Non-Competes: What’s Happening to Your Employment Contract?

The ACMS, in collaboration with the Philadelphia County Medical Society, has put forth this blog post as informational-only. The ACMS team is keeping a pulse on the ongoing FTC proposed rule change regarding non-compete clauses and we will continue to update members accordingly. Restrictive covenants have been a hot button issue that the physicians of Allegheny County have been very vocal about over the years. We will continue to work collaboratively with the Pennsylvania Medical Society, and our counterparts in other parts of the state, to ensure we are advocating properly for the physicians in Western Pennsylvania.

Here’s what is happening nationally:

In January, the FTC proposed a new federal rule that would ban all non-compete clauses, except for in a few limited exceptions, and would require companies to rescind any existing non-compete agreements at the time of the rule’s effective compliance date.  The proposed FTC rule would apply to all businesses including healthcare, such as physicians practices and hospitals. Healthcare in some states, like Pennsylvania, have relied heavily on non-compete agreements, and should the proposed rule be finalized, it would have a significant impact for physicians and those healthcare institutions that employ physicians.

The proposed rule was published in the Federal Register, which then triggered a 60-day public comment period which opened Jan 9, 2023. Once a final rule is published, it will become effective 60 days after publication, and compliance is mandatory 180 days after publication. To learn more or to submit a comment:  FTC Non -Compete Comment.

Here’s what is happening in Pennsylvania:

The Commonwealth is one in a minority of states that have no laws on the books to limit the use of restrictive covenants, also known as non-competes.  Back in December, several State House Representatives sought to to re-introduce a bill, formerly (HB 681) in the next legislative session: Barring Non-Compete Agreements in Healthcare Employment.

PAMED policy has always looked for a compromise and sought to protect the interests of both employers and practitioner employees.

To learn more, please check out:  Restrictive Covenants – Why It Should Matter to All Physicians Regardless of Practice Setting.

What’s Next?

ACMS legal counsel will be working on a more detailed blog post that will provide additional, and specific, updates to this proposed rule.

If this issue is one that you are passionate about, you are urged to not only comment through the FTC comment link but you should also reach out to your local representative.

Below are some additional articles that cover how a ban on non-competes would impact the Healthcare profession:

FTC Official Press Release

JDSupra: FTC Proposes Broad Rule Banning Non-Compete Covenants with Physicians and Other Healthcare Workers

Fierce Healthcare: How FTC’s noncompete agreements rule could impact healthcare

We want to hear from our members. If you have comments/concerns on non-competes, please contact us at [email protected].