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.

Pennsylvania law limits any restrictive covenant or noncompete clause in a physician employment contract to one year in duration. This restriction applies to any physician employment contract entered into on or after January 1, 2025.

Any restrictive covenant or noncompete clause must be reasonable in nature to be enforceable. This reasonableness requirement applies regardless of when the contract was entered into.

If you believe that your restrictive covenant or noncompete clause is unreasonable in nature, you should contact an attorney of your choosing to evaluate your legal options. A restrictive covenant or noncompete clause can be challenged in court via the filing of a civil lawsuit against the employer. Your attorney can help you determine the likelihood of success if you consider challenging your contract in court.

Please read on for more information concerning noncompete clauses/restrictive covenants.

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:

• On July 17, 2024, Governor Shapiro signed House Bill 1633 into law. The law, now known as Act 74 of 2024, places, for the first time in Pennsylvania, statutory restrictions on noncompete agreements in physician employment contracts.

• Act 74 will limit noncompete agreements in physician employment contracts to a maximum duration of one year. 

• On August 20, 2024, a Federal District Court judge in Texas struck down the Federal noncompete rule. 

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