As a nurse practitioner, especially a new one, you might be reviewing a job offer contract for the very first time. And chances are, that contract might include a non-compete clause.
But what the heck is a non-compete clause…and should you agree to one?
Today, I’m breaking down some details about non-compete clauses so that you can know what’s fair, what’s not, and the details to consider as you move forward with your NP contract.
In today’s episode, I’ll walk you through:
- What non-compete clauses are (and what they are not)
- When they are fair
- Some red flags to look out for
- The states in which they are likely not enforceable
- …and other things to consider as you go through this process!
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*Disclaimer, I am not an attorney and this is not legal advice – This is an educational information post geared towards nurse practitioners.
I’ve heard a lot of confusion and concern from specifically nurse practitioners and new NPs, when it comes to non-compete clauses. While non-compete clauses can be seen in some nurse contracts, they are more common for nurse practitioners, and there’s some advice that circulates that may not be the best advice out there. So I’m going to really break down for you what a non-compete clause is, as well as what you should be considering in terms of deciding what is fair and what is okay to proceed with when it comes to a non-compete clause.
Your Employment Agreement
Before we dive into what a non-compete clause is, let’s take a look at what your employment agreement might look like. Not all employers utilize multi-page legal contracts for employment. Some organizations, especially hospitals, tend to utilize the employee agreement letter. Neither of these is right or wrong and it’s not necessarily a red flag one way or the other so it’s good to understand the difference.
Employee Agreement Letter
An employee agreement letter may be a single page with your salary and your job duties, and all the other benefits might be defined by an employee handbook or other supplemental document. And in most states, if you’re signing an employment agreement, you’re likely under what’s called at-will employment, meaning that you can leave your job at any time without legal ramification. Conversely, you can be terminated or laid off at any time without cause.
Now, when contracts are used, they are typically multi-page legal documents that outline a variety of terms of employment, including:
- the length of contract,
- job duties,
- term, and
Let’s take a closer look at the term and termination clauses
Now term and termination means how long the contract is in effect for and under what conditions the contract can be broken or terminated. So for example, the termination clause in a contract may explain that the employer could terminate the contract based on poor performance, reduction in force or for no reason at all. But all of that should be outlined in the contract, including if you wanted to break the contract. For example, if – if it’s a one or two year contract, and you wanted to leave before then, the term and termination clause would outline the circumstances that would need to happen for you to do that. It might be as simple as you need to give 30 or 60 days notice, or in more severe circumstances, there might be some sort of repayment situation. That’s a red flag, by the way; if they want payment in exchange for you leaving before your contract, I wouldn’t recommend getting into that type of agreement. But all this to say that the term and termination outlines how long the contract is and under what circumstances the contract can be broken. Now, occasionally, in addition to the term and termination clause, there might be a non-compete clause.
What is a Non-Compete Clause?
A non-compete clause is a section that states that the employee, i.e. you, will not work for a competing organization or start a competing practice within a certain radius for a certain amount of time after leaving the employer or after termination of the contract. Typically, non-compete clauses are in place to help discourage employees from leaving quickly, or from taking patients with them when they leave. They’re usually there to serve the best interest of the employer as a way to prevent lost revenue and you can understand why an employer would be concerned about that.
Now, you will likely hear recommendations from other people, other NPs, or mentors telling you to never sign a non-compete clause. And, I want to point out that non-compete clauses are not inherently bad. While we know that they are in place to serve the best interests of the employer, that doesn’t mean you should never sign one.
What’s fair in a non-compete clause?
Let’s break down what’s fair when it comes to a non-compete clause. A typical non-compete clause may include details about radius, amount of time, and sometimes even type of practice or specialty.
What you want to look at first is the radius and also what they say about the specialty or the area of practice.The mile radius should really depend on the location that you’re in.
Here’s a great example:
I heard my friend, Monica Carter, talk about Washington DC. Now, Washington DC (the actual District of Columbia) is a 10 mile radius. So if you are practicing in DC, and you signed a non-compete clause that says the radius is more than 10 miles, you’d have to actually be licensed in other states in order to practice whenever you leave that position. This is something I consider not fair. It really creates an incredible burden on you to approve your license and potentially uproot your life in order to find another position.
Similarly, if you’re in a more rural area and the radius that is provided means that you’d have to move in order to find any other place to practice, that is really not fair to you as the employee. These would be terms that I would recommend trying to negotiate.
Amount of Time
If the certain amount of time is two years or less, I think that is a fair amount of time for an otherwise fair non-compete clause. A non-compete clause that extends past that seems like it would be trying to hinder any future competition, rather than simply prevent patient loss.
Type of Practice or Specialty
The other thing that non-compete clauses may or may not state is the type of practice setting.
For example, let’s say you get a job in a fairly narrow specialty, like long-term care.
The non-compete clause might say that you cannot work at another long-term care facility within an X mile radius for X amount of years. This means that when you leave this job, you’ll either have to go outside of this radius or stay within the radius but find a job in a different area of practice, a different specialty. You’ll need to decide if you are comfortable with this and decide based on your competency and your NP specialty.
Another example would be if you are in a really narrow focus, like you’re a women’s health Nurse Practitioner, and you don’t have any other certifications. If the non-compete clause says that you can’t practice within that specialty then that really eliminates a lot of opportunities for you and can be potentially overly restrictive, depending on the radius.
So, you want to take all these things into account when deciding if a non-compete clause is fair.
Let’s learn from COVID staffing shortages!
If the non-compete states that it applies if there’s a termination of the contract for any reason, this would mean that they could enforce it even if they terminated your contract. I would highly encourage you to try and get that amended.
For example, if they fired you or if they laid you off because of staffing the non-compete would still apply. Think about how many Nurse Practitioners were laid off during the COVID pandemic. With none of the non-essential surgeries or care happening, many people were pushed out from routine health maintenance. This resulted in a lot of practices deciding to lay off staff – and a lot of those staff were nurse practitioners.
That just isn’t fair, in my opinion. It’s not the NP’s responsibility or issue that staffing didn’t support their position so why should there be any restriction on where they can go and work next? I really encourage you to look for the kind of definition of termination that this non-compete clause applies for.
Let’s recap those red flags & things to watch for:
- The non-compete states that you cannot practice in the specialty that you are certified in.
- The non-compete states that it applies if there’s a termination of the contract for any reason.
- The non-compete states an extended amount of time. I personally feel that two years is a fair amount of time for this type of clause.
- The non-compete states a radius that would force you to move in order to find a new position.
There are some states where non-compete clauses are generally not enforceable for certain professions. I just want to put out another disclaimer here that I am not an attorney, so you certainly want to check with someone who has official legal training. But based on the research that I did, I’ve come up with a list of where non-compete clauses are enforceable and where they’re not.
Now some of them have some questionable terms. For example, there are some states where it says that they’re not enforceable for physicians, I’m not quite sure if this extends to providers as well so you’d need to look into this further.
Here’s my list of states where non-compete clauses are generally not enforceable for certain professions, likely, including nurse practitioners.
- North Dakota
As I said above, there are other states where physicians are exempt from non-compete clause enforcement. So just be sure to do your own research, speak with your own legal counsel should you need that type of advice, because, as always, this is for educational purposes, I don’t provide medical, legal or tax advice as I’m not qualified to do that.
In my opinion, this is all you really need to know to be properly prepared to understand a non-compete clause and to have the foundations on which to start a negotiation if that’s what’s next. When it comes to the non-compete clause, if you see terms that you don’t like in your contract, that doesn’t mean that you need to run away. It simply means that you need to open up a conversation and try to get things changed that you don’t think are fair to you.