Veterinary Non Compete Clause | Non Competition for Veterinarians

You may not realize about veterinarians that it takes a full four years of post-graduate work to attain their qualifications. Also, the average acceptance rate into a veterinarian school is just 11.7%. Thus, the value of a vet is nearly incalculable. They provide a service that we all need, and their wealth of knowledge and experience is something that cannot be duplicated. Many clinics that hire veterinarians now require them to sign a non-compete agreement when they first take the job. 

What is a Veterinary Non-Compete Agreement? 

The Treasury Department defines a non-compete agreement in the following way: 

Non-compete agreements are contracts between workers and firms that delay employees’ ability to work for competing firms. Employers use these agreements for a variety of reasons: they can protect trade secrets, reduce labor turnover, impose costs on competing firms, and improve employer leverage in future negotiations with workers.

Employers gain a lot of upside from requiring their employees to sign non-compete forms before they begin working there. This can help them lock down workers who might have jumped ship for other opportunities. The practice is so widespread in the industry that it generally works in favor of all animal healthcare industry participants equally. They are all rushing to secure their workforce. Non-compete agreements help make sure that at least some of the workforce is locked in place where they are so there isn’t so much shuffling around all the time. Non-competes are, many times, justified by the employer in return to the professional benefits offered.

What Can and Cannot be Included in a Non-Compete Agreement? 

Veterinarians are encouraged to read over all pre-employment forms carefully to know what they agree to. The non-compete forms that they are provided are no exception. They should probably spend extra time with these forms to ensure that they truly agree to the presented information. 

Here are a few things that may be included in a non-compete agreement: 

• Timing Elements – The form may specify the amount of time that a veterinarian is not permitted to go to work for a competitor. Generally speaking, the specified amount of time tends to range between two to five years. During that time, the veterinarian does not necessarily have to continue to work for the same employer, but they are not allowed to work for a competitor. That leaves most in the position of needing to continue to work for the same employer for that time. 
• Geographic Location – Another stipulation that you may see in your non-compete agreement is a geographic restriction on where you may work. The form may indicate that an employee is not permitted to work within a certain mile radius for a competitor. Additionally, it may specify certain states that the employee is not permitted to work for a competitor.
• Type of Employment – Veterinarians have a very specialized job, and companies that hire them want to make sure they don’t lose out on the talent they have acquired. They may include a rider in the non-compete agreement that clarifies that a vet cannot take on other veterinarian jobs while working for the company that they are at right now. If this seems kind of harsh to you, please understand that companies feel that they must do this to protect the asset (the vet) that they have. If that were not the case, people might often jump around from job to job to guarantee prompt service. 

Some elements cross the line and are NOT permitted in a non-compete agreement, including: 

• Limitless Time Restrictions – It is not fair or reasonable to restrict someone from working elsewhere for decades. There have to be reasonable time restrictions included in the non-compete agreement. Generally speaking, these restrictions cannot go beyond five years at most. The longer the time period listed, the more hesitant a potential employee may be to sign the forms anyway. 
• Vague Geographic Boundaries – The boundaries included in a non-compete agreement need to be specific and measurable. It is not reasonable to expect someone to never go to another competitor, no matter where that competition is anywhere in the world. Thus, the boundaries must be set reasonably. 
• Unreasonable Activity Restrictions – Your employer does not get to dictate your life to you forever. You retain many of your freedoms even when you go to work for the strictest of employers. Thus, you should look out for anything in your contract that seems overly burdensome on your freedom to do as you please in terms of your career. 

Lawyer Review of a Non-Compete Practice Agreement

Non-compete agreements can be rather complex, and they are certainly relevant to your work life moving forward. Some people prefer to take their veterinary associate agreements to a lawyer to have them review said agreement before they sign on the dotted line. Doing so will likely give the signer some peace of mind, and it will certainly make it less intimidating to try to figure out if the documents that you just signed are in your best interest or not. Beyond a non-compete a veterinary associate also must determine what their malpractice insurance responsibilities are if the contract is terminated. What type of professional liability policy did you have?

If you would like more information about non-compete agreements, how they operate, and what you should do if you are asked to sign one, please contact us today! 

Additional Information: Is a Two-Year Non-Compete Too Long?

Is a two-year noncompete too long for a veterinary associate? If you are an employee, you will have signed an employment contract agreement. And in that employment contract agreement, it’s going to contain restrictive covenants. And restrictive covenants are just things that you can’t do either during or after the contract is terminated. Common restrictive covenants in veterinary practice employment contract would include a non-disparagement clause, a non-solicitation agreement, confidentiality provisions, and then a non-compete. A noncompete essentially prohibits the vet from working within their specialty for a period within a certain geographic radius of where they work. In the contract agreement, let’s just say your general vet, it’ll say the vet can’t practice as a general veterinarian for one year within 15 miles of their primary practice location.

What the Veterinarian Employee Noncompete Agreements Says

Let’s kind of talk about some of the sneaky things that the employer tries to do in a noncompete. First, vets can do multiple things. They can do emergency medicine, they could do urgent care, and they could do general vet issues. You want to make sure that the specialty written into the contracts is just what you’re doing for that employer. If you’re doing emergency medicine, you don’t want to be prohibited from being a general vet after the contract terminates. You want as many options as possible when the contract ends, so you don’t have to move. Prohibiting things that you didn’t even do for that employer doesn’t make a lot of sense to me. So, you want to make certain that it doesn’t say you can’t do any kind of veterinary medicine. It needs to be specific to what you were doing for that employer.

Now, for some specialists, if you’re a radiologist or something like that, there’s going to be no way around that. But it needs to state what you’re specifically doing for that employer, nothing more. As far as time, usually, most non-competes for vets are going to be somewhere between one to two years. If you have a non-compete that’s three years or five years, that is, one, probably not enforceable, and then two, completely unreasonable as well. Somewhere between one to two years is the ideal range. Obviously, one year would be better than two.

But it’s not uncommon to see both of those lengths in the contract. So, is two years too long for a non-compete? Ideally, as I said before, you would want one, but two years, I think could be considered reasonable in some states.

Geographic Location where you can get employment for Veterinary Practice

Now, let’s talk about the geographic restriction. Maybe if you’re working in two locations for who knows, 5 to 15 miles, somewhere like that, is probably a decent range. Now, as these corporate-owned veterinary practices continue to gobble up all these veterinarian-owned animal care practices, you need to make certain that the geographic restriction only attaches to the places that you are working. Let’s say you’re in a big city and a corporate-owned vet practice owns 10 clinics in that city, well, if you have a 10-mile non-compete from 10 clinics, that could essentially knock you out of a city and you’d be forced to move.

Whereas if it was just 10 miles from where you worked, it would be more reasonable. It might be annoying to have to go outside of that radius for however long non-compete lasts. However, you’ll at least have other opportunities. So, you need to make certain, if you are with a big corporate-owned practice, that the non-compete only applies to the places that you are working or your primary practice locations, no more than two. It should be one or two at the most. There are some contracts that don’t just do a radius. They’ll also do like counties. You can’t work in this county or any contiguous counties. Any counties that touch your county would be unreasonable. Now, it’s going to depend upon the setting as well. If you’re in an urban environment in a big city, 10 miles could knock out hundreds of opportunities.

Whereas if you’re in a rural community, there may be no other opportunities within 10 miles of the clinic that you work at. So, that must be considered. The larger the city, the more opportunities, and the smaller the radius, would be considered more reasonable. Why does it matter to most people? Well, let’s say you grew up in a town, you have kids that go to school there, you have family in town, and you have deep ties to a community, the last thing that you would want if the contract is terminated is for you to have to move, or maybe it’s just impossible, there’s no chance that I can move if the contract terminates, well, it’s very important to focus on the geographic limitation and how many places it attaches to in that scenario. And then also, how long it is as well.

Negotiation with the Employer about Non-Compete in the Agreement

As I said before, you want to aim for one year and not two. That way, you have the shortest amount of time to be inconvenienced if you must work outside of whatever the restriction is for that one-year period. Now, how do you negotiate employee noncompete agreements? Well, you just must ask for what you want. If they come at you and say, it’s two years and 50 miles from your primary practice location, that’s likely unenforceable, certainly unreasonable. So, you need to come back and say, look, I want a one-year non-compete with a 10-mile restriction from the two places where I generate most of my charges or something like that. Now, some of these big corporate over vet practices are going to say, oh, I’m sorry, we can’t change the non-compete. Well, they can change it, they just don’t want to.

So, you’re going to have to make the decision if they do say take it or leave it, whether you take it or leave it or not. For some people, it’s the absolute most important thing when we negotiate contracts. For others, it doesn’t matter at all. Maybe they move to the community for a job, but they do not have any plans of staying there if the job ends, then you want to focus your attention when you’re negotiating on more important things to you, and you wouldn’t even mention the non-compete. It really depends upon the vet where they’re at in their life, whether they have ties to the community, to determine how much capital you want to put into negotiating the terms of the non-compete. There are states where non-competes are completely unenforceable for providers.

There’s only a handful of them. So, it’s very likely you’re in a state where non-competes are enforceable. I don’t know why, but I get comments all the time that, hey, I talked to a colleague, and they said non-competes are completely unenforceable everywhere. And for vets, that’s just not true. They are, in most states, if they’re reasonable. Whether something is reasonable or not, probably varies upon who’s viewing it. But I would consider never signing a contract agreement, just expecting something not to be enforceable, and always try to negotiate terms that are better for you. So, that’s a little breakdown of how long a non-compete should be and kind of what’s reasonable.

Can You Break a Veterinarian Contract?

Can veterinarians or a veterinary associate, employed in animal care practice, break their employment contract? And the short answer is yes, they can. However, if this means that veterinarians or the employee, in general, are breaching the employment contract and not adhering to the terms of the employment contract, then they would likely open themselves up to liability which includes litigation costs and arbitration as set in the employment agreement. The employer can ask for damages that might include recruitment costs for new veterinarians for the practice, they may ask for administrative fees, credentialing fees, and the list kind of goes on from there because of the resources they spent to find a new employee. So, it’s never a good idea for veterinarians employed in a veterinary practice to break employee agreements. We never advise our veterinarians or a veterinary associate to breach their employment contracts. The best way to break or terminate the contract is by doing it exactly how it’s outlined in the contract agreement. Typically, there is a clause that’s called a termination clause and there are normally three ways to terminate a contract agreement.

The first way is that both parties, the employer and employee, mutually agree to terminate the contract and go their separate ways. However, this is kind of rare and we don’t see it happen a lot. The second way is for-cause termination. And this is typically weighted more towards the employer. The employer can terminate the veterinary employment contract without notice if any egregious acts happen, and typically, they are listed on the veterinary employment agreements themselves. This might be violating a law or being convicted of a felony and losing your license to practice animal care. And again, the list just goes on from there. Then the last way to terminate a contract would be for no cause and a no-cause termination is typically outlined in the employment agreement and you just must give the other party 60 to 90 days’ notice, and then the contract is terminated and then you can go your separate ways.

The veterinarian’s employment contract also typically outlines how veterinarians or a veterinary associate will give that proper notice. It normally has an address, and you would either mail in a letter, hand-deliver it and in some rare instances, you’re allowed to email it. We also like to encourage our clients to give notice in multiple ways, as long as the law allows for it. That is the proper way to save the employee from liability is to properly terminate a contract, so both parties can save on resources by avoiding litigation as permitted by the law. But when you’re deciding to do this or break the veterinary employment agreements, you also want to keep in mind, are there any repercussions? Meaning, do you have to pay back any signing bonuses, or any relocation expenses so you are near the job site? Typically, those have a payback provision or a forgiveness period. And if you are to break or terminate the veterinary contract within that time, you must repay those. So, that is something you want to look at in your veterinary contract, and keep that in mind whenever you’re deciding to break or terminate the veterinary contract agreements.

And then lastly, most veterinary employment agreements have a provision with restrictive covenants. Restrictive covenants include your non-compete clauses and non-solicit clause to clients and employees in the practice of animal care. In the non-compete clauses, you want to make sure that you’re not practicing animal care within the restricted area of practice during your restricted time as determined by the noncompete clauses in your veterinary employment agreement. Typically, you’re not allowed to solicit clients, which means veterinarians leaving the job can’t ask clients or entice them to come with the veterinarian to a new job location, and the same for employees at your clinic or practice. In summary, you never want to breach a contract. If you would like out of it, you need to terminate it properly and give proper notice to your employer. And then you also need to remember, are there any repercussions to look for? Sort of anything you’ll need to pay back like signing bonuses, or relocation bonuses, and then look at those restrictive covenants to make sure you’re not in violation of any of them.

What is a Non-Compete Agreement? 

The Treasury Department defines a non-compete agreement in the following way: 

Non-compete agreements are contracts between workers and firms that delay employees’ ability to work for competing firms. Employers use these agreements for a variety of reasons: they can protect trade secrets, reduce labor turnover, impose costs on competing firms, and improve employer leverage in future negotiations with workers.

Employers gain a lot of upside value from requiring their employees to sign non-compete forms before they begin working there. This can help them lock down workers who might have jumped from job to job for other opportunities. The practice is so widespread in the animal care industry that it generally works in favor of all animal healthcare industry participants equally. They are all rushing to secure their veterinary practice workforces, such as veterinarians or a veterinary associate. Non-compete agreements help make sure that at least some of the veterinary practice workforce is locked in place where they are so there isn’t so much shuffling veterinarians around all the time. Non-competes are many times, justified by the employer in return for the professional benefits offered.

Lawyer Review of a Non-Compete Agreement

Veterinary practice noncompete clauses can be rather complex for the employee, and they are certainly relevant to your work life moving forward. Some people prefer to take their veterinary practice agreements to a lawyer to have them review said veterinary agreement before they sign on the dotted line. Doing so will likely give the signer some peace of mind, and it will certainly make it less intimidating to try to figure out if the documents that you just signed are in your best interest or not. Beyond the non-compete clauses, veterinarians also must determine what their malpractice insurance responsibilities are if the veterinarian’s contract is terminated. What type of professional liability policy did you have?

If you would like more information about employee noncompete agreement, how they operate, the law that covers noncompetes, and what you should do if a company gives you an offer and you are asked to sign one, please contact us today! We will be more than happy to discuss the content of clauses of the agreements veterinary practice, average job wage, a different approach in negotiating the veterinarian’s contracts clauses, and other resources.

Consultation with Chelle Law

If you would like more information about employee noncompete agreements, how they operate, the law that covers noncompetes, and what you should do if a company gives you an offer and you are asked to sign one, please contact us today! We will be more than happy to discuss the content of clauses of the agreements veterinary practice, average job wage, a different approach in negotiating the veterinarian’s contracts clauses, and other resources.