The debate over noncompete agreements in South Carolina continues to heat up as more professionals and lawmakers question their fairness and impact on the workforce. While proponents argue that non-competes are essential for protecting business interests and intellectual property, critics believe they stifle competition, limit job mobility, and unfairly restrict workers’ career options.
This ongoing tug-of-war between employers and employees has prompted discussions about potential legislative changes, with both sides pushing for a solution that balances economic growth with workers’ rights.
As the debate evolves, the future of noncompete clauses in South Carolina hangs in the balance. Meanwhile, more and more physicians and employers are reviewing the proverbial fine print more carefully to be sure that restrictive covenants, or agreements, won’t throttle future career opportunities.
“Generally, providers don’t pay enough attention to restrictive covenants,” said Wes Jackson, an attorney with Columbia-based Mann Blake & Jackson. “Providers are looking out for their patients’ best interests, but certain agreements may affect how they can practice in the future.”
“Practical problems can arise which may have an impact on patient care,” he added.
A non-compete agreement is one kind of restrictive covenant that appears fairly frequently in employment contracts. According to 2022 article from SC Law Review, a non-compete is simply when an employee agrees not to engage in a particular line of work after the employment relationship ends.
These kinds of agreements have been around for centuries. They first appeared in apprenticeship situations. A master tradesman would reveal his special techniques and expertise when training an apprentice and didn’t want that person to leave after they were trained to compete with them.
There are complex business and legal issues related to restrictive agreements that have caused concern both locally and nationally. Physicians, medical practices, and hospitals must weigh the impact these conditions may have on a physician’s employment opportunities and any impact on patient care.
The AMA Code of Medical Ethics says: “Covenants not-to-compete restrict competition, can disrupt continuity of care, and may limit access to care.” However, these agreements continue to be included in many contracts.
“The value or impact of a non-compete will vary by contract,” said Kelly M. Jolley, Managing Attorney with Jolley Law Group. “It is important to look at how the practice or organization is arranged. For instance, whether a physician is employed by a hospital, a subsidiary, or a group that contracts with a hospital.”
“Non-competes can serve a legitimate business purpose in limited circumstances, but they should be narrowly tailored to meet those needs,” said Jackson. “For instance, a non-compete can protect the investment a practice makes in a physician. This may be especially relevant if a physician is a recent graduate and he or she receives intensive specialty training at a practice or hospital.”
“The opposite is true for specialists that already have significant experience, training and established patient bases and primary care referral relationships,” Jackson added.
There may also be significant costs incurred by the employer associated with recruiting a physician, establishing a patient base or purchasing special equipment that can support a non-compete, but again, these are in limited circumstances, Jackson noted.
Most non-competes include specific time and geographic requirements. For instance, an employment agreement may indicate that a physician cannot practice within a certain geographic area of the current practice when leaving a position. There could be a huge difference to a provider whether that distance is 25 miles or 50 miles, as it could affect the travel distance to work or possibly a need to move. With a family, those kinds of considerations could be especially important.
In other situations, the contract may set limits on the number of years terms are in effect after someone leaves employment. A longer term could significantly affect how much of a disruption a change in employment might cause to a physician and his or her family.
Non-competes are just one type of restrictive condition that might appear in a contract.
“A non-solicitation agreement is another type of restriction preventing a physician from soliciting patients after leaving the practice,” explained Jolley. A non-solicitation condition will often limit a physician’s ability to build up a new practice. There may be situations where a patient does not know how to get in touch with their original provider, possibly resulting in a delay in receiving care.
“Contracts may also include non-disclosure agreements which prevent a physician from discussing confidential information if he or she moves to a new practice,” said Jolley.
A chief concern about non-competes in the medical field is how they could impact patient care. Some experts caution that if a physician leaves one practice and is unable to practice close by, patients may lose important continuity in their care or in their choice of a provider.
There have been numerous legislative challenges to non-compete provisions, both in South Carolina and nationally, leading some states to restrict or ban non-compete clauses entirely. Last year the Federal Trade Commission (FTC) passed a ban on non-competes. The rule, which was set to go into effect on September 4, 2024, would have banned nearly all non-competition agreements for employees across the country. However, as of August 2024, the rule has essentially been placed on hold.
Jackson believes that balancing the needs of providers and patients should always be at the forefront of policy makers’ minds, but “patient access to healthcare should be paramount”.
“They should carefully consider the impact on a person’s ability to gain employment and a patient’s ability to have unfettered access to a health care provider of choice,” he said.
When starting a new job, the last thing on a physician’s mind is the thought of leaving it. However, as the conundrums of non-competes continue to unfold, two truths remain: Stay informed and take more time before you sign.
Three tips to Stay Wise While Non-Compete Debates Continue
- Review Contracts Thoroughly: Before signing any employment contract, carefully examine any non-compete clauses. Consider consulting with a legal expert to fully understand the potential restrictions and long-term impacts.
- Negotiate Terms Early: Physicians can often negotiate the terms of a non-compete agreement before signing. Try to tailor the geographic scope, duration, or limitations on your ability to practice after leaving to your personal situation.
- Stay Informed: Keep up with changes in legislation and legal precedents regarding non-compete agreements in South Carolina. Shifts in the law could impact your future options.
Information gleaned from interviews with Wes Jackson, an attorney with Columbia-based Mann Blake & Jackson and Kelly M. Jolley, Managing Attorney with Jolley Law Group
