Noncompetes and employment law: Setting the scene as of early 2026

A proposed nationwide ban on noncompete agreements advanced by the Federal Trade Commission was blocked by a federal court in Texas, leaving physician noncompete regulation largely to the states. And those regulations vary widely among the 50 states. Christopher S. Mayer, J.D., an employment law specialist with the firm Frier Levitt, explains more.

Medical Economics: How would you describe the current atmosphere around federal enforcement, and particularly noncompetes for physicians and other clinicians?

Christopher S. Mayer, J.D.: We saw the FTC (Federal Trade Commission) a few years back try to aggressively regulate noncompetes. And there were a lot of questions on whether the FTC even had any jurisdiction over that. I personally believe they did not have jurisdiction over that, but they were trying to assert their jurisdiction broadly. And that was shot down in Texas. That rule that they had, that the FTC had adopted was shot down by a Texas court, enjoined, so it's no longer in effect. Where we are right now, at the federal level, noncompetes really aren't regulated.When I deal with or look at noncompetes, I'm primarily concerned with state law, because that's what matters so and in every state it's completely different. I mean, so you have to where employers who have multistate functions or practices run into trouble is when they have one noncompete agreement for all employees, and they try to use it in every state, and that just doesn't work. I mean, noncompetes are only appropriate first of all, for certain types of employees. I mean, a low-level employee in general should not be bound by a noncompete unless they have access to some sort of special information, which suggests that they may not be that low level if they're doing something like that. And you have to have noncompetes. You have to be mindful that there are different laws depending on the position that you're talking about, too. If we're going to focus on physicians, there is seemingly a trend nationally to move away from noncompetes with physicians, but in most states they're still enforceable.

When you're running a medical practice and you start to get larger, a noncompete is a very effective tool to have to protect your investment. You're hiring physicians, whether you're hiring a young physician or an experienced physician, where you’re paying this physician a lot of money to bring them over, it's an investment, and so they do protect your investment. No one wants to spend a lot of money in training and providing other tools to physicians just to see them take that investment and jump to another employer a couple of years later. So they are effective to protect those investments. But again, you have to be mindful of what state you're operating in. And there's a few different levels. Like California is obviously the classic example. They ban noncompetes there. There is no noncompete that is enforceable in the state of California. So that you start with that proposition, that's a statute. There are other states where they're regulating certain industries. Pennsylvania is an example. Pennsylvania last year adopted a statute that really limits what you can do with a physician and a noncompete. First of all, it has to be limited. This is only for noncompetes going forward, this didn't apply to old agreements, but in Pennsylvania, a physician cannot be bound by a noncompete that's longer than one year. And if an employer fires a physician, it's unenforceable. You can't enforce it. It's only if the physician leaves on his or her own accord. In other words, if they resign, maybe you can enforce it, but otherwise you can't. And then there are other states where there aren't statutory schemes, like, say, New Jersey or New York, but noncompetes are generally enforceable against physicians under certain limitations. They need to be very narrow, whether it's a year or two, no longer. In New Jersey, for example, a large geographic restriction is not generally enforceable, especially in urban areas. It needs to be tight, it needs to be, say, 15 or 20 miles and no more than that. So that's with noncompetes. It's very important if you want to have one that's potentially enforceable. And they're never guaranteed to be enforceable to begin with, because they always depend on the circumstances. And there's a human element, which is the judge who's enforcing it. So even if there's not a statute prohibiting it, a judge might be favorable to enforcing noncompetes or not. There's a lot that goes into play, but if you want any chance that it's potentially enforceable and to act as a deterrent, which is where I think they're the most valuable, you need to make sure it's compliant with whatever law the state where you're operating or where the physician is based, that's the critical consideration. So just having one noncompete that you think you can use forever, it doesn't work. It really doesn't.