New Non-Compete Law’s Impact on appointment letters on or after July 1

  • The new law requires that non-competes be used only “when there is a legitimate business interest” Currently, not all our departments use non-competes. This clarifies that their inclusion is not automatic.

 

  • UCONN Health non-compete clauses calculate the 10 mile radius starts from “UCONN Health and/or your UCONN Health location.” The new law states that calculation is from the “primary site where the physician practices” or is “mutually agreed.” Hence, any new provision should measure from the location where you primarily practice.

 

  • The new law states that a non-compete is unenforceable, where “the employment or contractual relationship is terminated by the employer, unless such employment or contractual relationship is terminated for cause” In short, if you voluntarly leave, the non-compete applies. If UCONN Health fails to renew your appointment, it cannot hold you to the non-compete.

 

  • All non-compete clauses must be signed individually by the physician.

 

  • The law defines the non-compete term as “any period of time after the termination or cessation of such partnership, employment” Occasionally, in the past, UCONN Health has measured the non-compete to run from the end of the appointment instead of the actual end of employment. Any new provision should make clear that the period runs from the end of employment.

 

Substitute Senate Bill No. 351

Public Act No. 16-95

AN ACT CONCERNING MATTERS AFFECTING PHYSICIANS, HEALTH CARE FACILITIES AND MEDICAL FOUNDATIONS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective July 1, 2016) (a) For purposes of this section: (1) “Covenant not to compete” means any provision of an employment or other contract or agreement that creates or establishes a professional relationship with a physician and restricts the right of a physician to practice medicine in any geographic area of the state for any period of time after the termination or cessation of such partnership, employment or other professional relationship; (2) “physician” means an individual licensed to practice medicine under chapter 370 of the general statutes; and (3) “primary site where such physician practices” means (A) the office, facility or location where a majority of the revenue derived from such physician’s services is generated, or (B) any other office, facility or location where such physician practices and mutually agreed to by the parties and identified in the covenant not to compete.

(b) (1) A covenant not to compete is valid and enforceable only if it is: (A) Necessary to protect a legitimate business interest; (B) reasonably limited in time, geographic scope and practice restrictions as necessary to protect such business interest; and (C) otherwise consistent with the law and public policy. The party seeking to enforce a covenant not to compete shall have the burden of proof in any proceeding.

(2) A covenant not to compete that is entered into, amended, extended or renewed on or after July 1, 2016, shall not: (A) Restrict the physician’s competitive activities (i) for a period of more than one year, and (ii) in a geographic region of more than fifteen miles from the primary site where such physician practices; or (B) be enforceable against a physician if (i) such employment contract or agreement was not made in anticipation of, or as part of, a partnership or ownership agreement and such contract or agreement expires and is not renewed, unless, prior to such expiration, the employer makes a bona fide offer to renew the contract on the same or similar terms and conditions, or (ii) the employment or contractual relationship is terminated by the employer, unless such employment or contractual relationship is terminated for cause.

(3) Each covenant not to compete entered into, amended or renewed on and after July 1, 2016, shall be separately and individually signed by the physician.

(c) The remaining provisions of any contract or agreement that includes a covenant not to compete that is rendered void and unenforceable, in whole or in part, under the provisions of this section shall remain in full force and effect, including provisions that require the payment of damages resulting from any injury suffered by reason of termination of such contract or agreement.