Physician Non-Compete Clauses: Enforceability and How to Negotiate (2026)

What a physician non-compete clause is

A non-compete clause — also called a restrictive covenant or covenant not to compete — is a contract provision that limits where and for how long you can practice medicine after leaving an employer. A typical clause bars you from working within a set radius of your employer's locations for a defined period after your departure, most commonly one to two years.

Non-competes frequently appear alongside two related but distinct clauses:

• Non-solicitation agreements prohibit you from actively recruiting patients or staff away from your former employer. These are narrower in scope and generally easier to enforce than non-competes.
• Non-disparagement agreements prevent you from making negative public statements about the employer. Narrower still, but increasingly common in physician contracts.

All three can occupy the same paragraph, and they are often inadvertently conflated. Understanding which restriction you are agreeing to matters, because they have different legal standards and different consequences.

The federal rule that failed — why your state law controls

In April 2024, the Federal Trade Commission announced a final rule (published in the Federal Register in May 2024) that would have banned most non-compete agreements nationwide, including in healthcare. A federal district court in Texas vacated the rule on August 20, 2024 (Ryan LLC v. FTC), holding that the FTC exceeded its statutory authority and that the rule was arbitrary and capricious.

The FTC initially appealed, then in September 2025 it withdrew its appeal and accepted the court's ruling. The rule was formally removed from the Code of Federal Regulations in February 2026. There is no federal ban in effect; the FTC has indicated it will pursue individual enforcement actions case by case under existing antitrust law, but no categorical prohibition applies.

The practical result: your state law is the controlling authority. In states that broadly permit non-competes, your employer can include and enforce one. In states that prohibit them, the clause is void even if you signed it. The landscape shifted significantly in 2025, and the direction of change is firmly toward restriction.

States that ban or severely restrict physician non-competes (2026)

As of mid-2026, the following states either ban non-competes broadly or have enacted physician-specific prohibitions. This area is changing rapidly — always confirm current law with a physician contract attorney in your state before signing.

States with broad non-compete bans (apply to physicians)

States with physician-specific bans enacted in 2025

Many other states (including New York, Michigan, Ohio, North Carolina, and Washington) have pending legislation. Check current law in your practice state every time you evaluate or renegotiate a contract.

What "reasonable" terms look like in states that permit non-competes

In states where physician non-competes are permitted, courts evaluate enforceability primarily on two factors: duration and geographic scope. A clause that is overbroad on either dimension can be unenforceable or modified (blue-penciled) by a court — but litigation is expensive and disruptive, so it is far better to negotiate narrow terms upfront than to rely on a court to fix them later.

Duration

One to two years is the range where courts in most enforcing states will uphold a clause without significant scrutiny. Reported physician contract data shows an average duration of approximately 18 months, and many physician contract attorneys recommend pushing for 12 months as a negotiating target. Courts in most states will uphold up to two years, but anything beyond that deserves legal review and negotiation.

Geographic radius

Contracts in enforcing states typically specify a radius of 10–25 miles from the practice site. Reported contract data shows an average radius of approximately 20 miles and a median of around 15 miles; a 10-mile radius is both common in actual contracts and the target most physician contract attorneys recommend in urban and suburban markets. Rural markets allow wider enforcement because viable alternative employment is genuinely scarcer — courts recognize this.

Which locations count

One of the most consequential but underread details is whether the restricted radius applies to every location your employer operates or only to where you actually practiced. If your employer runs fifteen clinics across a metro area, a 15-mile restriction around each one can effectively bar you from the entire region. Language limiting the restriction to "the location(s) where the physician primarily practiced during the final six months of employment" is far more defensible and far more negotiable than most physicians realize.

Texas-specific rules (effective September 2025)

Texas enacted physician-specific non-compete limits effective September 1, 2025 (SB 1318): duration is capped at one year, geographic scope at a five-mile radius from the physician's primary practice location at termination, and buyout amounts are capped at the physician's total annual salary and wages. Additionally, if a physician is terminated without good cause, the non-compete is void outright — not merely limited. Both the caps and the void-on-cause provision apply to agreements entered or renewed on or after the effective date.

Five things to negotiate before you sign

The best time to negotiate a non-compete is before you sign the initial contract. Employers are motivated; you have leverage. Once you are a year into employment and considering leaving, the conversation is much harder.

1. Reduce the radius. In urban and suburban markets, push for 10 miles or fewer from your primary practice site. Many employers will accept this. Larger organizations often include all practice locations in the default language; ask to narrow it to where you primarily practice.
2. Cap duration at 12 months. Market practice runs 12–24 months. Twelve months is entirely reasonable, and many employers will agree. Anything beyond 18 months deserves pushback.
3. Link enforceability to the reason for termination. Ask for an explicit provision stating the non-compete is unenforceable if the employer terminates you without cause. This single sentence changes the risk profile dramatically — it prevents a clause from locking you out of your market through no fault of your own. This is the single highest-leverage negotiating point in most physician non-compete situations.
4. Restrict the scope to your primary location. If the employer has multiple sites, limit the restricted territory to the location(s) where you actually practiced. "Any Company location" language can translate into an enormous effective radius.
5. Negotiate the buyout amount now, not later. If the contract includes a buyout provision, negotiate the price at signing when you have no immediate need to exercise it. Understand whether the buyout amount is in addition to, or replaces, any liquidated-damages provision, and whether it changes if you are terminated versus if you resign.

How the non-compete interacts with the rest of your employment contract

A non-compete clause does not sit in isolation. Three interactions matter and are often overlooked when physicians review contracts section by section rather than as a whole.

Without-cause termination

Most physician employment contracts allow the employer to terminate without cause on 60–90 days' notice. If your non-compete continues to apply after a without-cause termination, you can be locked out of your local market through no fault of your own. The stronger your without-cause-termination negotiation, the less it matters — but the non-compete exception for without-cause termination (see tip 3 above) is an independent and critical protection.

Recoverable draws

If you have a recoverable draw with an outstanding balance when you leave, you may simultaneously owe money back to your former employer and face a geographic restriction that limits where you can earn income to repay it. These two clauses rarely appear adjacent in a contract, but they interact directly. Model the worst-case scenario: draw balance owed + restricted practice radius + time to establish at a new employer.

Malpractice tail coverage

The non-compete period and your malpractice tail coverage obligation can overlap. If you leave before the tail-vesting schedule fully covers you, you may owe a tail premium while also earning less because the non-compete restricts your ability to establish practice at a nearby employer. Review both clauses together.