Covenants Not to Compete: What Nurses Need to Know About the New FTC Rule
What happens when a contract limits your ability to work elsewhere? Covenants not to compete (non-compete agreements) have long been a controversial aspect of healthcare employment. These clauses, often tucked into contracts, restrict nurses and/or nurse practitoners from working for competing employers or starting similar businesses within a certain geographic area and timeframe after leaving a job.
The Federal Trade Commission (FTC) recently proposed a sweeping rule to ban most non-compete agreements. This potential shift has significant implications for nurses and nurse practitioners across the U.S.
What Are Non-Compete Agreements?
A non-compete agreement is a contractual clause that restricts an employee’s ability to:
· Work for a competitor within a specific geographic region.
· Start a similar business in the same area.
· Perform similar work for a set period after leaving the job.
While common in fields like technology and sales, non-compete agreements are increasingly present in healthcare contracts, even for bedside nurses. Employers argue that these clauses protect proprietary information and investments in training. However, critics point out that they can trap workers in undesirable jobs and limit career growth.
The New FTC Rule: A Game Changer
In early 2023, the FTC proposed a rule to ban nearly all non-compete agreements in employment contracts. The rule would:
· Prohibit employers from entering into or enforcing non-compete clauses.
· Require employers to notify employees that existing non-compete agreements are void.
· Include an exception for certain business sales, where a former owner may be restricted from competing with the new business.
The FTC estimates that this rule could expand career opportunities for about 30 million American workers, including thousands of nurses.
How This Affects Nurses
For nurses, the FTC’s proposed rule could be a significant win. Here’s how:
1. Increased Mobility: Nurses will no longer be restricted from taking jobs at competing hospitals, clinics, or agencies. This could lead to better pay, more desirable shifts, or improved work environments.
2. Opportunities for Entrepreneurship: Nurses interested in starting businesses, such as consulting practices, wellness clinics, or educational programs, could do so without fear of violating non-compete agreements.
3. Wider Access to Talent: Healthcare employers would have to compete on wages and working conditions to retain skilled nurses, benefiting the workforce as a whole.
Are Non-Competes Legal for Nurses Now?
The legality of non-compete agreements varies by state:
· Some states, like California, already ban non-compete agreements as a matter of public policy.
· Others enforce them with restrictions, such as reasonable time limits and geographic scope.
· In healthcare, specific limitations exist in states like Texas and Florida, where the courts often consider whether enforcing a non-compete negatively impacts patient care.
Concerns from Employers
Healthcare employers argue that non-compete agreements are essential for protecting sensitive information, such as proprietary treatment protocols or patient lists. They also claim that banning non-competes could lead to higher turnover, disrupting patient care. However, the FTC contends that such protections can be addressed through less restrictive measures, like confidentiality agreements or non-solicitation agreements.
What Nurses Should Do Now
1. Review Your Contract: If you’ve signed a non-compete agreement, consult an attorney to understand your rights and obligations under state law.
2. Stay Informed: The FTC’s rule is now final, but there is an implementation period. Pay attention to updates, as employers may challenge the rule in court.
3. Advocate for Change: Use your voice to share how non-competes impact your career. The FTC accepted public comments during its rule-making process, and continued advocacy may influence future decisions.
Key Takeaways
The FTC rule to ban most non-compete agreements is a promising development for nurses. It could provide greater freedom, enhance job mobility, and create new opportunities for career advancement.
Have you experienced challenges with a non-compete agreement in your nursing career? Share your story in the comments and help empower other nurses to navigate this important issue.
