This April, the New Mexico state legislature passed a bill putting limits on non-compete clauses placed on physicians and other healthcare workers. The goal of this bill, also known as SB 325, is to allow physicians to leave practices without having to leave a community and their patients.
Non-compete clauses are considered standard in many industries, but when it comes to healthcare they can have far-reaching effects. The most common kind of clause used in healthcare contracts prior to this bill stated that providers could not work for a competitor within 50 miles of their original employer for one year, a rule that seriously affected how communities were able to get care.
SB 325 now stipulates that non-competes can only be enforced for the first three years of employment, and employers may require repayment of certain costs related to recruitment, such as loans, signing bonuses and relocation costs.
South Carolina physicians and others, such as dentists and nurses, could certainly benefit from a similar law. This way, families can keep using a doctor they know and trust even if their physician chooses to leave their practice. It keeps doctors and patients together, meaning happier and healthier communities. Meanwhile, an employers’ investment is still protected when it comes to recruiting.
There is, however, one important kicker: The ban doesn’t touch non-solicitation provisions. This means a physician may not be able to solicit employees or customers (patients) away from their former employer.
While New Mexico made steps in the right direction, they didn’t go as far as Alabama, which bans both non-competes and non-solicitations to professions that have specialized education or require a license, such as doctors, lawyers and engineers. Still, the New Mexico bill serves as an example of the kind of compromise that can be made to benefit both employees and employers when it comes to non-compete clauses.
