Ask the legal expert: non-compete clauses in long-term care employee contracts
Attorney John Durso, Ungaretti & Harris LLP
The purpose of a non-compete clause is to prohibit an employee from unfairly competing with a former employer. A majority of states allow for such a restriction, if the employer has a legitimate business interest and the restriction extends no further than what is reasonably necessary to protect that interest.
Generally, facilities have a legitimate business interest in restricting executives, managers and supervisors who have access to confidential information or trade secrets. Facilities have a more difficult time justifying restrictions for non-management employees who are unable to influence the decision-making process.
If there is a legitimate business interest, the non-compete clause must also be reasonable. If the matter is litigated, the court will look to the geographic area, time restriction, and scope of the restrictive covenant. The court would also balance the needs of the employer against the harm to the former employee. If the geographic area and time restrictions were reasonable, then the court would consider whether there is any potential injury to the public if the restrictive covenant is enforced.
The facility also must provide consideration for the non-compete clause. Generally, for at-will employees, the facility's offer of employment is sufficient. For pre-existing employees, the facility generally must provide something more as consideration (e.g., specialized training, bonuses, or additional benefits).
Otherwise, a facility cannot restrict a former employee from seeking employment with its competitors.