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Where can I restrict an employee from working?

October 10, 2013

Question:

Jennifer,

I'm hiring a new employee and I want to make sure if she leaves she doesn't take my patients.  What is a reasonable geographic area I can have you put in her employment contract to restrict her from working in if she leaves?

Thank you for your advice.
Thanks, 
Dr. L

Answer:

Depends.  Restrictive covenants are generally held as enforceable when they are determined to be reasonable in geographic range and duration when taking into account a number of factors, including the availability of other professionals in the restricted area, the potential harm to the employer, the potential harm to the employee and the potential harm to the public.  These factors will vary depending on where the employer is located and the actual restriction.  A practice in NYC attempting to restrict 2 miles from a set point may likely be found unenforceable whereas the same hypothetical practice located in Rome, NY with a 2 mile restriction may be upheld.  Now, when I say "upheld", I mean upheld by a judge in a court of law, which is where you would have to be in order to challenge a restrictive covenant.  Of course litigation is costly so from the employers perspective having a signed restriction regardless of potential ultimate enforceability is often threat enough to keep an employee from opening up shop within the stated range, which is why when representing potential employees our firm encourages no one sign a range they can't live with since they likely will not want to be forced to challenge.  But here, giving advice to the employer, I recommend we try for somewhat reasonable, and we'll also add in language stating that if a judge were to determine the restriction is unenforceable as drafted, the provision should not be thrown out entirely, but lowered to a limit the judge determines is reasonable.   

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