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Restrictive covenants are a common staple of most Employment Agreements. They restrict you from practicing in your specialty within a defined geographic area for a set period of time after your employment ends. You may have been told that “they’re not enforceable anyway”, but while some states and courts do frown upon them, in most instances they are in fact enforceable so long as the geographic and defined practice scope of the covenant is reasonably related to the legitimate business interests of the employer. Does the employer actually get patients from that reach area? Are they in that line of business? In many cases the answer is “yes”.
Regardless, even if you think it is an overreaching covenant, can you afford to spend the legal fees to fight it, particularly if you need a job right away without exposing your new employer to cease and desist threats that make them fearful they are wasting their time in hiring you or you cannot get your legal fees reimbursed after all of that hassle (even if you win)? The answer is a resounding “no” so you must only sign an agreement if you can live with the covenant.
Yes, restrictive covenants are even imposed for part-time jobs that are 3 or fewer days a week. You will still be introduced to their patient base and referral sources so you are a threat regardless. Nonetheless, I recommend balking at signing one if you are only there for 2 or fewer days per week, or seeing if they are willing to modify the length of time of the covenant or the geographic scope because of this. Perhaps the geographic scope will increase only if you leave your employment in year 2.
If you have another job at the same time, then make sure that the covenant does not interfere with the locations of your other job. Even if you work at one location on behalf of another employer, they may have more than one office and expect you to either switch or to refer across offices. If one of their offices or facility affiliations falls within the defined geographic area, then make sure that you have express permission to continue to work for them without issue.
Always ask for them to reduce this. The worst they can do is say “no”. Within an urban environment, miles might not be an appropriate border, and streets, avenues and natural boundaries (parks or rivers) may be better. In suburban or rural areas, the appropriate mile radius is largely dependent on the nature of travel and the availability of healthcare in the area. Experienced attorneys can advise you as to propriety. In any event, see if you can prevent it from falling outside of the border of a particular city, county or even the state in which you are located.
Typically they will have a broad covenant that applies to all of their locations, even if you do not work there. If it says you cannot work within a specified mile radius of any office or facility of theirs (or those with which they are affiliated), then try to have them limit it to their main site only, your primary site only, or just both their main site and the secondary primary site in which you are assigned. The manner of determining your primary site might be based on number of days on average spent there, percentage of time split, or number of patient encounters. The objective basis should be stated in the agreement. Having a covenant apply a radius surrounding every office including offices in which you may never work or only sporadically provide coverage could have the result of drastically expanding the geographic area beyond fairness.
Article contributed by Ron Lebow, More information on this subject will follow in the next newsletter
Michelman & Robinson, LLP
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