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The End of Non-Competes? The Impact It Will Have on the Healthcare Industry

Client Alert
January 10, 2023

A. Overview

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that, if enacted, will ban employers from entering into non-compete clauses with workers (the “Rule”), and the Rule would void existing non-compete agreements. In their Notice, the FTC stated that if the Rule were to go into effect, they estimate the overall earnings of employees in the United States could increase by $250 billion to $296 billion per year.[1] The Rule would also require employers to rescind non-competes that they had already entered into with their workers.[2] For purposes of the Rule, the FTC has defined “worker” to also include any employees, interns, volunteers, and contractors.”[3]

B. Providers

This proposed Rule would have a profound effect on the healthcare industry, as many providers, such as physicians, nurse practitioners, and physician assistants have entered into non-competes with their employers, restricting them from working within a certain proximity to their previous employers, usually for a set amount of time following their employment. The rule would also rescind this restrictive covenant that many providers have already entered into with their employers.

While the rule would undoubtedly benefit providers, and even potentially patients, by not restricting where providers can practice, the rule may present difficulties to health systems, including hospitals and clinics, particularly in areas where it is a struggle to find and/or retain healthcare workers, particularly physicians.[4]

The FTC has asked the public to submit comments on the Rule, which will be due sixty (60) days after the Rule is published in the Federal Register.[5]

C. Other Employers

BMD’s employment attorney, Bryan Meek, will be publishing a new podcast episode on his YouTube channel, Employment Law After Hours, during the week of January 9th further discussing these proposed FTC rules and the possible implications on the industry.

If you have any questions regarding this proposed rule or would like to discuss submitting a public comment to the FTC regarding this proposal, please do not hesitate to contact:

[1] Federal Trade Commission, Non-Compete Clause Rulemaking, https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking (Jan. 5, 2023).

[2] Id.

[3] Id.

[4] Association of American Medical Colleges, “New AAMC Report Confirms Growing Physician Shortage,” https://www.aamc.org/news-insights/press-releases/new-aamc-report-confirms-growing-physician-shortage (June 26, 2020).

[5] Non-Compete Rulemaking.

non-competesHealthcareJeana SingletonBryan MeekAdam D. FullerRachel Stermer
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Ohio S.B. 310 Loosens Practice Barrier for Advanced Practice Providers

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HHS Issues Opinion Regarding Illegal Attempts by Drug Manufacturers to Deny 340B Discounts under Contract Pharmacy Arrangements

January 14, 2021The federal 340B discount drug program is a safety net for many federally qualified health centers, disproportionate share hospitals, and other covered entities. This program allows these providers to obtain discount pricing on drugs which in turn allows the providers to better serve their patient populations and provide their patients with access to vital health care services. Over the years, the 340B program has undergone intense scrutiny, particularly by drug manufacturers who are required by federal law to provide the discounted pricing.Client Alert

S.B. 263 Protects 340B Covered Entities from Predatory Practices in Ohio

January 14, 2021Just before the end of calendar year 2020 and at the end of its two-year legislative session, the Ohio General Assembly passed Senate Bill 263, which prohibits insurance companies and pharmacy benefit managers (“PBMs”) from imposing on 340B Covered Entities discriminatory pricing and other contract terms. This is a win for safety net providers and the people they serve, as 340B savings are crucial to their ability to provide high quality, affordable programs and services to patients.Client Alert

DOL Finalizes New Rule Regarding Independent Contractor Status, But Its Future Is In Jeopardy

January 11, 2021On January 6, 2021, the Department of Labor announced its final rule regarding independent contractor status under the Fair Labor Standards Act. As described in a prior BMD client alert, this new rule was fast-tracked by the Trump administration after its proposal in September 2020. The new rule is set to take effect on March 8, 2021, and contains several key developments related to the "economic reality" test used to determine whether an individual is an independent contractor or an employee under the FLSA.
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