The Federal Trade Commission’s proposed regulation that would ban noncompete agreements across the country seems like potential good news for doctors. Of course, many hospitals and employers are against it. As a result, the FTC’s sweeping proposal has tongues wagging on both sides of the issue.
Many physicians are thrilled that they may soon have more control over their career and not be stuck in jobs where they feel frustrated, underpaid, or blocked in their progress.
As of 2018, as many as 45% of primary care physicians had inked such agreements with their employers.
Typically, the agreements prevent physicians from practicing medicine with a new employer for a defined period within a specific geographic area. No matter how attractive an alternate offer of employment might be, doctors are bound by the agreements to say no if the offer exists in that defined area and time period.
The period for public comment on the proposed regulation ended on April 19, and there is currently no set date for a decision.
In a Medscape poll of 558 physicians, more than 9 out of 10 respondents said that they were either currently bound by a noncompete clause or that they had been bound by one in the past that had forced them to temporarily stop working, commute long distances, move to a different area, or switch fields.
The new proposal would make it illegal for an employer, such as a hospital or large group, to enter a noncompete with a worker; maintain a noncompete with a worker; or represent to a worker, under certain circumstances, that the worker is subject to a noncompete.
It also would not only ban future noncompete agreements but also retroactively invalidate existing ones. The FTC reasons that noncompete clauses could potentially increase worker earnings as well as lower health care costs by billions of dollars. If the ruling were to move forward, it would represent part of President Biden’s “worker-forward” priorities, focusing on how competition can be a good thing for employees. The President billed the FTC’s announcement as a “huge win for workers.”
In its statements on the proposed ban, the FTC claimed that it could lower consumer prices across the board by as much as $150 billion per year and return nearly $300 million to workers each year.
However, even if passed, the draft rule would keep in place nonsolicitation rules that many health care organizations have put into place. That means that, if a physician leaves an employer, he or she cannot reach out to former patients and colleagues to bring them along or invite them to switch to him or her in the new job.
Within that clause, however, the FTC has specified that if such nonsolicitation agreement has the “equivalent effect” of a noncompete, the agency would deem it such. That means, even if that rule stays, it could be contested and may be interpreted as violating the noncompete law. So there’s value in reading all the fine print should the ban move forward.