Is a Non-Compete Enforceable Against a Dentist? | Dentist Non Competition Enforceability
Is a non compete enforceable against a dentist? First, there are a handful of states in the United States where non-competes are completely unenforceable. However, you could count them on the one hand. It is very likely if you’re reading this blog, the state that you’re in does acknowledge reasonable and enforceable non-competes. So, I’m going to talk about the states where they are enforceable and what they would consider, whether it’s reasonable or enforceable. In your contract, there will be a section called restrictive covenants. And that section will have a non-solicitation clause, a non-disparagement clause, confidentiality provisions, and then a non compete. And a non compete stops you from working in your specialty for a period within a specific geographic area.
Does the Law Favor the Practice Over Dentists?
What would be considered reasonable for all those things? First, it will likely list what you can’t do. And for the most part, it will say the practice of dentistry. Suppose you have some multi-specialty practice, and you can do different things. Then, you’re only doing one of those things for the employer. I would make certain that the specialty restricted is the one you’re only doing for that employer. That way, you have other options after the contract ends to do other things. For instance, maybe you’re doing orthodontics for practice, and you could still do general dentistry. Maybe it’s a year-long non compete, and you don’t want to move. You could at least do general dentistry for a year and then hop back to do orthodontics after the year ends.
That’s a little bit into what is listed as a specialty in the non compete. As far as how long, most non-competes for a dentist last between one and two years. If it’s longer, I think it would likely be unenforceable. You always want a shorter non compete. If someone is offering you a non compete that’s three years or five years, that’s completely unacceptable and very likely unenforceable.
Regarding the geographic limitation, that’s kind of for the. I guess the negotiation usually turns to, so as these corporate dental practices continue to gobble up these dentist-owned practices, they continue to multiply. In a city, they may have multiple locations. In a big city, there are dozens of locations.
If the non compete states you can’t work within, let’s say, 10 miles of every location of the employer. They have 10 locations in your city. It could effectively knock you out of practice in that city, which I don’t believe would be considered reasonable and would likely be unenforceable. You want to make certain how many locations the non compete attaches to. It’s only the locations you’re working at and then no more than two locations. Suppose it was just 10 to 15 miles from your primary practice location. That would be reasonable and enforceable as well. Let’s say you signed a non compete, and then you think, alright, they’re not going after me, I’m just going to break it anyway. And then, you establish practice within the geographically limited area. What can happen?
How to Enforce a Non-Compete Under an Employment Agreement?
Well, they can sue you. Suppose your contract has an arbitration clause. Then, they could go to arbitration over it. They could go to court and obtain a temporary restraining order or an injunction, which would stop them from working. They could sue you for, one, breaching the contract, and two, the damages associated with you establishing a practice within that area. So, I would not suggest signing an agreement with a non compete and expecting to ignore it. I think that’s a shortsighted way of thinking about contract law and a terrible strategy. I’m surprised how many dentists I speak to say, ” Oh, I spoke to a colleague, ” and they say non competes unenforceable. Unless you’re in the state where they are, I will not sign anything just saying, well, I’ll sign it, but I expect they can’t enforce it down the road.
So, yes, non-competes are very likely enforceable against a dentist if considered reasonable. And for some people, let’s say they have grown up in a city and want to move back. Maybe they’re living there and have kids in school. They just absolutely cannot move, or there’s family there. For whatever reason, having a very demanding non compete can make a great job potentially terrible if you have to move from the city to practice for whatever the limited period is. That’s something you want to negotiate and take a hard look at. It can be a deal-breaker for some people.
Dental Employment Agreements Non Solicit Enforceability
Non-solicitation clauses versus non compete clauses. What’s the difference? What’s the same? And what is typical in a dental employment agreement? Let’s start with non-solicitation clauses. Non-solicitation clauses promise not to solicit patients, employees, or third-party contractors for a specific period after your employment terminates with your dental practice. It looks like you get terminated, or you terminate your employment with the practice and leave. A non-solicitation clause states that for a period, typically one to two years. There’s a prohibition from reaching back out to the practice employees. Or patients you had provided services for while you were an employee. Solicitation, sometimes, is defined in the agreement. It may prohibit directly soliciting or indirectly soliciting.
If you see a language like that, it’s important to see within the employment agreement if it’s defined. If it’s not, it’s customary that you should reach back out to that prospective employer and ask them to define those terms for you. And to me, directly soliciting means reaching out to entice and encourage those employees or patients to come with you. Now, if you’re leaving the practice and a patient or an employee asks, where are you going? You can tell them. That’s not a solicitation. Solicitation is when you are the one who initiates the contact, you’re reaching out. You’re trying to poach those employees and those patients. That’s when you would violate a non-solicitation clause.
Let’s talk about general advertisements concerning a non-solicitation clause. Sometimes, this is directly outlined in the employment agreement. And it’s always best that you start there first. Look at the clause itself.
But if it just says you cannot solicit, normally, general advertising is not considered a solicitation. So, that’s the billboard, social media commercials, things like that, not a solicitation. You would only be in danger of violating a non-solicitation clause when you reach out directly to those patients and employees. What this looks like is maybe you are sending patient lists. You’re getting their addresses. You’re sending letters directly to them, or you’re seeking them out directly. Things like that would be a solicitation.
Consequences of Violating a Non-Solicitation Agreement
What are the consequences of a non-solicitation clause? Sometimes there are liquidated damages. You may have to pay tens of thousands of dollars if you’re found in violation. And then, normally, I would say there is equitable relief. And what that looks like is if the practice feels like you violate a non-solicitation clause, they can bring it before a judge.
And what they would do is they would declare an injunction. They may sign something like a restraining order simply stating that you cannot solicit those patients. That’s typically what a non-solicitation clause looks like. They’re standard. Now, let’s look at and talk about what is a non compete clause. A non compete clause is like a non-solicitation clause because it’s a promise not to do something. You’re promising not to compete with practice. Also, a non compete clause is typically for the same period as the non-solicitation clause. So anywhere between six months to two years. The non compete clause is also going to have a restricted area. It could be miles, it could be city blocks, it could be counties, or it could be municipalities. It just depends on what state you’re in, and are you in rural or are you in the city?
Other Blogs of Interest
- In a Dental Practice, is 10 Miles a Reasonable Non Compete for a Dentist?
- Is a 2 Year Non Compete Too Long for a Dentist?
Dentist Non-Compete Restricted Offices Explained | Restrictive Dental Practice
How many locations should a dental non-compete apply to? Before we get into this specific question, let’s back up and talk about what is a non-compete clause. Non-compete clauses are standard in just about any dental employment agreement. Even if you’re with private practice or an extensive corporate practice, there’s typically always a non-compete. Now, they might go by a couple of different names. It might specifically say a non-compete clause. However, it may say restrictive covenant, a promise not to do something. And then, it will list the language a restrictive covenant would typically include in a non compete clause. And sometimes, they don’t go by any name. They sneak them in there. So, you want to ensure that you read over your employment agreement carefully. It could affect your career after your employment ends with whatever practice you’re signing this agreement with.
Can Management Restrict an Employee Dentist?
Let’s talk about what is in a typical non-compete clause. Usually, there are two components to a non-compete clause. One, your period of restriction from competing. Now, this can typically be anywhere from six months to two years. It rarely goes over two. And I would say most of the time I see is around two years. Sometimes, I can get negotiated down to one year. Still, usually, I would say the average is anywhere from six months to two years. Now, we have our timeframe. It is how long your restriction is from competing after your employment agreement termination. You might terminate it, the practice may terminate it, but your employment has ended. And this is when the non-compete clause would then become valid. Okay, so we’ve got the time for how long.
Restriction Depending on Location
The other component of it is your restrictions. Again, this depends on where you are in the country. Suppose you’re in New York, you’re not going to use miles. Typically, New York city’s non-compete clause will stay in city blocks. That is because if you even go one mile, you’ll knock out most of the city. So, that’s not reasonable. If you’re in a rural area, a tiny town, sometimes the non-compete clause can go anywhere from 10 to 20 miles. And then, if you’re in a regular city setting, such as Phoenix, the mileage goes typically a little less.
It can be anywhere from 3, 5, or 10. I would say anything over 10 would likely be unreasonable. That would be something that you would want to negotiate down. So, we have our timeframe. You must know your restriction’s length. Then, you need to know the subject of your restriction. And this is where we’re talking about the specific questions today. How many locations should that restricted area apply to? It is easy. If it’s a private practice, they only have one location where your restriction applies. Let’s say three miles from the practice, which we’ll use as an example. Well, that’s great. You know that you cannot practice dentistry within three miles of that location. That’s easy. But likely, they get a little bit more complicated than that.
Multiple Locations Non-Compete Is a Red Flag
Let’s say it’s a private practice or a small corporation, and they have multiple locations. Sometimes, the language they’ll use in the non-compete restricts that mileage. So, three miles from any location where you provide practice ABC services. The complicated part is when it uses the word “any location you provide services for.” Suppose you cover a dentist on vacation, so you work a few days. Maybe a week at another location for the practice. That three-mile restriction now applies to that second location. So, you want to be careful when reading your employment agreement. If you see anything that says any site you provide services at, that should be a red flag to think about it. So, we talked about the language where they say any location you provide services for.
A green flag will be if you see where they say your restriction applies by the three-mile restriction from your primary place where you provide services, which is a little clearer.
Suppose you only typically work at one location. In that case, you provide 90% of your services at your primary site alone. Therefore, your only restriction is three miles from one location. That’s great. It’s easy to follow, won’t change in the future, and you’ll know if you violate it. Another sort of red flag that you want to be aware of is whether it’s a practice with multiple locations or a corporation with many locations. Sometimes, employment agreements will have a language that states your restriction from any location that a corporation ABC owns. So, this gets a little tricky. Again, let me restate this. It gets tricky to say any location from a corporation or practice ABC. Your restriction could be that three-mile restriction could attach to hundreds of locations you’ve never been to.
New Practice Restrictions
It isn’t easy because this can knock out a vast region. Let’s use Phoenix as an example. It could knock out the whole city if they have multiple locations around the city, even if you’re not providing services for them. You want to make sure you’re reading the contract very carefully. And suppose the practice is expanding in the future. In that case, they could add 5, 10 locations, and you’ll have that three-mile radius attached to any of those locations too. So, to be more concise, you want to know where you will provide services. That’s very important. It should outline in your employment agreement. Then the non-compete clause should only attach to your primary location. You should advocate for this if it’s from any location you provide services.
You need to remember that in the future, if you cover for a dentist who’s on vacation, your non-compete clause now attaches to that office that you only worked for for a week. And it’s going to knock out that area. The other thing is if it says any location that the corporation or practice owns. That’s a big red flag, too, because you don’t know if they’re expanding in the future. How many locations? It’s hard to tell. When you sign the agreement, you don’t know where your restriction comes from.
In conclusion, how many locations? I think it should be only from your primary location where you are providing services. The primary location where you have built up a patient base and relationships with your patients. You want to be stopped from going across the street and those patients going there that would be competing.
Dental Practice Employee Non-Compete Length
And then two other things you need to consider regarding the non compete. First the listed location. As you know, big conglomerates are gobbling up these dentist-owned practices. And so, you could be in a city with eight locations for your employer. You want to make sure that it says explicitly your location or maybe the two locations where you spend most of your time. You don’t want to sign a non-compete stating that it attaches to every employer-owned location, even if you have never worked in those locations. It is especially true for dentistry.
If you’re in private practice, dentist-owned, and they only have one location, then it’s simple. It’s just going to be that location and nowhere else. But, if you’re in a big city and they own a bunch of locations, you want to make sure it states explicitly your location, not all the locations. And then also, if you’re in a specialty, you don’t want to get stuck from being unable to do any dentistry. You want it to be specific to say what you’re doing for that employer. That way, if you can do other things for the period, like, let’s say you can’t move because of kids or family reasons, you could have an alternative for a year. That might not be ideal, but you could do that for a year and then return to your normal specialty.
Understanding a Dental Non-Compete Clause (Dentist Long-Term Impact)
Competition in the dentistry field keeps getting stronger by the day. As a practitioner, you’ve undoubtedly heard about dental non-compete agreements. But have you ever sought to find out what they’re all about and how they affect you?
Thanks to the growth of multi-location, low-cost dental facilities. Smaller practices that provide procedures such as teeth whitening may find it challenging to stay profitable. For this reason, your employer may insert a non-compete clause in your employment contract to protect your business from potential competition and offset the professional benefits offered.
Suppose you’re a dentist about to take on a new job and the employment contract has a non-compete clause. In that case, it’s best to work with an experienced dental contract lawyer. It protects your rights once you start the new job and decide to move on afterward.
What Are the Basics of Dental Non-Compete Agreements?
A dental non-compete agreement is a clause in the employment contract. It prohibits the restricted party (you) from providing services similar to what the non-restricted party (your employer) provides. Although these clauses are prevalent in employment contracts, they’re also common in contracts to purchase existing dental practices.
A non-compete clause may restrict your actions by actions, clients, or location. For instance, it may prevent you from opening a practice within five miles of your employer or prohibit you from soliciting patients from your employer’s client list.
Non-compete clauses are particularly suited for specialized dental practices. They prevent specialists from joining a dental office and working for only a short time before leaving to open a new office using the skills gained at the initial practice. It also keeps dentists from leaving a dental practice and leaving with all the current office staff and specialists.
Who Does a Dental Non-Compete Clause Benefit?
Dental non compete clauses typically benefit the dentist who stays in the practice when another dentist leaves. When these agreements get enforced, the remaining dentists benefit in the following ways:
- They won’t lose customers and income if a dentist in their office leaves and opens a facility nearby. That’s particularly true for specialty facilities that may not have many patients to serve within a locality.
- They don’t have to worry about losing their office staff since they can’t get poached by the dentist who decides to leave and open a new facility.
- They’ll know whoever joins their facility does so to work and enhance their skills and job experience rather than potentially stealing their staff and clients.
How Long Do Dental Non-Compete Agreements Last?
Although non-competition clauses in employment contracts are often considered trade restraints, the agreements are enforced based on reason. Thus, the agreements only get enforced for as long as it’s reasonable.
So, working with a dental contract attorney is always a good idea since it helps you determine the specific non-compete laws for your state. Generally, a non compete agreement will be reasonable and enforceable if:
- It isn’t more than what’s required to protect the employer.
- It doesn’t inflict untold hardship on either the employer or dentist.
- The restraint doesn’t affect the public.
Exceptions to Non-Compete Agreements
Dental non-compete agreements are not applicable everywhere. In states such as Ohio, a dental non-compete clause doesn’t apply if a practitioner’s expertise is essential to the general public’s well-being. Nonetheless, it’s still enforceable if it partially protects the employer’s legitimate interests.
A dental contract attorney can help you review a non-compete agreement before appending your signature. This way, you’ll avoid legal problems later on, especially when you decide to open a dental facility. There is also a need to consider potential dental malpractice issues.
Signing a Non-Compete Clause: Things to Consider
When reviewing your employment contract and the non-compete clause therein, you should consider the following:
The Geographical Location Covered
A big city can support more dental practices in a smaller area than rural towns. Suppose you get employed in a specialty dental clinic. Then, your employer will also likely enforce a non-compete clause in a larger area than a general dental facility can.
The Agreement’s Time-Frame
It’s best to evaluate how long the agreement will apply and determine its impact on your career progression. For instance, will the agreement bar you from pursuing your dreams if you’ve always wanted to work in your hometown after getting employed in a dental facility operating within the same town?
Circumstances that Negate the Agreement
Will the non-compete clause apply if your employer sells their practice, relocates, or closes the shop? Do such circumstances negate the non-competition clause in your employment contract?
Working for a Competing Dental Facility
Dentists who decide to leave a facility don’t always open their practices. Many join forces with a competing dental facility, often within the same locality. For this reason, it’s best to ensure your non-compete agreement addresses such circumstances.
What does the non-compete agreement stipulate if you decide to join a facility that competes directly with your employer rather than opening your facility? Typically, employers don’t feel too happy when employees leave to join competing dental practices. Ensuring that such scenarios get captured in your employment contract’s non-compete clause helps you avoid legal issues.
Why You Need a Dental Contract Lawyer
Contracts are an obligatory aspect of nearly all legal transactions, including employment. A well-drafted dental employment contract containing the necessary non-compete clauses can help to highlight the responsibilities of all the affected parties and protect their legal rights. Nonetheless, reviewing an employment contract is a detailed experience, given your limited legal expertise.
It’s a no-brainer that you should only enter a contract after it gets reviewed by a skilled dental contract lawyer. At Chelle Law, we have hands-on experience drafting and reviewing employment contracts in all medical specialties. In particular, dentists getting into employment can benefit from our thorough review of dental non-compete agreements.
We understand just how binding a non-compete agreement is. Thus we’re committed to helping you make an informed decision before signing an employment contract that will affect your career in the long run. Contact us today for assistance in contract reviews or learn more about our services.
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