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CRAFT SUCCESSFUL NON-COMPETES WITH THESE 5 TIPS

Published on Mon Jul 18, 2005

What do you have that's worth protecting?

If you're relying on your employees' consciences to keep them from walking off with your patients, you'd better give some hard thought to using non-competes.

Even if you already have non-compete agreements with your employees in place, now's a good time to review them to make sure a court would enforce them.

Home health agencies "should definitely have non-competes that meet guidelines in their states," counsels Burtonsville, MD-based health care attorney Elizabeth Hogue. "The stories of employees leaving agencies and taking patients with them are legendary in the industry. If properly drafted, [non-competes] should be upheld."

"It's a good idea to have a non-compete," agrees attorney Robert Markette with Gilliland & Caudill in Indianapolis. Even if they don't hold up in court, the non-competes act as a deterrent to employees considering unscrupulous behavior.

More than half of HHAs use non-competes, Markette estimates. But many of those aren't enforceable because they don't meet legal standards. "The time to find out it's not enforceable is now, not when it's time to go to court," Markette tells Eli.

Gear Your Non-Competes Toward Solicitation

Follow this expert advice to craft successful non-competes: 

  • Focus on clients and trade secrets. As the recent case involving Oxford Healthcare shows, HHAs must focus on what they have worth protecting. That's patient lists and trade secrets, Hogue notes.

    Agencies should spell those out in the non-competes, stressing why the employee's patient contact is so vital to the company, Markette encourages.
     
  • Restrict time. You can't keep an employee restricted forever. Non-compete terms of six months to two years are generally acceptable in most jurisdictions, Markette advises.
     
  • Restrict area. Likewise, you won't be able to keep an employee from working anywhere. Providers should limit their non-competes to a specific geographic area - usually their service area, Markette says.
     
  • Focus on solicitation. Many courts won't uphold agreements restricting an employee's use of generalized skills - in other words, working for your competitor, Markette notes. But they are more likely to uphold a non-compete that keeps employees from soliciting patients or other employees when they decide to jump ship.

    Rather than say that employees can't compete within a certain geographic area, say that employees can't care for clients whom they cared for at the agency where they used to work, Hogue suggests. Again, you should limit the customer contact only for a certain period of time after their employment ends.
     
  • Know your local rules. If you use a non-compete template you got from the Internet or another general source, there's a good chance rules in your area will make it unenforceable. Get advice from a local attorney who knows the peculiarities of your jurisdiction, Markette urges.

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