USA Today, New York Times, BNA, and several other news outlets have been reporting over the last few weeks about non-competition agreements and non-compete laws especially related to low-wage workers. There have been interesting changes and proposed changes to state laws that may affect several industries including healthcare.
In a recent article on Law360, titled “Noncompete Agreements Under Siege At The State Level,” the authors highlighted some developments in non-compete law. They posit that many areas of employment and labor law have seen changes, but the law of noncompetition agreements has been relatively static. Until recently, most changes came from case law in this area of law; however, more recently we are seeing that many state legislatures are taking up the issue.
Some states like Massachusetts, Oregon and Missouri are offering laws which include broad prohibitions on the enforcement of noncompetition agreements. However these proposals have not made much legislative progress according to the authors.
Other states have offered legislation that has health care industry-specific prohibitions. For example, the authors note that last year Rhode Island enacted legislation that effectively renders physician noncompetition agreements void and unenforceable, while Connecticut imposed new limits as to when noncompetition agreements can be enforced.
According to the authors, in 2017 the trend is continuing. West Virginia enacted a statute regarding physician noncompetition agreements, which limits the ability to enforce such provisions. The authors state:
Measures have also been introduced recently in Pennsylvania, Minnesota, Oregon (home care workers), New Mexico (certified nurse practitioners and midwives), and Connecticut (homemakers, companions and home health aides) that target noncompete enforcement against physicians and others in the health and medical profession. (emphasis added)
Low-wage employee non-compete clauses have also come under scrutiny. The authors note that this year several states have or are currently considering income-based restrictions, including Massachusetts, Maine, Maryland (did not pass), and Washington.
With the landscape of this very important issue changing, individual healthcare providers, their employers, and anyone else who uses, or is subject to, non-compete provisions will need to keep on top of developments to their state’s specific laws. As the laws change, it will be more important than ever to have non-compete provisions and agreements reviewed or re-reviewed to ensure you understand the effect of such changes.