Employers hoping to protect their substantial investment in hiring and supporting new physicians will do well to keep several rules of thumb in mind when adding noncompete language:
- Avoid over-generalizing your definition of “direct competition.”
- Make sure you identify a realistic geographical area from which the departing physician is prohibited to practice.
- Specify a legally acceptable timeframe during which the departing physician may not practice in the identified market area.
When it comes to noncompetes, make sure you clearly delineate:
- A specific time period—usually one year— during which the departing physician cannot compete; and
- A clear definition of employment(self, group, contracted provider);
- Scope of services(specialty and/or discipline);
- Solicitation of current patients, employees or contracts; and
- An identifiable geographic area—usually stated in radius from current practice locations.
Finally, many attorneys recommend including specific liquidated damages in the contract. The employer and employee agree that the employee will pay a (usually hefty) amount of money to the employer. Then the employer releases the employee from the restrictive covenants. If the dispute goes legal, the court will want to know how you came up with that amount, based on realistic economic damages suffered by the practice. Even then, it may impose a compromise that reduces the damage payment.