The modern dentist must balance providing high-quality care with running a profitable business. A budding dentist might be so excited to start a job at a new practice that he or she does not consider the impact a restrictive covenant might have on mobility and future opportunities.
Noncompete clauses, also referred to as “restrictive covenants” or “covenants-not-to-compete,” are contractual clauses found in employment agreements between medical professionals and their employers. Broadly speaking, noncompete clauses restrict the right of a dentist to engage in a similar or competitive practice of dentistry within a certain geographic region for a limited amount of time after ending the employment relationship.
ADDITIONAL READING |Introduction to noncompetition and nonsolicitation agreements for dental professionals
While it is important to note that all cases are fact-specific and analysis unique among different jurisdictions, post-employment restraints are generally viewed skeptically by courts and closely examined because they deprive medical professionals of their ability to earn a livelihood while also depriving a local community of a medical professional’s skills and services. Some states will not recognize noncompete clauses in contracts. However, the majority view (and the view in New York) is that a noncompete agreement will be enforceable against a former employee if the agreement is reasonable. A noncompete agreement is reasonable if the restriction:
- Is no greater than is necessary to protect the employer’s legitimate business interest
- Does not impose an undue burden on the employee
- Does not violate public policy (1)
A majority of states, including New York, will generally enforce a covenant-not-to-compete because the employer has a protectable interest in retaining its customers, confidential information, training, and customer goodwill after the employee leaves the practice. (2)
In Karpinski v. Ingrasci, the New York Court of Appeals enforced a noncompete agreement against a dentist who left his former employ at a private practice in Auburn, New York, to start his own practice in Ithaca. The Court enjoined the dentist from practicing oral surgery on the grounds that the restriction was not unduly burdensome because the dentist could still practice dentistry in general. His noncompete agreement was limited in scope only with regard to performing oral surgery within the geographic bounds stated in the contract. The Court further reasoned that the noncompete provision did not pose an undue burden on the former employee because he could still practice oral surgery within the State of New York, so long as he did not practice oral surgery in Cayuga, Cortland, Seneca, Tompkins, or Ontario counties (the five counties specified in the contract). (3)
ADDITIONAL READING |Making the 'alternate benefit' profitable
With some exceptions, courts generally treat patients as customers and assets of the employer. While this may sound counterintuitive (and maybe even unethical) for a learned medical professional, courts will not find a covenant-not-to-compete unenforceable on public policy grounds merely because a doctor-patient relationship takes a back seat to an economic relationship.
1. See Karpinski v. Ingrasci, 28 N.Y.2d 45, 49-50 (1971).
3. Id. at 48.