Non-compete clauses are common in contractual employment agreements no matter the industry. Dentistry is no exception. If you are selling your practice or leaving another dentist’s practice, you may be required to sign a non-compete clause.
If a non-compete clause is not in place, it can be detrimental to the business and dentist that is left behind. Clients can follow the leaving practitioner, which impacts the remaining business. Non-compete clauses stop this situation from occurring. When signed, they promise the leaving dentist will not compete in the same business or industry.
Non-Compete Clause Basics
Dentist non-compete clauses can be enforceable by the courts if they are correctly done. An example of such clause is one that prohibits a dentist from establishing or carrying on a dental practice within a 10 km radius of the existing business for the next two years following their leave. Essentially, they need to be clear and reasonable like the one above. If they are not, they can be dismissed by a judge.
There are three levels of reasonableness that are applied to non-compete clauses.
- The duration: First, the duration of the clause needs to be a reasonable amount of time. The duration will depend on the facts of the case because each one is different. However, courts are more willing to enforce longer non-compete agreements in a non-employment context such as buying and selling a dental practice, compared to one in an employment context.
- Geographic radius: Along with the duration, the geographic radius must also be reasonable and not outrageous. What is considered reasonable will depend on the circumstances at the time the clause was created. If the radius is quite excessive like province or country-wide, the court may find it unenforceable. Clauses with smaller radiuses are much more likely to be upheld.
- Public interest: The last level of reasonableness deals with public interest and how much they require the services of dentist. For example, if there was a shortage of dentists in a particular city or insufficient labour, a non-compete clause can be seen as unreasonable as the public needs to be attended to. As long as the clause does not have any negative effects on the public, the reasonability of this section should not be questioned. Using a clause like this to eliminate competition in general would also be unreasonable.
Non-Compete Clause Add-Ons
Sometimes a non-compete clause will not seem good enough to the remaining practice. In this instance, an additional add-on can be placed on the restrictions. This would come in the form of a non-solicitation agreement. A non-solicitation agreement prevents the leaving dentist from encouraging his or her old patients to now come to their new dental practice. This agreement prohibits the dentist from contacting current patients with the intention of providing them services that are the same or similar to the ones being offered at the existing business. In certain cases, a judge may decide that a non-solicitation agreement is sufficient and that a non-compete clause on top of that is not reasonable.
Non-compete clauses and non-solicitation agreements offer dental practices a certain level of protection from employees who decide to move on. They are frequently litigated, which requires their wording to be perfect and their reasonableness agreeable. Because the enforceability of these clauses largely depends on the particular circumstances of each employment relationship, it is critical that lawyers be consulted when one is being drafted. If you want to create a dental non-compete clause or a non-solicitation agreement, Juriscorp Law Offices can assist you with drafting one tailored to your unique situation.