Restrictive covenants, also referred to as covenants not to compete or non-compete agreements, have become ubiquitous in physician employment contracts as physician practices continue to consolidate and hospitals continue to employ more physicians. Employers will often require physicians to sign a restrictive covenant as a condition to employment. Unfortunately, little attention is given to restrictive covenants until a physician decides to leave his or her current employer and is considering a move to another competing practice or hospital.

Illinois, like many other states, limits the enforcement of restrictive covenants due to public policy concerns about limiting a physician’s ability to earn a living and disrupting the physician-patient relationship. A restrictive covenant restricting a former physician employee’s activities will be enforceable if it is reasonably tailored in scope, geography, and time to further a protectable interest of the employer, unless:

• The employer discharged the physician employee without cause.
• The employer acted in bad faith in requiring or invoking the restrictive covenant.
• The employer materially breached the underlying employment agreement.
• In the geographic region covered by the restriction a great public need for the skills and services of the former physician employee outweighs any legitimate interest of the employer in enforcing the covenant.

The reasonableness of a physician restrictive covenant requires a factual analysis of the following questions:

• Is there a protectable interest of the employer?
• Is the restrictive covenant reasonably tailored to further that interest?
• Is the restrictive covenant prejudicial to the public interest?

Read the full Restrictive Covenants In Physician Employment Agreements article.

ISMS medical legal guidelines: This is for educational purposes and is not intended nor should be considered legal advice.

 This publication has been posted by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.