Restrictive covenant

[Bluebonnet]

I have a contract for a specialty with a group and the restrictive covenant states non-compete in all surrounding county areas for 2 years post separation with a double 6 figure payoff. I feel this is excessive given I will only be working out of one site in one county. Pushed back requesting restrictive covenant be removed in entirety and this probably will not happen. Would appreciate physician experiences on how they dealt with restrictive covenant negotiation.

[Zaphod]

Bluebonnet wrote:

I have a contract for a specialty with a group and the restrictive covenant states non-compete in all surrounding county areas for 2 years post separation with a double 6 figure payoff. I feel this is excessive given I will only be working out of one site in one county. Pushed back requesting restrictive covenant be removed in entirety and this probably will not happen. Would appreciate physician experiences on how they dealt with restrictive covenant negotiation.

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I wouldnt work with a group with such a crazy covenant. Doesnt even sound like its something that a court would take seriously and you would likely win in court, however, you obviously dont ever want it to come to that so best to avoid the possibility.

[hightower]

Yeah, the 2 years thing seems absurd.  Ours is a 1 year non-compete and I hate the thought of that even. I signed my contract fresh out of residency and didn't know any better.  It can be very tough to get them to remove that language though.  I know one doc in our group tried to do that and was promptly told no way.  If ALL of the docs in my group demanded it they would have to change it.  But, I don't see that happening.  We have people who just blindly sign at the dotted line without asking a single question.  Once one person signs it, they've got you.  I can hear it now..."Dr. So and So signed it, so why won't you?"

[nachos31]

Even if it would be thrown out by a court, it can still cause you grief and prevent you from being hired by another group. Most contracts have a clause at the end that states that you will not be violating an existing non-compete by signing this new contract. Obviously, having a non-compete hanging over your head will likely scare them off or give them grounds to void the contract if they find out about it later. Battling it out in court takes time and money--two things you don't want to lose and two things a potential employer definitely does not want to lose. This would not be as big a factor I guess if you were striking it out on your own upon separation.

Maybe ask them why they have such a non-compete in place--if they got burned recently they're gonna be defensive. But maybe you can negotiate when it's enforced--e.g. If they end the contract there is no non-compete but if you end the contract then it applies or some such.

[WealthyDoc]

I have had a lot of success negotiating restrictive covenants.  Propose a more restrictive one, e.g. 25 mile radius within the one clinic location for a one year period.  You obviously have to do this before signing or taking the job.

[YSH]

Would recommend a lawyer (real JD not simply contract review services) to review the contract and discuss ways to remove or reword that so that it is more appropriate.  I personally feel like a restrictive clause is inappropriate for a new grad, just a way to lock new grads in (then in the meantime, sell new grad ideas of big house, big car and boom new grad is now debt loaded and locked in for life).  The truth is they don't know how capable you are and sometimes they might not care (because let's be honest, the liability is all yours) and you don't know how much you will enjoy that position.

In addition to nachos31 suggestion, can also consider no restrictive clause in place until at least 6 months or 1 year into the practice.  The first year of practice involves a lot of acclimating to the private practice anyway and while there is some upfront investment on the part from the practice I think one year of "getting to know you" from both sides is appropriate.

I have had two recent new grads acquaintances who has been majorly screwed over by the same practice because of the restrictive clause.  Both signed without really thinking twice. The practice was basically known to be a sweatshop for new grads.  The boss man hires the new grad, throws a ton of cases at them, overworks them and then when the new grad wants to negotiate, the boss tells them to take a hike.  Because of the restrictive clause, both newly graduated doctors had no choice to but the uproot and leave the town. The whole practice is basically a two man show, where the boss is annually hiring and the new associates keep leaving. Sad for the patients and the associates. And of cos, the hospital loses a very capable young doc.

 

[Craigy]

Agree with above, first and foremost, you should have a real attorney in your state review your contract.  Having an attorney review your contract is generally received as a good thing by the prospective employer.  It means you're taking them seriously and that you're seriously interested in their offer.

The non-attorney contract review services may do some good, but worst case they could miss or misunderstand key contractual terms, particularly where you might have unique state laws in play, and in some cases they may be guilty of unauthorized practice of law.

Whether or not a restrictive covenant or non-competition agreement is enforceable depends entirely on the unique laws and jurisprudence in your state and sometimes even in your locality.  Even if your non-compete is technically unenforceable, as nachos said above, another employer may be unwilling to hire you simply to avoid the potential of being sued even if they know you would likely win.

The whole "well everyone else signed this so you should sign it too" argument is bullshit, and they know it.  Just because every other doc who walked through the door is an idiot doesn't mean you have to be an idiot too.  There are definitely employers out there who are unwilling to budge, but most employers are not going to let a qualified candidate walk over some quibbles with their contract.  Seemingly large and immotile institutions can and will alter the language in their contracts to lure and sign an attractive employee.

Again, you need to consult with a qualified attorney in your area.

[childay]

How big of an area are the counties?  That sounds pretty excessive

[Bluebonnet]

Does anyone know the TX legal rules of what is considered a reasonable restrictive covenant for time and distance - if something like this exists.

[Zaphod]

There have been several cases tried in Texas and found unreasonable for time/distance, which yours definitely falls under. I'd do a search and read the accounts and details.

However, TX is pretty pro non compete, and as has been previously mentioned its simply not worth it to even think about dealing with. It will just cause so much headache. Give them a chance to make it reasonable or drop them from consideration.

[jhwkr542]

I have one as does everyone else in our smallish path group. I negotiated mine when I signed on. Biggest thing was if they terminated me without cause or didn't offer me partner at the end of the contract, it wouldn't be enforced. This really comes down to who wants who more. If you only have limited options and really want to be in this job, then their rules apply. If you're in a highly sought-after field, you'll have some leverage to negotiate it down.

[Bluebonnet]

Wanted to update the forum and appreciate the advise here. I had requested the restrictive covenant be removed...and it was!The group recruiter initially came back stating everyone had signed it before but stood my ground. There is still a restriction on taking other jobs while employed with the group but no restriction on geography or financial payoff post separation from group.

[ticker]

Good for you!  I pushed hard against a "non-negotiable" restrictive covenant/exclusive employment clause for weeks and thought I'd lost.  Then, about 20 minutes after I emailed the hospital recruiter to thank her and say my goodbyes, I got a call from the hospital lawyer.  Clause totally gone.

[Zaphod]

Wow! Good for you thats awesome. All this its "standard" stuff as usual turns out not to be true. However, it still takes a lot of guts to stand up to that kind of thing when you feel powerless and have much respect for you guys for doing so.

[nachos31]

Awesome job, BlueBonnet and Ticker. Out of curiosity, how did those conversations go in terms of did you bring it up as being unfair or something you didn't like or what? When they made claims as they often do about it being "the standard contract" or "all the others have signed this and it would be unfair to give you something different" how did you respond?