Q: I recently left an associate position with a chiropractor. I have established roots in this city with my family and do not want to move. However, I signed a non-compete clause in the original contract. I heard that non-compete clauses may not be enforceable. Is this true?
A: This is a very common question on both sides of the equation. The associate wants to break the agreement, and the employer wants to enforce it to the fullest. Many variables exist in state laws regarding non-compete employment clauses so you will want to hire a local attorney familiar with this specific issue to assist you.
Some states do not allow non-compete provisions, while others are very strict on their enforcement. The consequences of not investigating can be financially devastating if you decide to just “wing it.”
While the potential variations are high, you can start your analysis with a couple of basic provisions. The foundation is reasonableness. The geographic boundaries and timelines for the non-compete terminology must be reasonable in scope. The courts will look to find what is necessary to protect the employer’s business, yet not impede the associate chiropractor’s ability to work.
A timeline of two years is generally reasonable. When the restriction goes beyond this, it is difficult for the employer to justify the restrictions for the protection of their business.
The geographic radius is somewhat more variable. Population density appears to be one factor that plays importance in this analysis. Rural area practices tend to have higher geographical zones for protection than more urbanized practices.
Thus, a rural chiropractic practice may have a geographical restriction of 15 miles and be considered reasonable, where an urban practice may only have a restriction of blocks or one to three miles for the same reasonableness. The key is to look at what appears to be the precedent for your region.
Review cases of doctors who have challenged their non-compete clauses to see what the courts have decided.
For example: In a case in Wisconsin, a young doctor agreed to a two-year, 20-mile radius in her contract. Upon leaving the employer chiropractor’s office, she set up a new office, but only went 19.8 miles away, thinking that would satisfy the 20-mile radius.
The employer did not agree and filed for an injunction. The courts agreed with the employer, and he was able to enforce the injunction and shut down the young doctor’s new office. The ensuing financial issues grew for this doctor, since she now had signed contracts for the building, equipment, and utilities, but was not able to practice in the location.
Although an associate may have multiple reasons for breaking the contract clause, such as an employer’s breech of other provisions of the contract, these justifications may not provide a legal basis to violate the non-compete.
There are cases in which the courts have found the original contract provisions to be unreasonable, but instead of disallowing the entire clause, they have created or written restrictions that are reasonable.
Hire a local attorney and take the time necessary to find the correct information regarding your obligations associated with the employment contract you signed before you sign any new leases for buildings and/or equipment.
The non-complete clause is one clause that employer doctors will usually strive to enforce as they believe it will dramatically affect their business. While it may seem expensive to hire an attorney, it will actually save you time and money in the end.
Steven Conway, DC, DACBOH, JD, is a partner in True North Chiropractic Consultants LLC, which provides guidance and ethical solutions to the barriers found in chiropractic practices. He can be contacted by email at firstname.lastname@example.org, or through his Web site at www.truenorthchiropracticconsultants.com.
DISCLAIMER: This column is provided for educational purposes only. The accuracy or timeliness of the information presented is not warranted. The information is not presented as legal advice and no attorney-client relationship is established.