What to look for in Physician Employment or Professional Services Contracts Restrictive Covenants - Are they fair? What is fair?
Restrictive covenants come in many forms, and here are a few considerations you should consider to see if the restrictive covenants are fair.
- Geographic Restriction - Is there a geographic restriction to what the employee will be allowed to practice? Is it 5 miles or is it 25 miles? is that reasonable, well the answer depends. If your specialty is unique then the larger the geographic spread the more likely it will be enforceable, but if you have a more common skillset, the smaller the geographic restriction. The hard facts are such, that what is a reasonable amount of distance a patient is willing to go to see a particular type of doctor/healthcare professional?
- Specialty Restriction - Next you will want to specify the specialty area of practice you will be working in. I am not referring to all the specialties of the employee, but the area of work that the employee is specifically getting hired to work in. That needs to be reasonable and tight, for the benefit of both parties.
- Client/Patient Poaching Restriction - Many contracts have provisions regarding no client poaching from the business once the professional leaves. Similarly, there is case law that is out there that states that a contract cannot interfere with a patient-doctor relationship. The circumstances of this always vary, and it is good to talk with a legal counsel to navigate through these restrictions.
- Employee Poaching Restriction - Many contracts have what is called an employee poaching restriction, meaning that the professional will not take or attempt to take other employees with them when they leave. So be careful of whom you hire at the next job that you go to.
- Affiliates of the Employer Organization - Many times the restrictive covenants will have restrictions that apply to not only the employer but also their affiliates and other parties the employer has a relationship with. Is that fair? Sometimes yes, when there are legitimate business issues that are worth protecting and the employee is informed as to those entities before the contract is signed; but usually no, if the restriction is not specific. This is a word of caution to both the employer and the employee.
Restrictive covenants come in many forms, it is advisable for you to get legal counsel on your side to help you navigate them.
