05/29/2025
I address physician employment agreement noncompetes on a near daily basis in my practice, as I help physician clients offboard current jobs, restructure current ones and onboard to new and better ones. As of May 2025, several significant developments have reshaped the landscape of physician employment agreements in the United States, particularly concerning noncompete clauses.
Federal. You may recall that the Biden administration’s Federal Trade Commission issued a proposed federal regulation banning most noncompetes in all industries. But in August 2024, before the rule became official, a federal judge in Texas fully blocked it. This ruling effectively halted the implementation of the rule, which had been scheduled to take effect on January 1, 2025. I don’t think anyone expects the Trump administration to challenge the Texas ruling or revive this rule or policy.
State-Level Changes. A number of state legislatures have taken action to ban or restrict physician non-competes:
Indiana
Senate Enrolled Act No. 475: Effective July 1, 2025, this law prohibits hospitals and hospital-affiliated entities from entering into noncompete agreements with any physicians, regardless of specialty. Additionally, it invalidates financial penalties or repayment obligations in contracts with physicians employed for three or more years.
Louisiana
Act No. 273: Effective January 1, 2025, this act limits noncompete clauses for physicians. For primary care physicians, noncompetes are unenforceable after three years of employment. For other physicians, noncompetes are unenforceable after five years.
Pennsylvania
Fair Contracting for Health Care Practitioners Act: Effective January 1, 2025, this law prohibits noncompete agreements longer than one year for healthcare practitioners, including physicians. The law also includes provisions for notification requirements by employers.
Arkansas
New Legislation: On March 4, 2025, Arkansas enacted a law amending the state's noncompete statute to ban physician noncompetition agreements. The law takes effect in the summer of 2025.
Key Takeaways
Increased Physician Mobility: These legislative changes aim to enhance physician mobility and improve patient access to care by limiting restrictive employment clauses. Using Bittinger Law’s mantra: they make it easier for physicians to offboard from one job and onboard another.
Understanding: Physicians who are considering leaving their jobs need to understand not only what their contracts say but also whether the contract language remains legal. Generally speaking, in states that have not taken recent legislative action to ban non-competes, the prohibitions are enforceable if reasonably drafted as to time, service and geography.
Other Blocks. Don't be niaive. Just because your contract doesn't have a noncompete doesn't mean there are not significant hurdles to leaving. Do you pay for tail insurance? Do you repay a signing bonus? Do you lose shares or other vesting benefits? How much notice do you have to give? Do you automatically relinquish privileges when you terminate your contract?
Ongoing Legal Developments: While federal efforts to ban noncompete agreements have been blocked, state-level reforms continue to progress, indicating a trend toward limiting such clauses in healthcare employment.
If you need assistance in understanding how these changes might affect your specific situation or require guidance on contract revisions or employment changes, feel free to ask. I’m happy to help you strategize your offboarding.
