Connecticut’s legislature has amended the state’s physician noncompete law to provide for additional restrictions on physician noncompete agreements. (Public Act No. 23-97). In addition, Connecticut has extended noncompete restrictions to advanced practice registered nurses (nurse practitioners) and physician assistants. Governor Lamont is expected to sign the amendment, but has not yet done so.

Further Restrictions on Physician Noncompetes

In 2016, Connecticut significantly limited the use of physician noncompete agreements by requiring that such agreements entered, amended, extended or renewed after July 1, 2016, be rendered void if (i) the noncompete period exceeded one year; and (ii) it contained a geographical scope exceeding 15 miles from the physician’s “primary site” of practice. In addition, the 2016 law rendered physician noncompetes unenforceable if the employer terminated the physician without cause, or if a noncompete agreement expired and the employer did not offer to renew the noncompete upon the “same or similar conditions” unless the agreement was entered in contemplation of partnership or ownership.

The new amendment imposes additional requirements on physician noncompetes. A noncompete agreement that is entered into, amended, extended or renewed on or after October 1, 2023, shall be void if (i) the physician does not agree to a proposed material change to the compensation terms prior to or at the time of extension or renewal; and (ii) the contract expires and is not renewed by the employer or the employment or the contractual relationship is terminated by the employer, unless such employment or contractual relationship is terminated by the employer for cause. These new restrictions on physician noncompetes do not apply to physician groups of 35 or fewer physicians that have majority ownership comprising physicians.

In addition, the amendment requires that the noncompete agreement define the primary site of practice for purposes of the geographical restriction. This should result in fewer disputes concerning a physician’s primary practice site, but will result in less flexibility for employers that at some point during the relationship require physicians to work at other sites that were not contemplated upon signing.

Nurse Practitioners and Physician Assistants Now Covered by Connecticut Noncompete Law

As of October 1, 2023, agreements with nurse practitioners and physician assistants will be covered by the noncompete law in the same manner as agreements with physicians. However, unlike the small physician group exception that applies to the newest restrictions on physician noncompetes, all employers, regardless of size and composition, are required to comply with all of the new noncompete restrictions for nurse practitioners and physician assistants. Consequently, the requirement relating to the need to agree to a proposed material change to compensation prior to or at the time of extension or renewal is applicable to all employers of nurse practitioners and physician assistants, even small physician group employers.

Takeaway

The amendment reflects a significant change to Connecticut law, particularly because it adds nurse practitioners and physician assistants to those covered by the law. Moreover, it appears that the “proposed material change to the compensation terms” language is intended to clarify that compensation makes all the difference when making a renewal proposal, and that it is not enough that the proposed renewal terms result in the “same or similar conditions” when viewed in their totality.

Under the “material change to the compensation terms” standard, a noncompete may not be enforceable where an employer offered significantly better non-monetary terms and conditions in exchange for materially less compensation; while such a proposal might render the conditions of employment to be the same or similar, the noncompete apparently would not survive under the new amendment. Further case law developments should clarify this language, and what would result in a “material change” to compensation.

Our Health Care and Labor and Employment practice groups are monitoring these developments closely and will continue to provide updates. In the meantime, our attorneys are available to assist you with reviewing your existing noncompete agreements and preparing for the new amendment’s effective date.

Watch a recent webinar on healthcare noncompetes featuring Stephanie Sprague Sobkowiak and Salvatore Gangemi.

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Photo of Salvatore G. Gangemi Salvatore G. Gangemi

Salvatore G. Gangemi, a partner at Murtha Cullina, is a veteran labor and employment lawyer with nearly 30 years of litigation and counseling experience.

Employers from across the industry spectrum, including established companies in the senior living and health care fields; manufacturing, construction…

Salvatore G. Gangemi, a partner at Murtha Cullina, is a veteran labor and employment lawyer with nearly 30 years of litigation and counseling experience.

Employers from across the industry spectrum, including established companies in the senior living and health care fields; manufacturing, construction, retail and service firms; and emerging companies, seek Sal’s legal counsel to navigate today’s complex local, state and federal employment laws. His practice includes resolving disputes; advocating in courts and before administrative agencies; counseling on employment-related issues arising from acquisitions; and guiding clients in both long-range strategy and day-to-day administration of their workplaces and employees.

At the federal level, Sal brings extensive experience in OSHA investigations, audits and proceedings; the Fair Labor Standards Act (FLSA); Title VII discrimination matters; the Age Discrimination in Employment Act (ADEA); the Americans with Disabilities Act (ADA); and the Family Medical Leave Act (FMLA). He is also well-versed in state and local employment regulations.

Sal regularly represents clients in matters before the Equal Employment Opportunity Commission (EEOC), the U.S. Department of Labor and other federal agencies. On the state level, he appears before the New York State Division of Human Rights; the New York City Commission on Human Rights; the Connecticut Commission on Human Rights and Opportunities; the Connecticut Department of Labor; and the New York State Department of Labor. He has litigated cases involving misappropriation of trade secrets, restrictive covenants, breach of employment contract, fiduciary duty and other work-related common law claims.

Clients rely on Sal’s advice on routine human resources matters that arise in their businesses, including requests for reasonable accommodation for those with disabilities, family and medical leave issues, hiring and termination, and wage and hour concerns. Known for his proactive approach to identifying issues before they escalate, he conducts compliance training on sexual harassment prevention and other topics, performs worker classification practice and policy audits, and drafts employment policies and agreements. Sal shares his knowledge of the ever-evolving employment law landscape by speaking at events, conducting continuing legal education seminars and writing articles for a variety of publications.

Photo of Stephanie S. Sobkowiak Stephanie S. Sobkowiak

Stephanie Sprague Sobkowiak is chair of the firm’s Health Care practice and a prior member of the firm’s Executive Committee. Stephanie is recognized as one of Connecticut’s top lawyers for health care providers.

Described in Chambers USA as “a really strong lawyer” who…

Stephanie Sprague Sobkowiak is chair of the firm’s Health Care practice and a prior member of the firm’s Executive Committee. Stephanie is recognized as one of Connecticut’s top lawyers for health care providers.

Described in Chambers USA as “a really strong lawyer” who “cuts through the nonsense” to solve problems, Stephanie represents hospitals, physician groups, dental practices, community health centers and others in the health care industry. In her role, she partners with her clients on corporate, regulatory, compliance, risk management, fraud and abuse, medical staff and credentialing matters, Certificates of Need, and HIPAA and other patient privacy issues. In each relationship, she strives to understand her clients’ goals and strategic vision in order help develop strategies that make sense in the context of their businesses.

Known for her negotiation skills, Stephanie credits her success to applying a pragmatic approach when putting together transactions or resolving disputes between her clients and opposing parties. She has negotiated countless corporate agreements, advocated for clients in matters before the Connecticut Department of Public Health, the Office of Health Strategy and the Department of Social Services and handled a variety of complex Medicare matters. She also drafts and negotiates purchase and sale transactions for clients in the health care space.

Stephanie frequently shares her knowledge of federal and state health care regulatory requirements by speaking at seminars and authoring articles. Her insight on these topics, as well as other timely risk-avoidance issues, benefits a wide audience of health care professionals, lawmakers, accountants, lawyers and others.