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.
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.
PAMED President Kristen Sandel, MD Speaks about noncompete clause legislation on Pennsylvania Newsmakers.
Noncompete Clauses/ Restrictive Covenants FAQ
- What is a noncompete agreement?
- Are noncompete agreements enforceable in Pennsylvania?
- Who determines whether a noncompete agreement was reasonably necessary and reasonable in its restrictions?
- Didn’t the Federal Trade Commission (“FTC”) recently enact a nationwide noncompete ban?
- What would the Federal noncompete rule do?
- Who does the FTC consider to be a “senior executive?”
- Will the new Federal noncompete rule take effect on September 4, 2024, as scheduled?
- Will the new Federal noncompete rule ever take effect?
- What options does the FTC have if it does not pursue an appeal?
- Is there any provision in Pennsylvania law to address noncompete agreements in physician employment contracts?
- Did PAMED support House Bill 1633?
- What restrictions does the new law impose?
- Does Act 74 address what distance restriction a noncompete agreement may impose?
- Does Act 74 only apply to physician employment contracts?
- When does Act 74 take effective?
- Will the one-year limitation apply to employment contracts entered into before January 1, 2025?
- Does PAMED offer employment contract review services?
Copyright © 2025 Pennsylvania Medical Society. All rights reserved.