State legislatures have spent the past two years chipping away at one of healthcare’s most contested employment tools.
Fourteen states have enacted laws limiting restrictive covenants for healthcare professionals since 2024, according to an analysis published by Proskauer Rose attorneys Steven Pearlman and Brenna McLean, and the resulting patchwork carries direct implications for how ASCs recruit and retain physicians, nurses and other clinical staff.
Here are five takeaways from the analysis:
1. Arkansas, Indiana, Utah and Colorado have gone furthest, adopting bans that effectively eliminate noncompetes for healthcare practitioners outright. Arkansas and Indiana prohibit them for all physicians, Utah’s ban covers a broad range of healthcare workers, and Colorado bars noncompetes that restrict a provider’s ability to practice.
2. Pennsylvania, Maryland and Texas took a narrower path, allowing noncompetes to survive but only under strict conditions. Pennsylvania caps them at one year and voids them if the practitioner is terminated, Maryland exempts direct patient-care employees earning under $350,000 while permitting one-year, 10-mile agreements for higher earners, and Texas allows one-year, five-mile agreements with a buyout capped at the employee’s annual salary.
3. The list of covered practitioners is also expanding beyond physicians. Montana’s law reaches behavioral health practitioners, registered nurses, advanced practice registered nurses and physician assistants. Rhode Island voids noncompetes for advanced practice registered nurses, Texas extends its rules to dentists and vocational nurses, and Illinois has banned noncompetes for clinicians providing mental health services to veterans and first responders. For ASCs that rely on a mix of physicians, APRNs and PAs, the coverage question increasingly turns on what a clinician does rather than the title on their contract.
4. Continuity of care has become the throughline across nearly every statute. Maine requires enforceable noncompetes to preserve a patient’s right to choose their provider. Colorado and Utah void provisions that stop a departing clinician from telling patients where they’re headed next. Pennsylvania and Maryland go further, requiring employers to proactively notify patients of a departure and help transfer records. Texas requires physician covenants to preserve access to the prior year’s patient records and permits continuing care during an acute illness.
5. Where covenants do survive, legislatures are replacing judicial reasonableness tests with hard numbers: one-year and 10-mile limits in Maryland, one-year caps in Pennsylvania, and in Louisiana, terms as long as three to five years for physicians under an initial contract, narrowing sharply after that. Business-sale exceptions have held up better than employment noncompetes — Colorado, Pennsylvania, Rhode Island and Oregon all preserve carve-outs for the sale or purchase of a practice, which matters for physician-owned ASCs structuring buy-ins and buyouts.
The common thread, according to Pearlman and McLean, is that legislatures increasingly treat healthcare noncompetes as a public health issue rather than a private contract dispute, weighing provider shortages and patient access alongside employer interests. They expect the trend to continue, with more states extending protections to additional licensed professionals and tightening rules on patient non-solicitation.
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