What If The Non-Compete Is Too Tough?

LEGAL FORUM from November of 1996 may have an answer in A Too-Tough Noncompete Clause Could Defeat Its Own Purpose:

"Many groups are willing to compromise on their noncompete provisions. When I represent physician employees, I often negotiate such compromises. But I also resist them strongly when representing an established medical group."

Here is my reasoning. The enforceability of a noncompete provision is directly related to its reasonableness. Part of what makes the covenant reasonable is that it is necessary to prevent the departed physician from taking something (the group's market leverage) that would harm the medical group. But if the medical group starts allowing exceptions to the noncompete clause, it effectively has stated that the employee's departure is not harmful to the group, or that the harm is O.K. in certain circumstances. This is dangerous, because it suggests that the noncompete clause may not be an essential protection for the group, increasing the chances that a court may find it inappropriate and thus unenforceable. There certainly are reasons why this vulnerability may not apply in certain circumstances, or why this vulnerability may otherwise be acceptable. But weigh the issues carefully before you agree to compromise.

A medical group that is open to compromise has a number of options to consider. A covenant may only apply if the employee physician is terminated for cause, or departs the group without cause. (Be sure to define "cause" carefully!) Or the covenant may only preclude independent medical practice, so that the departed physician may become a hospital employee. Or the noncompete provision may disappear or change its focus after a certain period of continued employment. There are many permutations. In general, though, an employer should only agree to compromises that can be justified in the contract as both fair and consistent with the premise that underlies the covenant.