People often think of medical professionals as in-demand workers who are eligible for highly-competitive wages. Physicians, in particular, benefit from competitive pay that sometimes comes with enhanced professional mobility. People may imagine that medical doctors have their choice of positions and stay at a certain practice or hospital for the salary offered or other personal reasons.
However, not all doctors can choose where they practice medicine at will. Many physicians sign employment contracts that include restrictive covenants. If they leave their job, their employer can sue them in certain scenarios. Both taking a job with a direct competitor and starting a competing professional practice could lead to an employer’s attempt to enforce a noncompete agreement.
Do medical professionals who aspire to start their own practices have to worry about noncompete agreements in Texas currently?
Noncompete agreements are in legal limbo
The Federal Trade Commission (FTC) recently announced a new final rule. That rule specifically prohibits the enforcement of noncompete agreements. While that may seem promising to employees bound by such contract inclusions, there is a caveat.
Specifically, a federal judge here in Texas recently ruled that the FTC may have exceeded its authority by implementing this rule. The initial ruling does not have broad implications. However, the final ruling expected in the next few months could overturn the rule and allow businesses to begin enforcing noncompete agreements again.
Should that occur, physicians who signed contracts with noncompete agreements included could be at risk of litigation if they start a competing medical practice. Thankfully, they may also have the option of buying out the noncompete.
Including buyout terms is mandatory under Texas statutes. In theory, a physician who pays an exorbitant fee can secure their early release from a noncompete agreement. Sadly, many corporate medical employers make the buyout cost so high that an individual physician probably can’t afford it. Those with the backing of investors may have more options than those relying solely on their own resources.
Discussing professional plans at length with a skilled legal team can help a physician determine if their career development or choice to start a medical business could lead to a lawsuit. Review of any contract which includes a noncompete agreement is also crucial. Physicians and other professionals subject to noncompete agreements often need to be proactive about their protection if they hope to avoid costly litigation.