new law in pennsylvania, Act on Fairness of Contracts for Medical Professionals This law limits the ability of employers and health care providers to enter into noncompete agreements. Governor Josh Shapiro signed the law on July 23, 2024, which aims to ensure continuity of care between patients and health care providers. This legislation marks a notable shift in employment practices for health care professionals in Pennsylvania, reflecting a broader movement to scrutinize restrictive covenants, particularly in the health care field. Its primary goals include retaining healthcare talent, enhancing patient care, and promoting a competitive healthcare market.
New law prohibits new non-compete covenants for more than one year for “health care professionals,” defined to include physicians, osteopathic physicians, certified nurse anesthetists, certified nurse practitioners, and physician assistants. do. Certain non-competes entered into after January 1, 2025 are deemed to be “immoral, void, and unenforceable by the employer.” However, non-compete clauses limited to a period of one year apply in the event that a healthcare professional terminates the employment relationship or in connection with the sale of a healthcare professional.
Main regulations
non-competitive restrictions: Non-compete clauses that prevent a healthcare professional from treating or admitting patients are void and unenforceable. However, if a practitioner leaves the practice voluntarily, a non-compete clause of up to one year may still apply. If an employer terminates a physician’s employment, even for good cause, these agreements are no longer enforceable.
Employer cost recovery: Employers can recover reasonable expenses, such as relocation, training, and patient acquisition costs, incurred during the three years prior to a health care worker’s voluntary retirement.
Do not compete in business sales: A non-compete agreement remains in effect if the healthcare professional is a party to the transaction or is associated with the sale or transfer of a business.
Patient notification: Employers must notify patients within 90 days if a practitioner leaves the employer’s practice after a two-year outpatient relationship. The notice must explain the practitioner’s departure, how medical records will be transferred, and options for continued care with the employer or other health care provider.
Effective date: Non-compete agreements entered into before January 1, 2025 are not affected. Employers and healthcare professionals should review their existing contracts to prepare for the impact of this law.
move forward
Pennsylvania is one of a growing number of states that: iowa, marylandand louisianawhich limits non-compete clauses in health care providers’ employment contracts, and more than a dozen states have adopted similar measures. however, Federal Trade Commission Proposed Ban on Non-Compete AgreementsCurrently facing legal challenges, it does not apply to nonprofit organizations such as many hospital systems. Currently, nonprofit health care organizations in Pennsylvania, like private sector health care organizations, must consider this law when seeking to place covered practitioners under post-employment restrictions.
