Noncompete clauses for dental professionals: “Likely to be a thing of the past”
Following the Federal Trade Commission (FTC)’s proposed ban on noncompete clauses in January 2023, a group representing 40,000 dentists recently expressed opposition to the ban and requested the FTC to reconsider and withdraw it.
Meanwhile, many physicians have indicated strong support for the proposal, noting, among other reasons, concerns about patient care.
How do these opposing opinions compare in terms of what’s actually going on with the overall issue?
“This issue is, understandably, causing confusion and concern for dentists and employers,” Tim Twigg, president of Bent Erickson & Associates, told DentistryIQ, adding that ultimately, “Noncompetes, as we know them today, are likely to be a thing of the past and will no longer be allowed.”
According to Twigg, a significant portion of the confusion and concern lie with the fact that “While a lot of the recent focus is on the proposed FTC ban,” it’s a state issue as much as a federal one.
“Minnesota is close to banning noncompetes … [it’s] just one of many states that either has done this, or are set to do so,” he said. “California, North Dakota, Oklahoma, and Washington, D.C., already ban noncompete agreements with a few narrow exceptions. And Colorado, Illinois, Maine, Maryland, New Hampshire, Oregon, Rhode Island, Virginia, and Washington state prohibit non-compete agreements unless the worker earns above a certain threshold.”
As such, says Twigg, the push to ban or restrict noncompetes—which he attributes as “[stemming] primarily from employers excessively limiting employees/associates via long time frames and/or large geographic areas”—is likely to continue. “With or without federal action, noncompetes may be banned or restricted in many more states in the near future.”
But, he says, “I think it is important to note that these bans do not restrict or prohibit nonsolicitation, nonrecruiting, or confidentiality clauses, which are important, and necessary, for dental practices and patient health information.”
The FTC’s proposed ban, and disagreement around it
In its January proposal to prohibit employers from using noncompete clauses with workers, the FTC called noncompetes “a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses” and that “by stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans.”
It also stated that the practice of noncompetes harms consumers in in markets with fewer new entrants and greater concentration, noncompetes can cause higher prices for consumers—as seen in the health care sector.
This month, as part the comment period during which the public can provide input concerning a proposed rule, the Academy of General Dentistry (AGD), a Chicago-based professional association with some 40,000 dentist-members across the country, requested an immediate withdrawal by the FTC of the proposed rule to ban noncompete clauses.
“The AGD opposes the proposed ban and requests an immediate reconsideration and withdrawal of the proposed rule to ban noncompete clauses…[it] is addressing the ban because dental practice owners rely on legal arrangements and agreements to protect their real estate, intellectual property, goodwill and financial security,” the comments stated.
Other reasons the AGD cited for its rejection of the proposal include the fact that “the proposed ruling neither clarifies the need for such changes, nor does it cite a controlling statute stipulating authority for abrogating existing law.”
In contrast, the American Academy of Family Physicians (AAFP), indicated strong support for the proposed ban, with the group’s president noting in comments to the FTC that “noncompete clauses ‘can impede patient access to care, limit physicians’ ability to choose their employer, contribute to burnout and stifle competition.’ ”
More recently, notes the letter, “noncompetes have been documented to prevent physicians from practicing medicine in their chosen communities when they want to change jobs, thus potentially limiting patients’ access to their regular source of care.”
