(The first in a series of posts discussing the factors that courts consider in deciding whether a restrictive covenant in a physician employment contract is enforceable. If this post interests you, be sure to check out part 2, part 3, part 4 and part 5 of the series.)
First off, let me admit that the title of this post is intentionally misleading. If you Google “can I break my non-compete,” you’ll get millions of results. Maybe it was that very query that brought you here in the first place. But, really, it’s the wrong question to ask.
The right question is, “Is my non-compete agreement legally enforceable?” If your non-compete is enforceable, then the simple answer to the question, “Can I break my non-compete,” is “no.” You can’t break an enforceable non-compete without risking money damages and an injunction against you from practicing medicine in violation of the covenant.
Not only that, but your new employer probably won’t be very happy with you when your former employer sues it for interfering in your non-compete obligations—which can happen if you take a new job in violation of a restrictive covenant). And, of course, there are the legal fees and expenses involved in defending against a breach of non-compete claim—usually up to five figures at the TRO/preliminary injunction hearing stage, and easily six figures through trial.
Needless to say, by honoring an enforceable non-compete, you will be doing yourself an enormous favor.
It’s no secret that physician employment—and employment mobility—have increased dramatically in the last 25 years. Prior to 1990, fewer than two percent of physicians changed jobs during their careers. But today, doctors are more likely to be salaried employees than to own their own practices, and about 70% of physicians across all specialties will change jobs within the first two years of their careers. Doctors change jobs for the same reasons other professionals do: the prospect of greater compensation, better working conditions, opportunities to enhance professional skills, a more flexible schedule to accommodate family responsibilities—the list goes on. In a country where doctors depend on employment mobility to improve their livelihoods and quality of life, an oppressive non-compete in a single employment agreement can do lasting damage.
When is a non-compete in a physician employment contract enforceable? Well, if you live in Colorado, Massachusetts, Delaware or North Dakota, the answer is never. These states bar enforcement of physician non-competes as a matter of statute. If you live in California, your state bars enforcement of employee non-competes generally.
If you practice in any other state, however, the answer is murkier. The majority of states in this country apply a “rule of reason” test, under which a covenant not to compete is reasonable, and therefore enforceable, if:
1) it is no more restrictive than necessary to protect legitimate interest of the employer (“legitimate” meaning not just for the purpose of stifling competition);
2) it doesn’t unduly burden the physician; and
3) it doesn’t injure the public.
In separate posts below, I discuss arguments that physicians have used under this “rule of reason” approach to prevail against non-competes. Reading through these posts will likely give you an appreciation of how difficult it can be to predict where a court will come out when it applies a multi-factor test like this to the facts and circumstances of a particular case. There is little consistency to be found among states that follow the rule of reason test. Sometimes, it is difficult to find consistency in its application within a single state.
You should also know that employers win preliminary injunctions in contested actions to enforce non-competes about 60% of the time. (This rate of success may be attributable to the fact that, although employers often impose non-competes on their employees indiscriminately, they usually only exert the money and effort needed to obtain a preliminary injunction in cases where they’ve been advised by their counsel that the odds of obtaining one are good). Whether a trial court judge will grant a preliminary injunction often turns on her general disposition toward non-competes—does she favor an employee’s freedom of mobility or an employer’s “freedom of contract”?
Bottom line: this is an area of the law that is fraught with peril for physician employees. You need to consult with a lawyer in the state whose law governs your employment agreement before you take any action that might violate a non-compete. Of course, the very best approach is to consult a lawyer at the contract negotiation stage, before you ever agree to a covenant not to compete that is badly drawn and oppressive in the first place.
David M. Briglia is an employee-side attorney representing physicians and other healthcare professionals in negotiating their employment contracts with hospitals and group practices and litigating contract and employment law claims. The Law Office of David M. Briglia serves doctors and other healthcare professionals in Washington, D.C. and Maryland, including Silver Spring, Takoma Park, Bethesda, Rockville, Gaithersburg, Columbia, Baltimore and Frederick, and throughout Montgomery County, Prince George's County, Howard County, Anne Arundel County and Baltimore County. This blog is intended for informational purposes only and cannot be relied upon as legal advice.