State Non-Compete Updates
Updated: Jun 21, 2022
This summer, three (3) northeastern states passed laws which impose restrictions on non-compete provisions in employment, partnership and ownership contracts with physicians. Specifically, Connecticut’s, Rhode Island’s, and New Hampshire’s new laws greatly limit those instances in which a physician may waive his/her right to practice within a geographic location.
In Connecticut, effective July 1, 2016, physician non-compete provisions must be limited to one (1) year after a for-cause termination by the employer and fifteen (15) miles from the physician’s primary practice site or another office expressly set out in the non-compete provision. See the complete Connecticut Public Act No. 16-95 at https://www.cga.ct.gov/2016/act/pa/pdf/2016PA-00095-R00SB-00351-PA.pdf for these and other limitations imposed on physician non-compete provisions. The new Rhode Island law, effective July 12, 2016, extends the limitations on physician non-compete provisions even further by prohibiting such provisions in all instances except those in which a physician is restricted from competing with a practice he/she sells. In such instances, the physician may be restricted from competing for a period of five (5) years. See the complete law prohibiting Rhode Island non-competes against physicians at http://webserver.rilin.state.ri.us/Statutes/TITLE5/5-37/5-37-33.HTM. Finally, the new New Hampshire law, effective for new and renewal agreements as of August 7, 2016, placed an absolute prohibition on non-compete provisions which limit a physician’s ability to practice medicine in a certain geographic location. See the complete language of this prohibition at http://www.nhms.org/sb417-non-compete-clauses-physician-contracts.
In addition to the enactment of new laws, the Supreme Court of Nevada also made a ruling this summer which may have an impact on an employers’ decisions whether, and the extent of which, to include a non-compete provision in their employment agreements. Specifically, on July 21, 2016, in Golden Road Motor Inn, Inc. v. Islam, 376 P .3d 151 (2016), the State Supreme Court held that an unenforceable non-compete provision in a contract rendered the entire contract unenforceable. Accordingly, whereas other states may permit their courts to “blue pencil” an unenforceable non-compete by revising it in a manner that is consistent with state law, the Nevada Court held that it was not the position of the courts to make such revisions. See the entire Nevada Supreme Court opinion at http://caselaw.findlaw.com/nv-supreme-court/1743327.html.