• 03
  • March 10

A covenant not to compete may sound like arcane legal agreement, but it can have a significant impact on the ability to practice one's craft, whether it is medicine, engineering, running a restaurant or anything else. It can also protect an employer against a departing employee's "stealing" the company's customers and goodwill.

A non-compete agreement typically states that the employee will not provide the same product or service in competition with the employer, once the employee no longer works for the employer. Specifically, a covenant not to compete will limit:

  • Time: the number of months or years after employment that the employee must not compete against the employer
  • Activity: the types of products or services the employee is prohibited from producing or performing
  • Geography: the geographical area in which the employee must not perform the activity

Physicians often must sign covenants not to compete when they sign employment contracts. In Texas, covenants not to compete involving physicians trigger special rules. Such agreements must:

  • Allow the physician access to a list of patients he or she treated the year prior to termination of employment
  • Upon patient authorization, allow access to medical records for a reasonable fee
  • Allow the physician to buy out the of the agreement for a reasonable cost
  • Not stop the physician from continuing treatment of a sick patient

While non-compete agreements protect physicians' employers from competition that could seriously hurt their business, the agreements must not be too restrictive. If the court views a non-compete agreement as going too far - whether it is too limiting on the physician's ability to earn a living or help patients, or it is overzealous in protecting the employer's goodwill or business interests - the court may decide that it is an unreasonable restraint of trade and throw out the agreement.

Because of the complexity of non-compete agreements for physicians, we recommend speaking with an attorney before you sign one or offer one.