Noncompete Clauses/ Restrictive Covenants

The Pennsylvania Medical Society (PAMED) supports reasonable limitations on restrictive covenants in physician contracts. Restrictive covenants, sometimes referred to as noncompete agreements, often live within an employment contract. These clauses are designed to restrict a physician’s ability to leave an employer and work for a competitor or other medical facility. PAMED believes this interferes with patient care as it limits the opportunity for access to their physician based on distance if they should leave their practice.

Are physician non-compete agreements enforceable in Pennsylvania?
Yes, they are enforceable if they are reasonable as to scope, duration and geographic limitation.

PAMED has supported previous legislation on restrictive covenants that aims to prohibit their use in health care practitioner employment contracts, with limited exceptions. The bill allowed for the freedom of movement among employed health care practitioners while protecting health care employers in less densely populated areas who have more difficulty attracting and retaining practitioners.

Key Items:

• On July 17, 2024, Governor Shapiro signed House Bill 1633 into law. The law, now known as Act 74 of 2024, places, for the first time in Pennsylvania, statutory restrictions on noncompete agreements in physician employment contracts.

• Act 74 will limit noncompete agreements in physician employment contracts to a maximum duration of one year. 

• On August 20, 2024, a Federal District Court judge in Texas struck down the Federal noncompete rule. 

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