When does a veterinary associate's restrictive covenant go too far?
When does a restrictive covenant go too far?
Q: Is there any legality to a restrictive covenant that requires me to practice more than 40 miles away if I leave my current practice? I’m a New York veterinarian so I would basically have to leave the state and uproot my family. Can only a certain mile radius be enforceable?
First of all, various states have a wide range of positions on the enforceability of noncompetes in employment contracts. Some states are very pro-employer and support these clauses, while other states, such as California, prohibit the clauses entirely. New York falls somewhere in the middle of this range, but before you decide whether to breach an existing noncompetition agreement, ask yourself these four questions:
1. What are the chances my employer will sue me? Consider whether your boss has the time and money to pursue the issue. An overworked solo practitioner, for example, might be less likely to enforce a noncompete than a huge veterinary corporation.
2. Can I afford to defend myself? If your employer decides to bring a lawsuit, you have to be financially stable to fight for your rights. It's key to consider lawyer costs before breaking any contract.
3. How long will I be out of work? Determine whether you can afford to be unemployed during the time of the trial -- even if you win. New York, for example, has an enormously backlogged court calendar, especially in its larger metropolitan areas.
4. Is it wise to invest in a new practice? Remember, you will have to abandon it if you lose the case. Keep in mind that even if you "win," in litigation concerning noncompete clauses, you still may not get what you want. For example, a judge may decide that while a contract prohibiting competition for three years and 40 miles is unreasonable, he or she may decide that for a shorter period of time, that 40-mile distance is reasonable and therefore enforceable.
Most importantly, all employment contracts should be read carefully and understood clearly before signing. It's much easier and far less costly to negotiate terms before a contract is signed than to litigate after. If a doctor thinks his or her future plans could be in jeopardy because of noncompetition language in the contract, it's never a bad idea to seek expert advice.
Christopher J. Allen, DVM, JD, is president of the Associates in Veterinary Law P.C., which provides legal and consulting services exclusively to veterinarians.