Veterinary Non Compete Time Limits Explained: Noncompete for Veterinarians
Is a two-year non-compete too long for a veterinary associate? If you are an employee, you will have signed a veterinary associated employment contract. And in that employment contract, 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 would include a non-disparagement clause, a non-solicitation agreement, confidentiality provisions, and then a non-compete. A non-compete essentially prohibits the vet from working within their specialty for a period within a certain geographic radius of where they work. In the contract, 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.
Non Compete Agreement Time Computation
Let’s kind of talk about some of the sneaky things that the employer tries to do in a non-compete. 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 contract 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. 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 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.
New Practice Competition in Agreements
As I said before, you want to aim for one year noncompete 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 a non-compete? 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 a contract. 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, 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.
Veterinary Noncompete Practice 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.
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.
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 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.
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