Public Chapter 487
NON-COMPETE COVENANTS BEWEEN HEALTH CARE PROVIDERS AND EMPLOYEES
This new law sets forth parameters for reasonable non-compete covenants between health care providers and employees upon termination or conclusion of the employment or contractual relationship. It applies to health care providers licensed by the Board of Registration in Podiatry, Board of Chiropractic Examiners, Board of Dentistry, Board of Medical Examiners, Board of Optometry and Board of Examiners in Psychology. It does not apply to physicians who specialize in the practice of emergency medicine or radiology.
The restriction must be set forth in employment agreement or other written document signed by the health care provider and the employing or contracting entity and must be for two years or less. The maximum allowable geographic restriction is the greater of a ten mile radius from the primary practice site of the health care provider while employed or contracted or the county in which the primary practice of the health care provider while employed or contracted is located or there is no geographic restriction but the health care provider is restricted from practicing his or her profession at any facility at which the employing or contracting entity provided services while the health care provider was employed or contracted with the employing or contracting entity. Any restriction under this subsection shall not be binding on a health care provider who has been employed by, or under contract with, the employing or contracting entity for at least six years.
It also allows that an agreement entered into in conjunction with the purchase or sale of a health care provider's practice, or all or substantially all of the assets of the health care provider's practice, may restrict such health care provider's right to practice his or her profession, provided that the duration of the restriction and the allowable area of the restriction are reasonable under the circumstances. There shall be a rebuttable presumption that the duration and area of restriction agreed upon by the parties in such an agreement are reasonable.
The complete text of the Public Act, including provisions for any areas of exemption; enforcement of the Act; and action to be taken for violations of the Act, is available at here.
This law becomes effective on January 1, 2008.
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Note: This law effectively overrules Murfreesboro Medical Clinic, P.A. v. Udom, 166 S.W.3d 674 (Tenn. 2005)
