Noncompete Clauses/ Restrictive Covenants

The Pennsylvania Medical Society (PAMED) supports reasonable limitations on restrictive covenants in physician contracts. Restrictive covenants, sometimes referred to as noncompete agreements, often live within an employment contract. These clauses are designed to restrict a physician’s ability to leave an employer and work for a competitor or other medical facility. PAMED believes this interferes with patient care as it limits the opportunity for access to their physician based on distance if they should leave their practice.

Are physician non-compete agreements enforceable in Pennsylvania?

Yes, they are enforceable if they are reasonable as to scope, duration and geographic limitation.

PAMED has supported previous legislation on restrictive covenants that aims to prohibit their use in health care practitioner employment contracts, with limited exceptions. The bill allowed for the freedom of movement among employed health care practitioners while protecting health care employers in less densely populated areas who have more difficulty attracting and retaining practitioners.

Key Items:

• Legislation was introduced in the Pennsylvania Capitol that would prohibit the use of noncompete provisions in physician employment contracts.
• The legislation, sponsored by Representative Dan Frankel (D-Allegheny), passed the PA House with a vote of 150-50. PAMED continues to advocate for an amendment to the language that would allow non-affiliated private practices to use noncompete agreements.
• At the same time, the Federal Trade Commission (FTC)?approved a final rule?that will ban noncompete clauses for workers nationwide except in limited circumstances.

PAMED breaks down the similarities and differences between the Federal Trade Commission (FTC) Rule vs. Proposed Pennsylvania State Legislation (House Bill 1633). Visit https://www.pamedsoc.org/laws-advocacy/pamed-priorities/noncompete-clauses-restrictive-covenants to learn more.