Clinicians cheered the FTC's ban on non-competes. The celebrations are likely premature

Clinicians celebrated in April when the Federal Trade Commission voted 3-2 to ban non-compete agreements.

But the victory may be short-lived. Already, at least three lawsuits have been filed — two in separate districts in Texas (including one from the Chamber of Commerce) and one in the Eastern District of Pennsylvania. The legal actions aim to prevent the rule from going into effect on Sept. 4.

Non-compete clauses are prevalent and unpopular in healthcare. The American Medical Association estimates that between 35-45% of doctors have one in their contracts. Pharmacists, especially those who work at large retail chains, also commonly encounter them. So do nurses and physician assistants.

The agreements restrict where a clinician can practice after leaving a job, or the type of the work they’re allowed to do. And they can last a number of years.?

Nearly a third of family doctors said a non-compete agreement made them feel trapped in their current position, according to a survey last year from the American Academy of Family Physicians .?

Yet when I chatted with Virginia-based employment lawyer Tom Spiggle , I didn’t hear a lot of optimism that the FTC would be able to implement a ban any time soon, if at all. The agency faces an uphill battle in Texas, and its prospects don’t improve if the challenges make their way all the way up to the conservative U.S. Supreme Court.?

While groups representing clinicians have cheered the prospect of a ban on non-competes, the American Hospital Association is strongly opposed to one. In a statement, it called the FTC decision “bad law, bad policy and a clear sign of an agency run amok.”

The FTC’s ban has some exceptions, which would apply to senior leaders, anyone selling an ownership stake in a business and even not-for-profit hospitals (although perhaps not all of them.)?

The AHA cited the unequal treatment of not-for-profit and for-profit hospitals under the rule as one of its objections to the ban.?

For more on what’s ahead, you can read my conversation with Spiggle below. He also offers some advice to anyone who’s currently negotiating a contract with a new employer, or thinking of leaving their current position.?

And tell me: What do you think the impact of a ban would be on the healthcare labor market?

The transcript below has been edited for length and clarity.

LinkedIn News: Where do things stand now?

Spiggle: Everybody's in a holding pattern on this. The challengers will be successful in getting an injunction. Now, the injunction will have to be renewed at each step. [But] I imagine there'll be an injunction in place that will prevent the FTC from enacting the rule until this works its way through the court system.?

The first challenge was in Texas, a notoriously conservative circuit, which has been pretty open to these challenges to administrative actions. I would suspect there'll be an objection all the way through the Fifth Circuit and then to the Supreme Court. And that's probably where it's going to end up. And so everybody's waiting.

LinkedIn News: That could take years.

Spiggle: It could be years. I imagine they’ll move pretty quickly on this, but pretty quickly by the appellate and Supreme Court standards is a lot different than the pretty quickly you and I would be thinking about.

LinkedIn News: What does this mean for people who are negotiating contracts now?

Spiggle: It really is the status quo. Employers obviously are keeping an eye on this as they have been for a while. Setting aside the FTC’s explosive rule, there have been a bunch of states that have enacted restrictions on non-competes. I imagine we'll continue to see that.?

If you're a clinician negotiating a non-compete right now, you probably don't have any more leverage than you had before. I think most employers are like, we'll cross the bridge when we get to it.

LinkedIn News: What is the precedent here? How do these cases look on their legal merits?

Spiggle: It's a tough call. If it wasn't this Supreme Court, if this had been five years ago, then I would say the FTC’s rule would have been upheld.?

One thing for everyone to watch is that the Supreme Court recently heard two cases challenging what's called the Chevron rule. The Chevron rule has been in place for 40-plus years, and it basically says you should give deference to these administrative bodies when they are rule-making. It was assumed that administrative bodies have expertise in their field, and they know better than the courts, at least about the issues that they are enforcing. Conservatives hate this rule, painting by broad brushstrokes. Just based on oral arguments, there's a good chance that it is watered down.?

If I were to put money on this, I'm thinking that [the non-compete ban] gets overturned at the trial court level, the appellate court level, and then Supreme Court level.

LinkedIn News: Clinicians will be disappointed to hear that. What do you think the impact, if any, will be on the labor market and clinicians’ negotiating power?

Spiggle: Even when people are covered by a non-compete, that doesn't mean that it is a valid non-compete. If they're overly broad, there are any number of ways they can be challenged.

And then in a really tight labor market, what we see sometimes is that the new employer will pay the legal fees to defend any challenge to the non-compete. Another thing to remember about non-competes is that they're only effective if the employer enforces them. You may see some saber rattling, but the employer [might not] come after you unless there is a serious challenge to their business model.?

LinkedIn News: What are the main takeaways for clinicians at this time?

Spiggle: I’d have an attorney review [your contract.] Even if an employer is disinclined to completely waive a non-compete, there are ways to limit it, [such as] the time duration and the descriptions of the jobs that are considered competitive. If you can narrow that scope, then you might have a non-compete that is more palatable to you and isn't as restrictive.?

It’s not unheard of to be able to negotiate like, if you're going to enforce this non-compete, you're going pay me [to sit out of the labor market.] Those are tough to get, but they're not impossible.?

But if you, for whatever reason, end up covered by one, I wouldn't just be like, I've got a non-compete so I'm screwed. It depends on the employer. Employers are like people in some ways; if they feel like you're trying to screw them over, then they're going to fight back. But if they feel like this person's working collaboratively with me, they're not out to steal my business, [then they might say], Go ahead and work for the hospital in the next county over. I'm fine with that.