By Jennifer Lankford, Labor and Employment Attorney
As I discussed in a previous blog post, Employment Contract Negotiation for Nurse Practitioners, the process of negotiating an employment contract can be extremely complicated for a nurse practitioner. Not only are you concerned with outlining the scope of your practice, including the duties and expectations of your employment, but you are also negotiating for salary and benefits, like bonuses and vacation days.
Meanwhile, a savvy NP is carefully considering and restrictive covenants within the contract, such as non-compete or non-solicitation provisions. This article will provide a brief overview on the enforceability of these covenants as they pertain to nurse practitioners.
First – the basics. The most common restrictive covenant places limitations on a nurse practitioner’s ability to work within a specific geographic area for a defined period of time if the employment relationship ends. Countless NPs tell me, “I heard courts won’t enforce restrictive covenants, so I shouldn’t be worried about a lawsuit.” This is a common misconception. While courts are often reluctant to uphold restrictive covenants, they will enforce these contractual provisions where the restriction protects legitimate business interests and the authoritative state law so requires. Simply, nurse practitioners should be aware of that – fairness aside – restrictive covenants, if reasonable, are enforceable.
What should you expect if you run into non-compete issues with a former employer? When a party is sued for a breach of a non-compete, the court begins the evaluation process by balancing the interests of your former employer with certain public policy concerns, such as interference with the nurse-patient relationship. If a covenant is unreasonable, it is not necessarily void. Rather, a court will modify the provision to fit the legal standards of the particular state. The defining law in some states is clear statutory law and in other areas, a combined body of law, in other words, accumulation of case decisions over the years. Using this information, the court will determine whether the parameters of the restrictive covenant are reasonable or excessive.
For instance, Tennessee has enacted a specific law which defines the acceptable limitations of a non-compete for healthcare providers, including nurse practitioners. See Tenn. Code Ann. § 63-6-204. Under that law, a non-compete agreement is enforceable where:
The restrictions is for two years or less and the geographic restriction is either:
- limited to a ten mile radius from where the health practitioner practiced;
- limited to the county in which the health practitioner practiced; or
- provides no geographic restriction, but the health practitioner is prevented from practicing at any facility his or her former employer serviced during employment.
Meanwhile, other states, such as Nebraska, have no state law regarding nurse practitioner’s rights under a non-compete and rely heavily upon “reasonableness” requirements.
Consider the case of Denise Pollard, a nurse practitioner in Omaha, Nebraska. Ms. Pollard began working for a pharmacy in Omaha in 2011, performing Botox injections and hormone replacement therapy. Prior to beginning her employment, Ms. Pollard signed an employment agreement containing a non-compete provision. Three years and over 400 patient later, Ms. Pollard was fired. Thereafter, she decided to start her own business and was then sued for breach of the non-compete agreement. Ultimately, the court issued an injunction against Ms. Pollard, prohibiting her from soliciting, contacting, or providing services to her past patients with that employer. Her former employer sent letters to all of these patients, informing them of the court’s decision.
Similarly, Missouri courts have found reasonable a non-compete between a nurse practitioner and a hospital, which prevented the NP from engaging in the practice os nursing within a fifty-mile radius for one-year following termination. According to the Court, the covenant was necessary to protect the hospital’s interest in “it’s patient base, as income from patient billings constitutes its primary source of revenue” Washington County Memorial Hosp. v. Sidebottom, 7 S.W.3d 542, 545 (Mo. App. E.D. 1999).
As you can see, the restrictions and consequences vary, but the underlying principle is the same – be aware of any restrictive covenants, such as non-competes, in your employment contract. Not only should nurse practitioners be aware of the parameters of the non-compete, but they should also consider negotiating with their employer as to when these provisions take effect. Often, a nurse practitioner can avoid limitation of future opportunities by negotiating for less harsh restrictions or alternatively, by requesting severance pay to match the length of the non-compete, thereby, avoiding financial hardship during the term of the non-compete.
Jennifer Lankford is an associate attorney at Thompson Burton, focusing her practice on labor and employment law. If you have questions about your employment agreement, Jennifer can be reached at firstname.lastname@example.org.
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