Noncompetes for physicians: Necessary contracts or a nuisance to careers?

Noncompete agreements are an unfair business practice that hurts physicians’ job mobility, in turn limiting patient access to needed health care, opponents say.

Noncompete supporters say they support free market competition in business, but special work contracts are needed to protect hospitals and other health care employers due to the specialized skills and high pay of physicians and health care executives.

The Federal Trade Commission (FTC) on Jan. 27 will convene “Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements,” an online workshop for the business watchdog agency to assess the status of noncompetes in employer-employee relations.

“This workshop will focus on employee noncompete agreements, and will include public statements from FTC Commissioners, victims of unfair and anticompetitive noncompete agreements, and leading experts in the field,” the FTC’s official description said.

President Donald J. Trump and Vice President J.D. Vance aim to highlight the negative effects of noncompete agreements on American workers and put business on notice about current enforcement priorities.

If this sounds familiar, that may be because the FTC sought public comments and banned noncompete agreements during the administration of President Joe Biden.

So what gives? Here is the latest information about federal regulation of noncompete agreements in business generally, and in health care specifically. The information was compiled from www.ftc.gov, prior reporting by Medical Economics and its sister publications, and other online resources.

The workshop will be all-virtual due to the chance of inclement weather across a wide swath of the country. A livestream link will be posted here.

What is a noncompete agreement?

A noncompete agreement is a contractual provision that restricts a worker’s ability to take a job with a competitor or start a competing business after leaving an employer. The FTC has described these agreements as restraints that can limit job mobility and suppress competition in labor markets. In health care, noncompetes are often tied to geographic areas and time limits that can significantly affect where physicians are able to practice. The FTC has emphasized that such agreements may affect not just workers, but also consumers and patients.

Why are noncompete agreements important to physicians?

For years, physicians have said noncompetes hurt their ability to choose where they heal patients. In sum: “Noncompete clauses can impede patient access to care, limit physicians’ ability to choose their employer, contribute to burnout and stifle competition,” AAFP then-President Tochi Iroku-Malize, MD, MPH, MBA, FAAFP, said in a 2023 statement. To prepare for the workshop, the FTC solicited public comments and received at least 134 responses, including 16 from health care or patient advocacy groups.

More recently, the American Academy of Physical Medicine and Rehabilitation commented to the FTC against noncompetes. The contracts particularly are harmful to emergency doctors who treat anyone who walks in the door, but generally don’t develop long-term relationships with patients or gain proprietary knowledge about the inner workings of health care business and management, according to American Academy of Emergency Medicine and the American College of Emergency Physicians.

So, all physicians oppose noncompetes?

Not necessarily. America’s Physician Groups (APG), representing 340 organizations committed to the transition to value-based care, outlined a more nuanced view in its letter to the FTC. APG members use noncompete agreements because medical practices invest lots of time and money helping their physicians establish practices, and “given, that a labor market that permits unlimited physician mobility will impact quality, patient access, and create patient confusion.” APG does note various provisions with noncompetes could help or hurt physician practices and career moves.

What about hospitals and health care systems — can they limit how physicians practice?

The American Hospital Association (AHA) has maintained noncompetes have a place in health care. AHA commented to the FTC that the commission should target noncompetes that constrain lower-skilled, lower-wage employees who lack bargaining power. But FTC should let stand noncompetes negotiated by physicians and hospital executives — sophisticated and highly skilled leaders.

FTC or other federal action could have real effects on hospital work environments, according to AHA.

“The actions it takes against one hospital will ripple across the entire field,” the AHA letter said. “The commission must be certain that it is targeting the most egregious forms of noncompete agreements — namely, those that impact employees who cannot effectively bargain for different terms.”

Why are we talking about this now? Didn’t the FTC ban noncompete agreements nationwide?

Yes. In April 2024, the FTC adopted a final rule that prohibited most noncompete agreements nationwide. The rule was based on the agency’s conclusion that noncompetes constitute an unfair method of competition. The FTC argued that the rule would promote labor mobility and economic competition.

“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” FTC then-Chair Lina M. Khan said at the time. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”

Why did that nationwide noncompete ban not take effect?

The rule was immediately challenged in federal court, and federal courts blocked the FTC’s noncompete rule, finding that the agency lacked authority to issue such a sweeping regulation. In September 2025, the FTC announced it would dismiss its appeals and accede to vacatur of the rule. As a result, the rule was set aside and never went into effect.

Did that FTC action, or decision to not act, have any policy or political overtones?

The FTC decision marked a shift in the commission’s strategy from rulemaking to enforcement, and it indicated the direction of the Trump-Vance administration, said the statement from FTC Chairman Andrew N. Ferguson.

He also took a swipe at the Biden administration FTC for a political stunt, calling the noncompete ban “unlawful six ways from Sunday.”

“Let us be clear: Plaudits from the liberal media and other Democrat partisans are all this rule generated,” Ferguson said about the ban. “Perhaps that was the point. The rule did not protect a single American worker, nor did it bring relief to a single worker who is stuck in a job because of a noncompete agreement. And that is a shame.”

What is the current federal status of noncompete agreements?

As of late 2025, there was no nationwide federal ban on noncompete agreements. Employers may still use noncompetes, subject to existing antitrust and consumer protection laws. The FTC has made clear that the absence of a rule does not mean noncompetes are beyond scrutiny. Instead, the agency is focusing on enforcement under its existing statutory authority.

What about state laws involving noncompetes?

The 50 states have their own regulations around noncompete agreements. Rules range from outright bans to various allowances or restrictions for use. The American Medical Group Association and others argue the state-level regulation is the best method for oversight of noncompetes.

Does my state have rules for noncompetes?

There are online resources to begin hunting down your state’s rules about noncompete agreements. The newest may be the State Noncompete Law Tracker, published this month by the Economic Innovation Group. Online human resources and payroll companies Paycor and Paylocity have their own primers on state-by-state rules. If you look for online resources, be sure to check publication dates. Due to the FTC actions in 2024 and 2025, older resources may be outdated.

How should independent physician practices interpret current federal policy?

Independent practices should understand that noncompetes are not banned but are under active federal scrutiny. The FTC has made clear that it will challenge agreements that unnecessarily restrict competition or worker mobility. Practices that use noncompetes should carefully evaluate their scope, justification, and enforcement. For physicians, the current environment suggests increasing federal attention to how noncompetes affect access to care and workforce stability.