JUL-AUG 2018

MedEsthetics—business education for medical practitioners—provides the latest noninvasive cosmetic procedures, treatment trends, product and equipment reviews, legal issues and medical aesthetics industry news.

Issue link:

Contents of this Issue


Page 28 of 68

that the employee has obtained for the benefi t of the employer during the course of their employment. In order to have a valid (read: enforceable) covenant not to compete, it must be "reasonable." Factors that are considered when determining the reasonableness of an agreement include: the level of the employee's position; whether the employee possesses unique employer informa- tion; the employee's skills; the nature of the industry; and whether the restriction prevents the employee from employment with compa- rable opportunities for professional growth and benefi ts. An overly broad agreement that unreasonably restrains an employee's opportunity to pursue his/her profession may be unenforceable. U.S. courts typically consider a non-compete agree- ment to be unreasonable if the restriction is greater than necessary to protect the employer's legitimate interests or if those interests are outweighed by the hardship to the employee and the likely injury to the public. This is because a covenant not to compete can leave a former employee unable to work or make a living. The covenant must also be reasonable in terms of geographical distance and time. If the employer no longer engages in business in the area, the non-compete typically will not be enforceable. In addition, most states that per- mit covenants not to compete only honor covenants that last for two years or less after termination of employment. STATES THAT DISFAVOR NON-COMPETES Courts have become increasingly unwilling to enforce non-compete agreements, primarily because states do not want to impede an employee's ability to earn a living. States that either prohibit or do not enforce non-compete agreements include California, Oklahoma, Rhode Island and North Dakota. California does not recognize a covenant not to compete in an employment context. Not only are non-compete covenants void under California law, but an employer could be liable in tort for wrongful termination if it terminates an employee who refuses to agree to a covenant not to compete. The only exception to California's prohibition of non-compete agreements is if the covenant is part of the sale of a business or dissolution of a partnership. Oklahoma, Rhode Island and North Dakota do not pro- hibit the use of non-competes, but do fi nd non-compete clauses unenforceable. In Massachusetts, Missouri and Oregon, non-competes are disfavored and typically con- sidered not enforceable. Even states that permit non-compete agreements impose restrictions. For example, in Colorado, a covenant not to compete is unenforceable unless it is related to the purchase or sale of a business, the protection of trade secrets, the recovery of educating and training an employee who has served an employer for a period of fewer than two years; or executive employees or their professional staff. Some states, such as Georgia, will only enforce restric- tive covenants against "key employees." A key employee is one, who, by reason of the employer's investment of time, training, money, trust, exposure to the public or exposure to customers, vendors or other business relationships, has gained a high level of notoriety as the employer's repre- sentative or spokesperson. Many states prohibit the use of non-compete covenants against physicians in the medical industry because they would interfere with patients' freedom to seek the health- care professional of their choice. NON-SOLICITATION CLAUSES A non-solicitation clause seeks to prevent an employee from engaging in any activity that has the purpose or effect of persuading or attempting to persuade another employee to leave your practice or patient from leaving your practice. In short, it prohibits an exiting employee from poaching your 26 JULY/AUGUST 2018 | Med Esthetics © GETTY IMAGES Most states that permit covenants not to compete only honor covenants that last for two years or less after termination. LEGAL ISSUES

Articles in this issue

Archives of this issue

view archives of Medesthetics - JUL-AUG 2018