Question

How Are Minnesota Doctors Affected by Noncompete Agreements?

Brandon M. Schwartz - Business Litigation - Super Lawyers

Answered by: Brandon M. Schwartz

Schwartz Law Firm
Oakdale, MN
Phone: 651-528-6800

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Answer

Minnesota courts are critical of overly broad noncompete agreements, which unnecessarily prevent employees from either working for competitors or soliciting clients after leaving the company. Minnesota law requires these agreements, also known as restrictive covenants, to be reasonable with respect to the geographic limitations they place on an employee seeking new work and the length of time the noncompete is in effect.

That said, in a highly competitive industry such as health care, employers are often allowed to be more restrictive than employers in less competitive fields. Minnesota courts are more likely to enforce a noncompete agreement between a hospital, clinic or other health care company and a physician it employs.

A More Complex Recruitment Process 

The recruitment process for doctors is competitive, as well as lengthy and expensive. Minnesota courts understand that in these situations, an employer’s investment of time and money deserves a certain level of protection. Health care facilities often incorporate a noncompete agreement, restrictive covenant or liquidated damage provision in the employment contract with a physician to help protect its investment and financial risk. 

A liquidated damage provision is a provision within the physician's employment agreement providing geographic and temporal restrictions such that if the physician practices within said restrictions, they pay a predetermined amount to the clinic/hospital. However, if they practice outside said restrictions, there is no liquidated damage. These provisions often allow the physician to continue practicing while reimbursing the clinic/hospital for the substantial investment they have made in the physician and minimizing costly and time-consuming litigation.

Another factor favoring employers in noncompete disputes involving physicians is that health care professionals tend to be more familiar with these agreements than workers in other industries. Often, a noncompete agreement is stuffed in with a pile of other paperwork that a new employee is asked to sign on a first day. They are not given the opportunity to discuss a noncompete agreement with a lawyer or consider whether an agreement is unduly restrictive. 

Because the recruitment process for physicians is more drawn out, job candidates have more opportunity to review proposals and obtain legal counsel before signing any agreements. 

Next Steps If You Are Asked To Sign A Noncompete

If you are a physician who is being recruited for new employment, a noncompete agreement may be part of the proposed offer. It is always wise to speak with a lawyer who can review the proposal to ensure it is not overly restrictive. An experienced attorney knows what limitations are reasonable for physicians and what may be too limiting. Involving a lawyer during the negotiation stage can prevent expensive and lengthy disputes down the road. 

If you have recently ended your employment with a health care provider and have questions about an agreement you previously signed, you should consult with an attorney who can help determine if it is enforceable.

 

Disclaimer: The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.

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