Physician Non-Competes: Are they still enforceable in Illinois?

Most of the large teaching hospitals are moving away from including broad non-competes in their Physician Employment Agreements, but private practice groups are becoming more creative in drafting enforceable non-competes.

Over the last few years, there has been a lot of litigation over physician non-competes in Illinois. Yet many doctors still come to our office with the belief that non-competes are not enforceable in Illinois. It is a mistake to sign an agreement based on the belief (or hope for that matter) that the agreement will not be enforceable. In fact, in some ways, it may be easier now than ever before for a physician practice group to draft an enforceable non-compete in their Physician Employment Agreements.

Last year, the First District Appellate Court in Illinois decided a case called Fifield et al. v. Premier Dealer Services, Inc., and held that, as a matter of law, “there must be at least two years or more of continued employment to constitute adequate consideration in support of a restrictive covenant.” On the one hand, this decision may benefit physicians whose employment is terminated before they reach the two year mark. On the other hand, private practice groups have been given additional instruction on how to construct a more enforceable restriction.

Obviously a practice cannot force a physician to stay employed for a full two years, but they can minimize a physician’s opportunity to resign by including a lengthy notice requirement. If 6 months’ notice is required for early termination, a physician would have to know that the employment was not a good fit within 18 months of starting.

Another possibility for private practice groups is to tie additional compensation to the non-compete. For example, in lieu of offering a signing bonus, a practice might offer a non-compete bonus that would be payable upon signing. In such case, length of employment would not be the consideration measured in determining enforceability.

Regardless of what steps private practice groups take, the Fifield case demonstrates that non-competes are still enforceable in Illinois so long as they are reasonable in the eyes of the law. Physicians should carefully consider the implications of a non-compete before signing an agreement. It’s always easier to address problems on the way in, than on the way out.