Non-Competition Agreements

The currently pending Senate proposal S.2625 – so-called non-compete “reform” legislation – was filed on Monday, July 23, 2018, in the Massachusetts Senate. It is not a stand-alone piece of legislation, but instead is buried deep within a $600 million appropriations bill which was issued from the Senate Ways and Means Committee. It would change drastically the legal landscape for enforcement of non-compete agrees. For example, it would require salary payments to the ex-employee during the non-compete period. It would also outlaw enforcement of a non-compete contract where an employee has been laid off without cause. It is a highly controversial piece of legislation which has been debated, in various iterations, for nearly a decade.

To read my recent op-ed published in the Boston Business Journal on this topic, click here.

Photo: Seattle Municipal Archives via Flickr (CC by 2.0)
Photo: Seattle Municipal Archives via Flickr (CC by 2.0)

SB 417, currently pending in the New Hampshire Senate, seeks to amend RSA 329 by adding a provision which would make it unlawful to prevent a physician from leaving one practice or hospital and setting up shop just a few miles away in competition with his or her former employer.  The bill is concise and states as follows:

Any contract or agreement which creates or establishes the terms of a partnership, employment, or any form of professional relationship with a physician licensed by the board [of medicine] to practice in this state, which includes any restriction to the right of such physician to also practice medicine in any geographic area for any period of time after the termination of such  partnership, employment, or  professional relationship shall be void and unenforceable with respect to said restriction; provided, however, that nothing herein shall render void or unenforceable the remaining provision of such contract or agreement.  The requirements of this section shall apply to new contracts or renewals of contracts entered into on or after the effective date of this section.

The Bill was initially introduced and referred to the Senate Commerce Committee but has since been transferred to the Health and Human Services Committee for follow up.  There are no scheduled hearings.

A legislative change of this nature will be of interest to hospitals, physician practices and individual physicians, each likely having significantly different feelings about whether the amendment is a good or bad thing.  Many would argue that such provisions have generally been deemed unenforceable, at least with respect to new patients, since the 1997 case of Concord Orthopaedics v. Forbes was decided by the New Hampshire Supreme Court.  However, passage of this legislation would put any doubt to rest.

Those who have an interest in this issue should keep a watchful eye on this bill and consider contacting their own Senators or members of the committee to express their thoughts.  Following pending legislation can be accomplished by clicking here and inserting the bill number where indicated.