Effective January 1, 2025, Pennsylvania enacted the Fair Contracting for Health Care Practitioners Act. This law bans non-compete agreements for longer than one (1) year applicable to doctors of osteopathy, medical doctors, certified registered nurse practitioners, certified registered nurse anesthetists (CRNAs) and physician assistants (collectively, defined as Health Care Practitioners). A non-compete agreement is a contractual agreement entered into between an employer and an employee in which the employee agrees not to compete with their employer after the termination of the employment relationship. These agreements usually contain time as well as geographic limitations which prohibit competition. Pennsylvania courts generally have upheld such agreements so long as restrictions contained therein are deemed to be reasonable.
The underlying rationale in enacting the new legislation is to ensure continuity of care for the benefit of patients. A one year, or less, non-compete restriction will be legal and upheld if the Health Care Practitioner terminates their employment, or if the relationship ends as a result of the sale of a medical practice. On the other hand, a non-compete will be unenforceable if the employer terminates the practitioner’s employment. Additionally, employers are required to notify patients within ninety (90) days of a practitioner’s exit with whom the patient has had a two-year relationship. In this notice, the practitioner’s separation must be explained, and the patient must be provided with information regarding how their medical records can be forwarded and what options may exist to continue medical care with another provider in the practice. Non-compete agreements which were in existence prior to January 1, 2025 are not affected by this law.
A recent effort by the Federal Trade Commission (FTC) to ban most non-compete agreements across all industries has stalled as a result of a ruling by a Federal District Court and subsequent appeal. It is expected that the incoming administration will abandon the appeal and thus kill the effort entirely. While Pennsylvania’s new law is limited to Health Care Practitioners and does not entirely ban non-compete agreements amongst those type of employees, it may prove to be the first step in that direction.
Should you have any questions regarding the Fair Contracting for Health Care Practitioner’s Act, or how it may affect your personal situation, contact our firm.