I worked for a medical practice in 2012. I left 1 year ago due to disagreements with the physician owner. In my contract there is a non-compete for an 8 mile radius. It also applies for 36 months after I left the practice. I am being courted by a new employer that is only 7 miles from the previous practice (as the crow flies) and I still have 2 years left on my non-compete. How enforceable is this non-compete? Are there remedies? What could happen if I work here anyway?
Add'l : There are several other practices (same specialty) between both my old work address and my potential new one. I don't know how my old employer could possibly substantiate a claim that I will cause damage by practicing 7 miles away. I do not intend to solicit patients or do anything that could harm their business
Employment / Labor Attorney
Non-compete agreements are enforceable in Texas. However, a number of defenses are available to former employees who are sued by a former employer seeking to enforce a non-compete agreement. The agreements must be reasonable in terms of time, geographic region, and scope. The agreement must also be part of a legally enforceable contract, meaning in part, that you must have been given consideration in exchange for your promise not to compete. Moreover, the consideration you were given generally needs to have some relationship to the objective the former employer was trying to obtain through the non compete agreement. (for example, non-compete agreements often state that the employer is providing you with access to confidential information, such as client lists, in exchange for your agreeing to the non compete agreement.). Although the facts of your case will dictate the outcome, I have never come across a published case in which an 8 mile restriction was found unreasonable. The fact that there are several other practices nearby can also be argued in favor of the employer. The former employer will argue that it is a highly competitive market, and the geographic restriction is necessary in order to prevent former employees from using the employer's confidential information only miles away. You may have an argument with the duration, but it is hard to tell. You might also have an argument regarding the scope of the agreement and whether or not there was valid consideration given, but you would want a competent attorney who is experienced in this area of the law to examine the agreement and discuss the facts with you.
A former employer attempting to enforce a non-compete agreement has a wide range of remedies at his disposal. If the non-compete is valid, the former employer is entitled to injunctive relief, meaning that the former employer can obtain a court order preventing you from competing within that 8 mile area. Moreover, the initial injunctive relief can be obtained by way of a temporary restraining order (TRO) which can be obtained ex-parte (with just the former employer's attorney presenting the request for relief to the court). However a TRO can last no longer than 14 days. After that expires, the former employer can litigate the legality of the non-compete and possibly obtain a temporary injunction, which could prevent you from working in that region, and after a trial, a permanent injunction. Also, if the agreement is legally enforceable, the former employer could be entitled to monetary relief, including damages, costs, and attorneys fees.
I would strongly recommend that you hire an attorney who is skilled in labor and employment law in your geographic area and have him examine the non-compete agreement. He will be able to tell if the agreement is enforceable or not, or at least tell you what he may be able to do to reduce the duration or scope of the agreement.
With respect to covenants not to compete generally, in many instances, such covenants in contracts actually recite some amount of liquidated damages that the employee acknowledges in the event the covenant is breached, so the covenant may be enforceable as a result of that language. If there are no liquidated damages recited, the employer must demonstrate that the failure to conform to the covenant actually caused it harm, and the amount of that harm. Given the circumstances that you have described (i.e., there being several other practices in the same specialty in the defined area), proof of actual harm caused specifically by your presence may be difficult at best for your former employer. On the other hand, if that physician decides to pursue an action, you also likely will incur legal fees in defending against that suit. You should consult with a local experienced lawyer, with whom you can discuss all the specifics of your situation, and who will have a familiarity with the law in Texas on the subject.
Please remember, however, that specific questions entail specific facts as to which an experienced lawyer can give you reliable advice. Both my and other lawyers' answers to questions on Avvo are for general purposes only and do not establish an attorney-client relationship; nor should they be considered legal advice. They also are simply responses to the questions that are posed, and do not necessarily address every circumstance in your particular situation. Your best approach may be to contact a lawyer directly through Avvo, and have a consultation at which time you can provide complete details.
You can file a declaratory judgment action to see if it is enforceable. It might have been void ab initio due to lack of separate consideration. However it should be noted, it is a very specific restriction with respect to mileage, but a pretty lengthy timeline. A lawyer would need to review what you signed offline to determine how well drafted (bulletproof) it is. Depending on the precise wording a dec action could really illuminate how the drafter shot themselves in the foot if a comma is in the wrong place or a term is undefined. If they drafted it themselves without the aid of a business planning lawyer it very likely is something that can be effectively challenged.
A lawyer can also advise you whether it makes sense to go ahead and take the new job as an efficient breach of the noncompete - a lot of times it makes sense to violate the noncompete, but in others it is like showing up with a spoon to a knife fight which is a horrible idea if the party is extremely litigious and has never settled other suits with former employees.
Best of luck
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Employment / Labor Attorney
With due respect to the Texas attorneys who previously answered - find yourself a Texas attorney who actually knows noncompete law for physicians like yourself. The reason I say this is because Texas has a special noncompete law for doctors. See http://txnoncompete.com
- There are specific requirements for a physican's noncompete to be valid. These requirements do not apply to noncompetes in other fields.
- There must be a buy-out provision so you are not subject to a noncompete.
- There is a recent Texas case holding if the buy-out requirement is not met the noncompete is void. A court will not fix it.
The first thing I would do is compare the noncompete to Texas' requirements and see if it passes muster. If it does not have a buy-out provision I would double-check with a Texas attorney before chucking the noncompete into the garbage can.
If the required terms are present then consider buying it out.
This is not legal advice but only general information. No attorney-client relationship is created without a written and signed retainer. I do not know all the facts of your specific situation, which will affect this general post. You can get more information at my websites: http://kindsvater.com http://internetmarketinglawcenter.com
As attorney Kindsvater said, there is a specific statute that controls enforceability of noncompete clauses for physicians in Texas. One requirement (which does not apply to noncompete clauses in other professions or occupations) is that the noncompete clause is not enforceable unless it has a reasonable buyout provision. There are other possible ways to avoid the noncompete clause, and it is well worth your time and money to pay an attorney for a consultation to review the contract.
Questions and answers to questions on this website are not privileged or confidential communications, do not constitute legal advice and do not create an attorney client relationship. My responses are intended only to help point you in the right direction so you can ask an attorney of your own choice for legal advice. You should not try to handle legal matters on your own or based upon advice from a website. If you have a real legal problem, you need to hire an attorney.