There have been several moves by state governments in the last year to restrict noncompete agreements in physicians’ employment contracts, according to a Sept. 16 report by the American Medical Association. This legislative trend runs parallel to the decline of physician-owned practices in the last two decades, according to the AMA, as physicians look increasingly towards employment with hospitals and health systems.
Some of the state laws ban noncompete agreements outright while others set limits on punitive measures in the agreements.
Here are nine ways that states are restricting physician noncompete agreements:
1. Arkansas and Wyoming are two states that recently banned noncompete agreements in all contexts.
2. Earlier in 2025, Oregon enacted two bills that banned many physician and healthcare provider noncompete agreements. It specifically voided and made unenforceable any noncompete agreements that restrict the practice or medicine or nursing between a medical licensee and a person, management services organization, hospital or hospital-affiliated clinic. The law states that physician noncompetes may be permissible in certain situations, including by “professional medical entities.”
3. Last year, Maryltand passed a law that differentiated between physician and healthcare practitioners earning more or less than $350,000, banning noncompetes for those who earn less than this amount in annual compensation. Those earning more may be subject to noncompetes limited to one year and cannot cover more than 10 miles from the physicians’ primary place of employment.
4. This year, Colorado made its noncompete ban more broad and created an exception for certain business transactions, including the purchase and sale of a business, a direct or indirect ownership share in a business or all of the assets of a business that restricts competition by an owner of an interest in the business. These noncompetes are limited by time, with the length of time depending on whether the physician selling their ownership interest is a minority owner in the practice.
5. In Louisiana, a ban passed in 2024 distinguishes between primary care physicians and nonprimary care physicians. A three-year limit exists for noncompetes for primary care physicians, which turns into a total ban. For nonprimary care physicians, there is a five-year limit, followed by a total ban. Noncompetes that are in place for the temporary three- and five-year time periods will have time and geographic restrictions. The law does not prohibit noncompets for physicians working with rural hospitals and physicians working with a federally-qualified health center that operates in a rural parish.
6. Connecticut has a law that limits physician noncompetes to no more than one year. In 2023, a section was added to the law to distinguish between larger and smaller physician practices when it comes to noncompetes. Certain restrictions apply to practices that have more than 35 physicians and those that do not.
7. In 2024, Pennsylvania passed a law that states noncompete covenants may not have a duration of more than one year and is only enforceable if a physician voluntarily terminates employment.
8. Texas updated its noncompete statute this year to limit the duration of the physician noncompete to no more than one year and limit the geographic scope of noncompete to no more than a five mile radius from the physician’s primary practice location.
9. Texas also defined that a buyout amount in a contract can’t be greater than the physician’s total annual salary at the time of the physician’s employment or contract end.
