule forever. Money talks and will make docs walk
 
The reality is a lot of hospitals and academic systems will still put the non-compete verbiage into all of their employment contracts even if it is unenforcable. The fact that it is there will discourage many physicians from leaving and joining a competitor. Even for frivolous lawsuits in this country, you need to spend tens of thousands of dollars to litigate. Obviously your employer will have exceptionally deep pockets to make the process as long and painful as possible even if you win in the end.

Don't hold your breath.
 
medgator said:
Probably more common with the surgeons I would imagine when the hospital is willing to pay up to get their surgical program off the ground.

Have heard of instances of specialists getting peeled away from groups with smaller ancillaries like a lab or a couple scanners etc.

At least someone thought to think of this issue. HOPPS has been killing the Medicare physician fee schedule forever. Money talks and will make docs walk
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You're right. I've seen this with surgical subspecialties that are the most profitable for the systems: ortho, cardiothoracic, neuro, facial plastics. Hospitals seem willing to roll out the red carpet and golden handcuff these docs with sky high W2 pay to secure the service line. Rad onc has always been a totally different feel though... like, ughh, do we really have to pay a rad onc this much? Our lawyers say we can't offer X over MGMA median because of Stark Law, and there are 5 other candidates we are considering so you've got 24 hours to take it or leave it...
 
Gfunk6 said:
The reality is a lot of hospitals and academic systems will still put the non-compete verbiage into all of their employment contracts even if it is unenforcable. The fact that it is there will discourage many physicians from leaving and joining a competitor. Even for frivolous lawsuits in this country, you need to spend tens of thousands of dollars to litigate. Obviously your employer will have exceptionally deep pockets to make the process as long and painful as possible even if you win in the end.

Don't hold your breath.
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It will take a while for this to sort itself out in terms of what it means in practice, but i would expect this to not be the case. It will be a violation of FTC rules to include the clause, not just to enforce it. That may be punishable by fine. A hospital also doesn't want to find itself in a position where every contract with every employee is potentially reviewable for damages.

Frivolous lawsuits can be financially punished, which is what knowing pursuit of unenforceable/illegal contract terms would be. In California where non-competes are banned, you do not see them in a contract, full-stop.
 
MidwestRadOnc said:
On what planet would an equity PP partner immediately jump to be a W2 employee at the hospital across the street because his non-compete was no longer chaining him to the burden of managing technical reimbursement? In a pro-only group, the hospital could always cut your PSA contract if you don't do what they say and employee directly. There's a med onc group in VA that just blew up this way. This is a completely bizarre take.
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Also there remain plenty of ways to encourage employees to stay without a non-compete to cover your sunk costs of onboarding/recruiting.

Signing bonus that is really a loan that is forgivable over a period of time and has to be paid back with interest on leaving early. Ditto for student loan repayment. Vesting equity. Retention bonuses. etc, etc.

Also, and this is crazy, one could consider treating their employees well so they don't want to leave. It is not harder to recruit doctors then in demand professionals in any field. There is a reason Google et. al famously provide ridiculous amenities on campus. It's not out of the goodness of their heart, it is an employee retention tool that clearly they have done the math on and feel it is favorable to do this rather then just pay everyone more and use the money as retention (though they do that to a degree as well). Hospitals have gone the opposite way, cutting doctor's lounges etc, lunches, etc because they can.

Non-competes for employee physicians have been abused to suppress the physician labor market for decades. I am very hopeful this will put an end to that.
 
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DoctwoB said:
Also, and this is crazy, one could consider treating their employees well so they don't want to leave. It is not harder to recruit doctors then in demand professionals in any field.
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How dare you. You are a misanthrope, what do you know. Id write more but I am so busy, Im always interviewing because SDN makes it so no one likes me. What did I ever do to you!?!
 
Oh well...Maybe next time. At least this issue was brought out into the light. So many new grads are signing contracts without understanding the implications of the non-compete. They get surprised at the pace but have no choice but to trudge through the job with their head spinning from all the patients they have to see and document on.

Is it illegal to publicly share or discuss contract terms so others can just stay away and not commit to the interview/negotiation process with a hospital or group using onerous non-competes? Like a review system for employers. A non-compete makes you lose one star. More than 4 patients an hour costs another star. Why not?
 
notgolfingmd said:
Oh well...Maybe next time. At least this issue was brought out into the light. So many new grads are signing contracts without understanding the implications of the non-compete. They get surprised at the pace but have no choice but to trudge through the job with their head spinning from all the patients they have to see and document on.

Is it illegal to publicly share or discuss contract terms so others can just stay away and not commit to the interview/negotiation process with a hospital or group using onerous non-competes? Like a review system for employers. A non-compete makes you lose one star. More than 4 patients an hour costs another star. Why not?
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Unless you've signed an NDA, how could that be illegal? Suggesting you cant talk about it seems like it should be illegal! 🤣

I generally try not to say much though when people call to ask about my prior positions. I would definitely not review something online with my name attached. Our field is loaded with litigious sensitive people so I just wouldnt risk it. If you are a new grad and the person you call is being cagey or says things like "I just needed an environment change", read between the lines.

Some places are turning in to actual revolving door practices where no one seems to stay more than 1-2 years. Huge red flag, Id stay away.

As always though, kind of hard to stay away from anything if you have 1 offer and the alternative is not working or being an MSKCC fellow.
 
NotMattSpraker said:
Unless you've signed an NDA, how could that be illegal? Suggesting you cant talk about it seems like it should be illegal! 🤣
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I have heard from some older docs that discussing contract specifics ($/RVU, # days PTO, etc) prior to signing your own contract runs afoul of some vague antitrust laws because of "price fixing" if you use that information to negotiate something equal or better. This is what they sent, but I wasn't really able to find anything else to corroborate it so it's still unclear to me where the line is.

Does anyone know better one way or the other?
 
HolySmokes said:
I have heard from some older docs that discussing contract specifics ($/RVU, # days PTO, etc) prior to signing your own contract runs afoul of some vague antitrust laws because of "price fixing" if you use that information to negotiate something equal or better. This is what they sent, but I wasn't really able to find anything else to corroborate it so it's still unclear to me where the line is.

Does anyone know better one way or the other?
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Sounds like some bs Ron would spout?
 
I have had multiple contracts in the past saying something along the lines of I am not allowed to talk about details of the contract and that I'm not allowed to disparage them. Not sure how enforceable it would be, but I would be careful if you signed the contract and it has that part in it somewhere, and then you go around saying negative things about them (unless they were illegal things, then it's probably okay). Now if someone sent you the contract and you didn't sign, well that is a risk they took. If someone had opinions about a certain job that was opinion based (i.e. I was not happy there), that would probably be legal. Etc. This is not legal advice.
 
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CurbYourExpectations said:
I have had multiple contracts in the past saying something along the lines of I am not allowed to talk about details of the contract and that I'm not allowed to disparage them. Not sure how enforceable it would be, but I would be careful if you signed the contract and it has that part in it somewhere, and then you go around saying negative things about them (unless they were illegal things, then it's probably okay).
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What you described is mostly a legal bluff that would hold very little if any legal weight once your employment was over. Obviously, if you violate the terms of your agreement while employed, you can be terminated. But unless it was written in a way that clearly stated the consequences of said violation and your consent to the terms (which hopefully no one would sign), they would have to prove some kind of material damage AND intent for any liability. I guess if you did something really stupid like upload the entire contact to Reddit and attached negative commentary, you might find yourself with liability. But word of mouth discussion…no.
 
ramsesthenice said:
What you described is mostly a legal bluff that would hold very little if any legal weight once your employment was over. Obviously, if you violate the terms of your agreement while employed, you can be terminated. But unless it was written in a way that clearly stated the consequences of said violation and your consent to the terms (which hopefully no one would sign), they would have to prove some kind of material damage AND intent for any liability. I guess if you did something really stupid like upload the entire contact to Reddit and attached negative commentary, you might find yourself with liability. But word of mouth discussion…no.
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It is complicated, sometimes a grey area. I would ask a lawyer about the contract first of all (of course anything I say is not legal advice). I would recommend anyone that thinks about what they are doing could be burdensome to them on a legal front, that they should look into if their state is an anti-SLAPP state, and also look into if their (former)employer could start a lawsuit from a SLAPP state.

So this is important because I think many people on SDN have no idea what they are talking about (i.e., not lawyers). Don't put yourself on fault. Don't put yourself out on a ledge when the major posters of negativity on this site are the most protective people of their personal information I have ever seen. You owe them nothing, even if you got screwed.
 
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CurbYourExpectations said:
I have had multiple contracts in the past saying something along the lines of I am not allowed to talk about details of the contract and that I'm not allowed to disparage them. Not sure how enforceable it would be, but I would be careful if you signed the contract and it has that part in it somewhere, and then you go around saying negative things about them (unless they were illegal things, then it's probably okay). Now if someone sent you the contract and you didn't sign, well that is a risk they took. If someone had opinions about a certain job that was opinion based (i.e. I was not happy there), that would probably be legal. Etc. This is not legal advice.
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Of course if someone agrees to a condition in a contract, that is potentially enforceable. The issue here is if you explicitly don’t agreee to anything in a contractual manner, can you be forced into silence. Doesn’t pass the smell test. If I don’t sign a confidentiality agreement, why can’t I discuss what was offered in a contract that I did not sign? For example, when a hospital negotiates with vendors like Varian, we sign a confidentially agreement that we won’t discuss the prices offered even if we don’t end up buying the equipment. If that agreement were not signed, there would be no issues disclosing prices
 
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RickyScott said:
Of course if someone agrees to a condition in a contract, that is potentially enforceable. The issue here is if you explicitly don’t agreee to anything in a contractual manner, can you be forced into silence. Doesn’t pass the smell test. If I don’t sign a confidentiality agreement, why can’t I discuss what was offered in a contract that I did not sign?
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Yeah, I agree with that, if you never signed to the contract. I would err on the position of "in my opinion, I was not happy with xyz, maybe some would be.", type of thing. (not legal advice lol)
 
RickyScott said:
Of course if someone agrees to a condition in a contract, that is potentially enforceable. The issue here is if you explicitly don’t agreee to anything in a contractual manner, can you be forced into silence. Doesn’t pass the smell test. If I don’t sign a confidentiality agreement, why can’t I discuss what was offered in a contract that I did not sign? For example, when a hospital negotiates with vendors like Varian, we sign a confidentially agreement that we won’t discuss the prices offered even if we don’t end up buying the equipment. If that agreement were not signed, there would be no issues disclosing prices
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It’s more than that. If they stick a statement that you won’t discuss elements of your contract in your employment contract without any further stipulations, most if not all courts would view it as a part of your employment agreement. It would have no meaning once you leave. You have to agree to what you won’t discuss, the length of time you won’t discuss it, and (often) potential consequences for violations. My wife’s best friend is a contracts lawyer. Super common across industries for people to try to sneak vague crap like this which has no meaning. The only reason they have any power is because people believe they do. Like I said before, the way people usually get into trouble is for doing crap like posting it to social media with commentary which clearly shows intent to disparage the company.
 
Employees have the right to unionize, to join together to advance their interests as employees, and to refrain from such activity. It is unlawful for an employer to interfere with, restrain, or coerce employees in the exercise of their rights. For example, employers may not respond to a union organizing drive by threatening, interrogating, or spying on pro-union employees, or by promising benefits if they forget about the union.

Section 7 of the National Labor Relations Act (the Act) guarantees employees "the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection," as well as the right "to refrain from any or all such activities."

Section 8(a)(1) of the Act makes it an unfair labor practice for an employer "to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7" of the Act.
"Section 7 of the NLRA states that: “Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection . . . ” 29 U.S.C. §157. Employees can engage in “concerted activities for the purpose of . . . mutual aid or protection” if they are not in a union. For instance, the 6th Circuit has found that non-union employees who “left the premises together to carry their grievances . . . to the area manager” engaged in action protected by the NLRA. Vic Tanny Int’l v. NLRB, 622 F.2d 237, 238 (6th Cir. 1980). Even something as simple as discussing wages in the workplace may be “concerted activity” subject to the jurisdiction of the NLRA. An employer cannot have a blanket rule banning the discussion of wages by employees. “A rule prohibiting employees from communicating with one another regarding wages, a key objective of organizational activity, undoubtedly tends to interfere with the employees’ right to engage in protected concerted activity.” NLRB v. Main St. Terrace Care Ctr., 218 F.3d 531 (6th Cir. 2000)."

Under NLRA employees have the right to communicate with their coworkers about their wages, as well as with labor organizations, worker centers, the media, and the public. Wages are a vital term and condition of employment, and discussions of wages are often preliminary to organizing or other actions for mutual aid or protection.

[...] you may discuss wages in face-to-face conversations, over the phone, and in written messages. Policies that specifically prohibit the discussion of wages are unlawful as are policies that chill employees from discussing their wages. When using electronic communications, like social media, keep in mind that your employer may have policies against using their equipment for unauthorized use, though it is possible such policies could be unlawful.


Some contracts I have seen are fairly specific in what they deem as items related to employment (>2 pages worth of listing specific details), NDA related signings. NDA information is often in the same section as noncompete agreements, so there may be wording such as "agreement not to disclose information there-within", etc. I agree with ramses, it doesn't seem like they give a time limit for most things, so maybe it is not legally binding outside of employment. If something is unjust or illegal, I think it could be talked about openly without fear, less clear to me if they say you can't discuss specifics of your job contract, but possibly protected by this? Running the contract by a lawyer for clarification of what you're allowed to talk about may be the best way to go about it before talking about specifics of the employment. (Not legal advice)
 
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CurbYourExpectations said:
Employees have the right to unionize, to join together to advance their interests as employees, and to refrain from such activity. It is unlawful for an employer to interfere with, restrain, or coerce employees in the exercise of their rights. For example, employers may not respond to a union organizing drive by threatening, interrogating, or spying on pro-union employees, or by promising benefits if they forget about the union.

Section 7 of the National Labor Relations Act (the Act) guarantees employees "the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection," as well as the right "to refrain from any or all such activities."

Section 8(a)(1) of the Act makes it an unfair labor practice for an employer "to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7" of the Act.
"Section 7 of the NLRA states that: “Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection . . . ” 29 U.S.C. §157. Employees can engage in “concerted activities for the purpose of . . . mutual aid or protection” if they are not in a union. For instance, the 6th Circuit has found that non-union employees who “left the premises together to carry their grievances . . . to the area manager” engaged in action protected by the NLRA. Vic Tanny Int’l v. NLRB, 622 F.2d 237, 238 (6th Cir. 1980). Even something as simple as discussing wages in the workplace may be “concerted activity” subject to the jurisdiction of the NLRA. An employer cannot have a blanket rule banning the discussion of wages by employees. “A rule prohibiting employees from communicating with one another regarding wages, a key objective of organizational activity, undoubtedly tends to interfere with the employees’ right to engage in protected concerted activity.” NLRB v. Main St. Terrace Care Ctr., 218 F.3d 531 (6th Cir. 2000)."

Under NLRA employees have the right to communicate with their coworkers about their wages, as well as with labor organizations, worker centers, the media, and the public. Wages are a vital term and condition of employment, and discussions of wages are often preliminary to organizing or other actions for mutual aid or protection.

[...] you may discuss wages in face-to-face conversations, over the phone, and in written messages. Policies that specifically prohibit the discussion of wages are unlawful as are policies that chill employees from discussing their wages. When using electronic communications, like social media, keep in mind that your employer may have policies against using their equipment for unauthorized use, though it is possible such policies could be unlawful.


Some contracts I have seen are fairly specific in what they deem as items related to employment (>2 pages worth of listing specific details), NDA related signings. NDA information is often in the same section as noncompete agreements, so there may be wording such as "agreement not to disclose information there-within", etc. I agree with ramses, it doesn't seem like they give a time limit for most things, so maybe it is not legally binding outside of employment. If something is unjust or illegal, I think it could be talked about openly without fear, less clear to me if they say you can't discuss specifics of your job contract, but possibly protected by this? Running the contract by a lawyer for clarification of what you're allowed to talk about may be the best way to go about it before talking about specifics of the employment. (Not legal advice)
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The thing to remember about civil law is it ultimately comes down to majority opinion. Even if a judge agrees to try the case, it’s a jury of non legal folk who decides (though remember it does not have to be unanimous in civil trials). If you sign something that says I won’t do this for this long or else…reasonable people could say, well you did sign it. But what are the chances they will care if say, 21c comes after a former employee for honestly answering specific questions from a prospective employee? Especially when presented with evidence from your post above which nicely articulated the fact many of these are toeing the legal line to begin with. South Park has a very humorous (albeit highly inappropriate) portrayal of the fluidity of contract law in the imagination land trilogy.

Last, you can’t legally compel someone to lie. Unless you truly forget the details of your contract, the only legally acceptable answer you can provide if asked directly (assuming these are even enforceable) is “I’m not allowed to discuss the details of my employment including my non compete.” Could there be a bigger red flag to scream don’t work here? I can’t think of many.
 
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