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Restrictive Covenant Considerations

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Employment agreements will oftentimes include restrictive

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covenants including non-competes, non-solicit

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and non-disparagement provisions

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that impact the employee employer relationship both

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during the term and after the term of employment agreement.

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There's been a lot of talk and,

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and conversation about the enforceability

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of non-competition provisions,

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particularly against physicians.

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And this is a continued hot area focused by many states

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with certain states doing away

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and enacting legislation to prevent the enforcement

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of these types of covenants.

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But it varies from state to state.

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Typically, you will see a

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duration on these non-competition covenants

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that cover both the term of employment

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and one to two years after.

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And you wanna understand if your employment agreement

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includes a non-competition, what activities are restricted

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and the duration of that non-competition covenant

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when I'm representing the employee and negotiating his

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or her employment contract.

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There are circumstances that I think are appropriate where

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if the state does have an enforceable non-compete,

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there are circumstances where there should be

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appropriate carve outs.

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That would include situations

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where the physician's terminated without cause,

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where the employee terminates for cause for example,

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'cause they weren't paid appropriately under the terms

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of the employment agreement or other conditions were not

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satisfied or in circumstances where the practice makes a,

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a decision on its own that it's gonna terminate

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or separate the relationship.

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Um, there are also other considerations that have

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to be considered, which is, for example, Texas for example,

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has a state law that requires a physician

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to have the opportunity to buy out his

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or her non-compete in addition

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to non-competition provisions.

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Non-solicitation and non-disparagement provisions also are

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common provisions

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that willman find in an employment agreement.

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The non-solicitation can cover both the solicitation hiring

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of employees and contractors,

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and it may also cover the solicitation

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of client relationships.

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So for example, you may be prohibited from soliciting a

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hospital in which you

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provided coverage during the term of employment.

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You may be prohibited from soliciting that relationship

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or trying to continue that relationship once the employment

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agreement ends non-disparagement provisions.

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We need to determine whether

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or not the provision is mutual so

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that the employers prevented from disparaging, you know,

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your professional reputation

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and also the scope of parties that are protected

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by the non-disparagement.

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For large organizations, when you start talking about

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employees and stockholders

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and their affiliates, it becomes a universe of individuals

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that makes it nearly impossible

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to figure out who we're talking about.

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And while I understand the, the idea

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that you shouldn't be badmouthing your employer,

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that it's a bad practice

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and that the employer wants to prevent that, you also want

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to draft a non-disparagement provision that also allows the

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Physician to be able to comply.

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You want to be able to control the non-disparagement

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provision and make sure that you're not badmouthing

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or saying bad things about the employer organization itself

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and the, you know, the direct people that you report to,

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anything beyond that becomes a,

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a non-disparagement provision

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that's very difficult to comply with.

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Uh, and there may be circumstances

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where you make a statement that you really had no idea

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that about somebody, that you had no idea

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that they could be covered by the protections

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of the nons disparaging provision.

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The last thing you'd wanna consider

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with both the non-solicit

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and the non-disparagement is the term

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or duration of those provisions so you can make sure

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that you comply with those.

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It's not uncommon for the non-solicit to have the same term

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that the non-compete has, so one to two years

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of post-termination, but a non-disparagement may go on

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indefinitely into the future,

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which can cause footfalls later on.

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When you make a statement five years

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and you're not even thinking about in your employment

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agreement or your relationship,

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you may make a statement not even thinking about the fact

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that you agreed into perpetuity not

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to say something bad about your last employer.

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So you need to be very careful about the duration of each

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of these covenants.

Report

Faculty

David M Yousem, MD, MBA

Professor of Radiology, Vice Chairman and Associate Dean

Johns Hopkins University

Mahla Radmard, MD

Postdoctoral Research Fellow

Johns Hopkins University School of Medicine

Bartholomew Dalton Esq.,

Senior Partner

Dalton & Associates

Judd A. Harwood, JD

Partner

Bradley Arant Boult Cummings LLP