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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
Client Alert

Time to Update Your HIPAA Compliance Plan for Telehealth Policies and Procedures

September 8, 2020The delivery of healthcare in this country may be forever changed following the COVID-19 pandemic. Providing services through telehealth technologies initially allowed providers to connect with patients in a safe and socially distant manner and helped keep vital hospital beds free for COVID-19 care. Now, while still a safe, socially distant option, telehealth allows patients to access healthcare services in an efficient manner, decreases the likelihood of cancellations, and expands access to services that do not require an in-person encounter (i.e., surgery, procedure, or test). Telehealth is now widely reimbursed by both federal and commercial payors and more provider types are able to provide telehealth services within their licensed scope of practice.Client Alert

The SEC Amends Accredited Investor and Qualified Institutional Buyer Definitions

September 2, 2020The SEC Amends Accredited Investor and Qualified Institutional Buyer DefinitionsClient Alert

Landlord Alert: CDC Issues Temporary Halt in Residential Evictions

September 2, 2020On September 1 the Centers for Disease Control and Prevention (“CDC”) issued a nationwide temporary halt on all residential evictions through December 31, 2020. With the July 24, 2020 expiration of the prior moratorium established under the CARES Act, the CDC based the new moratorium on the need to protect public health and the likely increase in the spread of COVID-19 if mass evictions take place.Client Alert

BMD Obtains Supreme Court Victory on Behalf of Sterilite of Ohio, LLC

August 28, 2020Columbus, Ohio – On August 26, 2020, the Supreme Court of Ohio issued its opinion in Lunsford v. Sterilite of Ohio, LLC, Slip Op. No. 2020-Ohio-4193. The Supreme Court’s 4-3 decision reversed an Ohio Court of Appeals ruling that had reinstated a putative class action against Sterilite brought by a group of current and former employees claiming that Sterilite’s use of “direct observation” urinalysis screening violated their common law right to privacy.Client Alert

Provider Relief Fund Phase 2 & Reporting Requirement Updates – Deadline to Request Phase 2 Funds is August 28, 2020

August 21, 2020On July 31, 2020, the Department of Health and Human Services (“HHS”) announced that certain Medicare, Medicaid (managed care and fee-for-service), CHIP, and other providers would be given another opportunity to receive additional Provider Relief Fund payments. HHS has allocated around $15 billion for Phase 2 distribution. Providers are eligible for these new distributions if they fulfill the following criteria and have not yet received a Provider Fund payment equal to approximately 2% of their revenue from patient care.
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