Physician Employment Non-Compete Agreements: The Value Behind the Valuation
- May 3, 2022
The impact of restrictive covenants on competition and economic growth has long been a source of debate among economists, politicians, employers, workers, and state courts. The Workforce Mobility Act of 2021 introduced in the U.S. House of Representatives on February 25, 2021, aims to limit the use of non-compete agreements to certain circumstances, such as with the sale of a business or for senior executives. As one example, President Biden’s Executive Order on Promoting Competition in the American Economy issued on July 9, 2021, states:
The American promise of a broad and sustained prosperity depends on an open and competitive economy. For workers, a competitive marketplace creates more high-quality jobs and the economic freedom to switch jobs or negotiate a higher wage…to address agreements that may unduly limit workers’ ability to change jobs, the Chair of the FTC is encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.
Regardless of the resulting overall impact of these recent efforts, restrictive covenants are currently ubiquitous in the American economy and should be reviewed thoroughly as employers and employees navigate the changing landscape.
Within the article, the authors explain why and how non-compete agreements are applied and enforced, and the value of the non-compete agreement.