LEGAL CORNER
Unique Considerations FOR RESTRICTIVE COVENANTS IN PHYSICIAN EMPLOYMENT AGREEMENTS
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BY JOHN BALITIS AND DINA AOUAD n order to protect legitimate business interests and prevent unfair competition, many employers utilize what are known as “restrictive covenants.” A restrictive covenant is a provision, often included in an employment agreement, that limits a worker’s ability to compete with a former employer. Restrictive covenants may prohibit a departing worker from engaging in competitive activities such as soliciting a former employer’s customers, clients, and/or employees and from revealing information that is proprietary or confidential. Restrictive covenants also may limit the time frame and geographic area in which an employee may work after leaving a job. These restrictions are known as noncompete provisions.
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A R I ZO N A P H Y S I C I A N M A G A Z I N E
Although restrictive covenants are popular, an employer’s ability to enforce them is limited. In Arizona, restrictions on an employee’s post-employment activities must be reasonable and limited in geographic and temporal scope. Also, restrictive covenants imposed on physicians are scrutinized more aggressively than in other industries. Despite the freedom to contract, Arizona law does not favor restrictive covenants, and this bias is particularly strong for restrictive covenants governing health care professionals. The Arizona Supreme Court in Valley Medical Specialists v. Farber affirmed this concept and established rules for the use of restrictive covenants in medical practices.
