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In
the November, 2010, PsyFin, we featured an Illinois therapist
who was not permitted to call herself a therapist. When she
left her job with a large group practice, the group owner invoked
the strict terms of her original contract--which said that if she
wanted to set up a solo practice in town, she had to market
herself as a "coach" rather than a therapist for 12
months.
Since
then, we’ve heard from a number of curious clinicians who: A)
are being asked to sign such a contract; B) have already
signed one and wonder if they have to honor it; or C) are
running group practices themselves and would like to bind their new
employees this way.
Below,
we talk to a pair of experts who walk us through some of the
problems inherent in non-compete contracts. But first, there are two
big ideas you should keep in mind:
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Rules governing such arrangements are set by each state. So
if you’re dealing with this issue now, your first move is to find
out what the law says. Your state professional association ought to
be able to help you there. If not, you can try the state attorney
general’s office.
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There is no such thing as a "standard non-compete
arrangement." Every-thing’s negotiable. So if you’re
asked to sign one, don’t be afraid to ask for better terms, or
even try to eliminate it. And if you’re the employer who wants a
clinician to sign on the dotted line, bear in mind that the more
onerous you make the restriction, the more likely it is that your
future ex-employee will fight it later on--or just ignore it
altogether.
The
Illinois clinician referred to above is a little unusual--since she
was simply limited in how she was permitted to market herself. Most
of the non-competes we’ve seen have actually been stricter than
that, saying that the clinician was not permitted to practice at all
within a certain distance of the employer for periods of between 12
and 36 months.
And
often, according to David Ballard, assistant executive director for
marketing and business development with the American Psychological
Association, the non-compete goes hand-in-hand with a
non-solicitation or confidentiality clause. He explains: "The
contract will say explicitly that for X amount of time, the
practitioner is not allowed to contact any of the clients or try to
get them to leave that practice for another practice. Client lists
are proprietary and the therapist is prohibited from copying
them."
But
are these clauses enforceable?
Maybe not. First of all, no one wants to go to court. And it’s
unlikely that even an agency or large group is going to sue a former
employee over something like this unless they stand to lose a lot of
money.
And
then, Ballard points out, non-competes are sometimes written in a
way that violates the law. "If someone has a specific specialty
and they’re one of only a few in a geographic area, [the clause]
may be considered excessive by the courts."
And
there are patient rights to consider.
Glennon Karr, an Ohio attorney who works frequently with mental
health professionals, tells us that non-competes can be considered
"unreasonable" when they deny a patient the opportunity
to continue therapy with the clinician who’s leaving the
group. On the other hand, Karr tells us, he’s been involved with
cases where that issue was settled in a way the therapist didn’t
much like:
"One
of the remedies I’ve seen was that the former employee could see
the client--but any ‘profits’ would have to be turned over
to the agency."
Referring
to the Illinois therapist discussed earlier, Ballard says calling
yourself a coach may be a viable option. Karr, on the other hand,
sees "a potential bag of worms." Clinicians may be legally
vulnerable if they advertise coaching services while also listing
credentials such as PhD, CSW, etc. That may mean their work
still falls under the jurisdiction of the state licensing board.
That can spell trouble because, as Karr notes: "A big agency or
group practice may have a presence on the licensing board."
Below,
Karr and Ballard offer a checklist of steps to consider if you’re
faced with disputes over non-compete contracts:
1. Try
to negotiate. Ballard says: "I’ve heard of cases where
the therapist had the clause changed so it only applied to cases of
termination with cause. That offers you at least some protection...Or
you can try to reduce the timeframe--from 24 months down to 12 or 6.
Same with geography. If it’s a 10-mile radius, reduce it to
five."
2. Consider
"buy-out" language. This is more common in medical
practices where the money is more significant. But in a case where a
therapist has the ability to take away a lucrative chunk of
business, the former employer might be satisfied with a percentage
of that money for 6-to-12 months after separation.
3. Remember
the key word in non-competes is "reasonable." And when
it comes to things like geographic limitations--a five-mile
restriction, for instance--what’s reasonable in a large city might
be totally unreasonable in a smaller town.
4. In
the end, be prepared to compromise because it’s probably too
expensive for either party to go to court over something like this.
"You could literally spend $50,000 if you had to push this up
to a state supreme court," Glennon Karr says.
Contacts:
1) David Ballard, APA, Washington, DC, (800)374-2723, email:
dballard@apa.org; 2) Glennon Karr, Ohio Psych Consultants,
Columbus, OH, (614)848-3100, www.karrlaw.com.
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