A key part of any physician contract is the non-compete agreement. Many employment agreement negotiations fail due to an overly broad non-compete. An Arizona Physician Non Compete Agreement is generally found reasonable and enforceable with a 12 month and 5 mile restriction from the physician’s primary practice location. However, most non-competition clauses push the geographic limitation far beyond 5 miles from 1 location.
Arizona Reasonable Time Restriction:
Arizona Reasonable Geographic Limitation:
5 miles from the physician’s primary practice location.
Arizona Physician Non-Compete Agreement
To be enforced, the restrictive covenants must do more than simply prohibit fair competition by the employee. In other words, a covenant not to compete is invalid unless it protects some legitimate interest beyond the employer’s desire to protect itself from competition. Despite the freedom to contract, the law does not favor restrictive covenants. By restricting a physician’s practice of medicine, this covenant involves strong public policy implications and must be closely scrutinized.
Valley Med. Specialists v. Farber, 982 P.2d 1277 (Ariz. 1999).
Arizona Non-Compete Must be Reasonable
This covenant must be put through a reasonableness analysis. Reasonableness is a fact-intensive inquiry that depends on the totality of the circumstances. A restriction is unreasonable and, thus, is not enforced: (1) if the restraint is greater than necessary to protect the employer’s legitimate interest, or (2) if that interest is outweighed by the hardship to the employee and the likely injury to the public. Id.
The continued success of a specialty practice, which is dependent upon patient referrals, is a legitimate interest worthy of protection. The restriction cannot be greater than necessary to protect VMS’s legitimate interests. A restraint’s scope is defined by its duration and geographic area. Id.
Restrictive covenants between physicians are strictly construed. The burden is on the party wishing to enforce the covenant to demonstrate that the restraint is no greater than necessary to protect the employer’s legitimate interest, and that such interest is not outweighed by the hardship to the employee and the likely injury to the public. A court must evaluate the extent to which enforcing a covenant would foreclose patients from seeing the departing physician if they desire to do so. Id.
If you have a question about an Arizona Physician Non Compete Agreement contact Chelle Law.