Is a Non Compete Enforceable Against a Veterinarian (ETHICAL?)

Are non-competes enforceable against veterinarians? Employers include non-compete provisions and agreements to protect their interests once the veterinarian leaves employment. This can affect the veterinarian in two main ways. One, there are time restrictions, and two, there are location restrictions. When an agreement ends, the veterinarian moves on from this practice, the non-compete would impose restrictions on when and how that veterinarian can practice if they remain usually within the area. For instance, a typical non-compete provision will have a restrictive period time, usually between one to three years. Additionally, there’s a location restriction where the veterinarian is typically prohibited from performing services within a certain mileage radius from the practice. This can vary widely depending on what part of the country the veterinarian lives in. For instance, if there’s a very urban area, then the location would typically be smaller in scope, maybe 1, 2, 3, a few miles along those lines.

If you’re talking about a larger rural area, then you’re also going to have a larger mileage radius imposed as part of the non-compete restriction. It’s not unusual to see 10 to 20, to even 30 miles, depending on the location and the nature of the services involved. So, to answer the question, yes, non-competes are generally enforceable against veterinarians. There are some states that do not typically uphold non-compete restrictions, but the majority do. Every state is a little different in how its laws treat non-compete and what is considered reasonable. Non-compete restrictions are the main point of negotiation with any contract.

It’s important to understand the details and how they would apply to a specific veterinarian situation. For instance, going back to the discussion of location, there are so many ways that can be detailed in a non-compete restriction. Is the mileage radius and location area tied to the veterinarian’s primary practice location? Is it tied to all locations that the practice owns or may own in the future, especially if it’s a practice owned by a large corporation that’s buying up smaller clinics? Is it tied to any location where the veterinarian would perform services under?

Even if there is a primary practice location, there are multiple locations across the city. And the veterinarian happens to fill in on a temporary basis, for just a couple of days a year, would that trigger that non-compete restriction where the agreement ends, and therefore a much larger portion of the area be unavailable to the veterinarian to practice upon the termination of the agreement? There are so many different factors to consider, and it’s very important to investigate all the details. We’d be happy to answer any questions that you have and look into any veterinarian situation specifically and provide guidance.

Enforceable Veterinary Non Compete Locations

How many locations should a veterinarian’s non-compete apply to? Let’s first start with what is a non-compete. There are normally two components to a non-compete clause. It restricts you after your employment has terminated with your current practice, so you were restricted from providing veterinary services, or if you’re specialized in any of those specialty services for a period within a specific restricted area, normally they’re for one to three years. And then today what we’re discussing is how many locations should that restricted area apply to? Normally, the restricted area can really be anywhere from one mile all the way up to 20. It just really depends on where you live in the United States.

If you’re in a city area, typically it’s going to be less miles. If you’re in a rural area, normally that restricted area is going to be larger. So, we’ve got our timeframe, we’ve got our restricted area. And now, we need to know a very important question: how many locations from your practice is that restricted area attached to? If you’re a small practice and they only have one location, that’s easy to figure out. It’s only going to attach to the one location that you’re providing services for. It gets a little bit more complicated when there are multiple locations, multiple clinics or if it’s a corporate veterinary practice, which is very common nowadays. Other topics of interest include:

• How Many Locations Should a Veterinary Non Compete Apply To?
• Veterinary Associate Non Compete vs Non Solicit

So, if there are multiple locations owned by this practice, you have to be careful and read your non-compete clause very carefully. Sometimes there’s a language that states that you’re restricted only from your primary location where you give services within 12 months of termination of that agreement, that’s kind of like standard language. It gets a little bit trickier when there’s language in the agreement that states “any location that you provide services at”. Why does this matter if it says any location? Well, if you fill in for a vet who’s on vacation, boom, that non-compete restricted area now attaches. There’s no sort of language in there that says for how long you have to be giving services at that location, it just says any services and you provide it, then boom, that location now has a restricted area around it from competing.

So, this can really get complicated if you move around and you’re here or there, but you do have one primary location. Another sort of scenario that I see a lot with clients, and this pertains more to more of corporate practices. It will say if corporation ABC, let’s just pretend that’s the name of it. The non-compete clause will say that the restricted area attaches to any location owned by corporation ABC. Now, this really gets complicated. When you sign that document, the corporation may have 10 locations. Right off the bat, that’s overly restrictive. But if they buy up 20 or 30 more practices within the United States or the state alone, now you have a huge area that you are restricted from practicing.

Would this be enforceable? Depends on what state you’re in, but it would be unreasonable. And even if it would not be enforceable, you don’t want to get into a situation where you have to litigate that and spend money paying attorneys to fight out the terms of your agreement that you signed. So, to prevent all of this from happening, I always recommend reading your agreement very carefully. When you get to the restrictive covenants, that’s your non-compete clause would be included in there, read it carefully and see what locations the non-compete attached to. It really should only attach to your primary location. You really want to advocate and push for that because if it starts attaching to any place you provide services for, you need to be very careful if you decide to cover for a vet knowing that now you are restricted from that area, from that location. And the other thing you really want to look for is if it’s any practice or any location that the practice owns. You want to be careful there because you don’t even know what the future will hold for that corporation, and how many practices are going to buy up in the future. You could really be limiting yourself, so you want to read your employment agreement carefully and look for a language that’s only restricting your primary location.

Enforce a Mileage Restriction Against an Associate

Is 10 miles a reasonable non-compete geographic restriction? If you are a veterinary associate and you are an employee or have potentially been bought out by these enormous veterinary conglomerates gobbling up all the veterinarian-owned practices lately, you are likely going to have non-compete in your contract. A non-compete simply says you cannot work within your specialty for a set period within a certain geographic radius from where you work. Let’s kind of break down the elements of that. One, non-competes are enforceable in nearly every state. There are a handful of states where they are completely unenforceable. However, you should go into signing the contract, assuming it’s going to be enforceable.

I find that most providers, for some reason, think that all non-competes are completely unenforceable, and yes, maybe if it’s unreasonable, but most states find that a reasonable non-compete would be considered enforceable. The first thing you need to identify is whether your state recognizes non-competes for providers or not. Okay, let’s just assume, yes, you’re in a state where it’s enforceable. The non-compete is going to state you cannot practice in your specialty. You want to make sure if you’re a specialist and you do have multiple options that are specific to the task that you’re doing for that employer. Now, if you’re a general vet and it says you cannot act as a general veterinarian, okay. But maybe if you’re in emergency medicine or urgent care or an animal hospital or something like that, keep it specific to what you are doing.

And then it will be for somewhere between one to two years. You obviously want to keep it less. One year would be considered reasonable pretty much anywhere. Sometimes, they’ll try to push it out to two, sometimes three years. I do not think three is a reasonable amount. So, you would want to keep it down to one year at most. And then finally, what we’re focusing on today is the geographic restriction. So, is 10 miles of reasonable non-compete geographic restriction? I would say, yes, it is. Now, the setting is important. If you’re in an urban environment, 10 miles can knock out hundreds of opportunities. Whereas if you’re in a rural environment, there may be no other place to compete against within 10 miles.

Depending upon where you are, if you’re in a bigger city and there are dozens to hundreds of different practices, you may be able to work after the contract terminates, then a smaller radius would be considered more reasonable. Now, there will be employers that try to really push the limits of the geographic restriction and they’ll do it in several ways. One, they could just really try to stretch out the mileage 30, 50 miles from your practice location. That would not be considered reasonable in most places. Two, if they are a vet clinic that has multiple locations within a city, they may say it attaches to every location that they own. If you’re not working at those other locations, it is not fair if that is included in your non-compete. You want to get that removed and limit it to the places that you just work.

Does it Count if Emergency Medicine?

Now, what if you work at multiple locations? Well, one or two locations, okay, it could attach to both of those, but an employer may try to be sneaky, and it states any place you’ve worked over the last 12 months it attaches to, and maybe they have four or five locations. And so, they might just try to place you at one location one day per year to attach the non-compete to that. You need to make certain that they are not allowed to do that. And the easiest way to do that is just to state in the contract that if there are any locations that the employer wants you to work at beyond whatever the initial location was, there must be a mutual agreement. When is the right time to negotiate a non-compete? Obviously, before you sign the contract. You have no leverage after the fact if you sign an agreement and then come back to the employer.

So, you want to make certain that they understand that for whatever reason, the non-compete is not going to work for you. For people that live in a city, they have kids that go to school, they might have family in the area, and they absolutely cannot move after the contract is terminated, this could be the biggest problem with any kind of employment contract. Well, there are others who just move to a city for a specific job and absolutely do not care because they don’t plan on staying there if the job doesn’t work out. You need to prioritize what’s most important to you, but the non-compete, certainly for a lot of my clients, is the number one thing. And you need to make it clear to the employer. Look, I’m not going to accept this the way it’s written. If you want me to work for you, we’re going to have to come to compromise and some will say, okay, and then others will say, no, take it or leave it. And then it’s up to you to decide whether it’s something you want to leave or not. So, is 10 miles a reasonable non-compete for a vet? For the most part, yes, it would be considered reasonable, but you must take into account all the other factors I just talked about. 

Breaking an Agreement with the Practice

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

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 contract without notice if any egregious acts happen, and typically, they are listed on the contract themselves. This might be being convicted of a felony losing your license to practice. 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 contract also typically outlines how to 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. That is the proper way to save yourself from liability to properly terminate a contract. But when you’re deciding to do this or break a contract, you also want to keep in mind, are there any repercussions? Meaning, do you have to pay back any signing bonuses, any relocation expenses? Typically, those have a payback provision or a forgiveness period. And if you are to break or terminate the contract within that time, you must repay those. So, that is something you want to look at in your contract and keep that in mind whenever you’re deciding to break or terminate the contract.

Consultation with Chelle Law

If you would like more information about employee noncompete agreements, how they operate, the law that covers noncompete, 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.