Physiatry Practice Management Resources

The agreement must be reasonably necessary to protect the employers' legitimate business interest. Courts will enforce a non-compete agreement if, along with the other factors described above, the restriction is reasonably necessary to protect an employer's business interests. Protectable interests include trade secrets, customer good will and confidential information. It makes sense for an office of specialists to protect their business interests by limiting a physician's ability to set up a competing practice in the same specialty nearby. However, asking secretarial or clerical people to sign non-compete agreements is considered highly suspect because the main purpose of your practice is medical care, which clerical people cannot perform. Seeking to restrain your lead cardiologist is a different matter. The rule of thumb is that any non-compete agreement must be geared to protect your clientele and the revenue stream of your business.

Best PracticesAlthough Pennsylvania law generally focuses on those four requirements, there are a few other best practices that you might want to keep in mind.

Unilateral enforcement. Drafting non-compete agreements and presenting them at the correct time are only part of the battle. Agreements should be enforced unilaterally and not, for example, pursued only if a top employee leaves. If you do not enforce a non-compete agreement with all employees, you may be in the unenviable position of having to defend yourself against accusations of selective enforcement, and that could potentially weaken your case by suggesting that your business is not in the habit of enforcing non-competes. It's also not advisable to enforce non-compete agreements only with top performing employees. Doing so may encourage people to deliberately perform poorly so that you will fire them and thereby invalidating their non-compete agreement.

Specific language influences speed. If and when you do have to enforce a non-compete agreement, it will be as an emergency measure designed to immediately stop the employee from engaging in behavior that is immediately harmful to your business. It is then that the value of precise language becomes apparent. Precise language will leave little room for time-consuming interpretation and reinterpretation of your intent. It is important to be realistic, however, and to understand that non-compete disputes are intense matters that will take up a significant time. Disputes typically are handled by a Court of Common Pleas judge, who will usually issue a preliminary injunction or restraining order immediately upon learning that you have a non-compete agreement in place. Proceeding from that point through witnesses, depositions and trial toward a permanent injunction can take anywhere from 30 to 45 days.

Public policy plays a role. Overreaching the bounds of what is reasonable is a mistake. When dealing with non-compete agreements and physicians, public policy considerations come into play. The judge has the authority to simply strike portions of the agreement that he or she thinks are unfair. Courts of equity can grant limited enforcement only to those portions of the agreement that are deemed reasonable and enforceable. Physician's practices may be held to a higher standard. No matter what your business interests, the courts will always consider, first and foremost, a community's supply of doctors. In a city like Pittsburgh where there are numerous physicians, given the number of teaching hospitals and universities, it would not likely be considered a matter of community interest. However, in outlying areas where doctors are in short supply, the community's interest in medical care could prevail, and courts might not enforce the non-compete.

Pennsylvania law regarding non-compete agreements, while still subjective, has been established over time by the state's case law. Given the evolving nature of case law, it is not a foregone conclusion that firing someone would mean that his or her non-compete agreement would be null and void. The best thing for physician practices to do is to be proactive and have a well-drafted, well-thought out employment agreement that contains appropriate non-compete provisions, non-raid provisions to prevent competitors from hiring away groups of employees from your practice, and most crucially, for employers not to try to overreach. By taking the time to deal with these issues up front, your practice may even be able to prevent non-compete disputes from occurring in the first place.

Written by: Mary-Jo Rebelo, Esq.