It has been a busy year for health care noncompete legislation. Multiple states have enacted legislation, set to take effect in 2025, banning or limiting noncompete agreements for physicians and other health care workers. Although this post only covers enacted legislation, many other states have proposed legislation pending.
Arkansas: On March 4, 2025, Arkansas enacted a law amending the state's noncompete statute to ban physician noncompetition agreements. The term "physician" is defined to include any person authorized or licensed to practice medicine under the Arkansas Medical Practice Act and any person licensed to practice osteopathy in Arkansas. The law takes effect in the summer of 2025.
Louisiana: Louisiana enacted a law, effective January 1, 2025, limiting noncompetition agreements for physicians. Effectively, employers cannot have a noncompetition agreement with primary care physicians once they have been employed for three years or with any other type of physician after they have been employed for five years.
The law defines primary care physicians as those who predominantly practice "general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology." For primary care physicians, the law prohibits a noncompetition provision longer than three years "from the effective date of the initial contract or agreement." It also prohibits employers from including a noncompetition provision in "[a]ny subsequent contract or agreement between the employer and primary care physician executed after the initial three-year terms." In the event a primary care physician terminates their employment during the initial three-year term, an employer may enforce a noncompete covenant that prevents the physician from carrying on or engaging in a business similar to that of the employer in the parish in which the primary care physician's principal practice is located and no more than two contiguous parishes in which the employer carries on a like business. The parishes must be specified in the agreement, and the agreement cannot exceed a period of two years from the date of the physician's termination.
The same limitations apply for all other types of physicians, except an employer may enforce a noncompetition agreement against a non-primary care physician if the employer terminates the physician's employment within the first five years (as opposed to three for primary care physicians).
The law explicitly excludes certain physicians: specifically, physicians employed or under contract with a rural hospital or physicians employed or under contract with a federally qualified health care center. Furthermore, the law only applies to employment-based agreements. Louisiana's statute specifically permits noncompetition and nonsolicitation agreements in the sale-of-business context. Louisiana Rev. Stat. § 23:921(C).
Maryland: Maryland enacted a law, which takes effect July 1, 2025, limiting noncompetition agreements for employees who (1) earn less than $350,000 per year, and (2) are either (i) required to be licensed under Maryland's Health Occupations Article or (ii) are employed in a position that provides direct patient care. For such employees, a noncompete agreement must be limited to one year and cannot exceed ten miles from the primary place of employment.
Pennsylvania: Last summer, Pennsylvania enacted the Fair Contracting for Health Care Practitioners Act (the "Act"), which became effective January 1, 2025. The Act, which is not retroactive, limits certain noncompetition provisions entered by licensed medical doctors, osteopaths, nurse anesthetists, registered nurse practitioners, and physician assistants. Specifically, outside the sale-of-business context, the Act only permits noncompete provisions for health care practitioners if (1) the provision does not exceed one-year post-employment, and (2) the employer seeking to enforce the provision notifies certain patients within 90 days of the health care practitioner's termination.
Utah: Utah passed a law on March 26, 2025, effective May 7, 2025, that prohibits a "health care services platform" from requiring a health care worker to enter into a noncompetition agreement. The law defines "health care services platform" as "a person that operates or offers for use" an "electronic program, system, or application through which a health care worker may accept a shift to perform a health care service or role, as an independent contractor, at a health care facility."
Arkansas, Louisiana, Maryland, Pennsylvania, and Utah are not the only states that impose heath care-specific limitations on noncompetition agreements. For instance, Texas, Florida, Colorado, Tennessee, and Washington, D.C., among other states, have long-standing limitations on physician-based noncompetition agreements. Most states impose some form of restrictions, ranging from very minor limitations to outright bans. Employers expecting to enter noncompetition agreements with health care employees should work with counsel to understand the state-specific limitations and requirements. We will continue to monitor and report on developments in this highly dynamic area of law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
