Noncompete Clauses: A Contract Provision That Has Exhausted Its Usefulness?

Abstract

Noncompete clauses (NCs) are common in many physician employment agreements, including those of radiologists. NCs restrict radiologists' ability to perform services for anyone other than their employers, not only during the term of employment but also for a period of time after employment ends. Although courts frown on the post-termination portion as a restraint of trade, in most states, NCs will be enforced if they are deemed reasonable in duration and geography. However the practice of radiology has changed. Teleradiology is common, and improvements in telecommunications and portable devices allow radiologists to perform their services virtually anywhere. In light of these changes, are NCs still necessary for radiologists? Eighty-six University of Maryland radiology residency alumni for whom e-mail information was available were asked to complete an online survey regarding whether they are subject to NCs, the key terms of their NCs, and their views on the continuing usefulness of NCs. A review of all state and federal cases published in the Westlaw law database in which radiologists' NCs were adjudicated was also performed. Twenty-one alumni from our residency program completed the survey, representing a 24.4% response rate; 57.1% of respondents are subject to NCs. Of that group, post-termination restrictions ranged from 1 to 2 years in duration, and geographic limitations ranged from 7 to >50 miles from the employer's practice. Respondents were split as to the impact of teleradiology, with 36.8% feeling that NCs are now more necessary and 26.3% feeling that NCs are less necessary. Searches of Westlaw revealed 7 cases on point, which upheld as reasonable NCs ranging from 1 to 5 years in duration and imposing geographic limitations of 15 to 40 miles from the employer's practice. Although the practice of radiology has undergone significant changes, this survey shows that NCs are still widely used and are still being enforced in many courts. It is unclear whether NCs still make sense in today's practice, but it may be important to modify them to explicitly address the practice of teleradiology. NCs are common and have been upheld in court, although radiologists are split on their usefulness in this era of teleradiology. Contracts should specifically address teleradiology in NC provisions.