What Young Doctors Need To Know About Covenants-Not-To-Compete

Most physician practice groups that hire a young physician will ask him or her to sign an employment contract that contains a restrictive covenant. Restrictive covenants contain post-employment limits on the physician employee's ability to practice medicine and compete with the former employer. They are enforced in most states even though they represent a restraint on trade because they are designed to protect the former employer's patient and referral relationships that have taken years to develop.

Restrictive covenants typically take on two forms.

The most common and acceptable restrictive covenant is a restrictive covenant that prohibits the former employee from soliciting the employer's patients, referral sources and employees. Courts typically enforce such covenants as reasonably designed to protect the employer's legitimate interests. As this type of covenant allows the physician to continue to treat the patients of the former employer, provided the physician