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Restrictive covenants limit the right of an employee or associate to compete with a former employer after termination of their business or professional relationship. This article will discuss recent case law on restrictive covenants in employment contracts and partnership agreements involving physicians.
The Judicial Council of the American Medical Association discourages restrictive agreements as not in the public interest (Current Opinions of the Judicial Council of the American Medical Association, 1982, opinion 9.01). This opinion is only a guide to professional behavior. The courts have upheld such agreements in appropriate circumstances, however.
Several states have enacted legislation invalidating restrictive covenants or severely restricting their application. Such covenants are enforced, however, in most states if the restrictions on competition are reasonable as to geographic area and time limits. Generally, the restraint must be no greater than necessary to protect a legitimate interest of the party to whom the promise not to
Cooper A. Restrictive Covenants. JAMA. 1982;248(23):3091–3092. doi:10.1001/jama.1982.03330230013004