Noncompete agreements are very common for highly compensated professionals in Texas. These agreements generally impose limits on the ability of a professional to move from one firm to another. The question most often asked about such agreements is whether they are enforceable. The answer depends upon several factors that cannot be easily summed up in a single sentence or paragraph. This post will summarize the factors most often used by Texas courts in determining whether to enforce a noncompete agreement against a physician.
The general rule
Texas courts will enforce noncompete agreements if they are ancillary to or a part of an otherwise enforceable agreement. In addition, the restraints must not be greater than necessary to protect the employer’s legitimate interests, including goodwill, trade secrets or other confidential information. Courts have also developed specific rules for noncompete agreements that apply to physicians.
Rules for physicians
The agreement must not deny the physician access to patient lists for a period of one year prior to the termination of employment and must allow the physician to obtain access to these records if the patient consents and if the physician pays a reasonable fee. The agreement must also specify that a patient has the right to seek treatment from the departing physician or the practice that previously employed him. The second rule specifically applicable to physicians is that the agreement must contain a clause permitting the buy-out of the covenant for a reasonable price or, at the option of either party, for a price determined by an arbitrator. Third, the agreement must specifically allow the physician to continue to render care to specified patients during the course of a serious illness, even after the employment is terminated.
An agreement will be unenforceable unless it contains reasonable geographic restrictions. Generally, these limits should not exceed the area where the physician previously worked. The period in which the noncompete applies must, like the geographic restriction, be reasonable.
An employer who wants to protect its legitimate interests should consult an experienced employment attorney before asking a prospective employee to sign a noncompete agreement.