This article originally appeared in the Spring 2025 issue of EquiManagement. Sign up here for a FREE subscription to EquiManagement’s quarterly digital or print magazine and any special issues.
During the October 2023 AVMA Economic Summit, then Federal Trade Commission (FTC) Chair Lina M. Khan spoke about noncompete clauses. “One sector from which we heard many comments was health care workers, including veterinarians,” she said. “They shared stories of how noncompete clauses have upended their lives, keeping them stuck in jobs and forcing them to forego better job opportunities or otherwise uproot their families because the noncompetes have locked them out of local jobs. Others shared the fear of being buried in litigation by an employer, even when the noncompete in place was void or not enforceable.”
The FTC estimates that 30 million Americans—or one in five workers—are bound by these agreements. Currently, noncompete agreements for employees are banned in California, Minnesota, North Dakota, and Oklahoma.
In April 2024, the FTC issued a final rule banning noncompete clauses nationwide, claiming they constitute “unfair or deceptive acts or practices in or affecting commerce.” The final rule was set to become effective in September, 120 days after publication in the Federal Register. But, as expected, the U.S. Chamber of Commerce and several other business groups immediately sued the FTC in Texas federal court, arguing that the commission lacked the power to adopt such a rule and its adoption would prevent businesses from remaining competitive. Most noncompete agreements in veterinary medicine prevent doctors who leave a position from working as a veterinarian in that geographic area for a specific number of years. In response to the FTC’s decision, many practices changed their employment contracts to include nonsolicitation clauses instead. These clauses prevent veterinarians who leave a practice from:
- Directly or indirectly soliciting clients to do business with a different firm or veterinarian.
- Directly or indirectly soliciting employees to accept employment with a different firm or veterinarian.
- Utilizing proprietary information in any way.
Some practices kept noncompete language in their contracts in addition to the nonsolicitation clause; others did not.
In August 2024, the Texas federal court blocked implementation of the FTC’s final rule banning most noncompete agreements. Judge Ada Brown, of the U.S. District Court for the Northern District of Texas, ruled that the federal agency had overstepped its power when it approved the ban. “The FTC lacks substantive rulemaking authority with respect to unfair methods of competition,” she wrote. “The role of an administrative agency is to do as told by Congress, not to do what the agency think[s] it should do.” This decision prevented the final rule from taking effect as planned.
The future of noncompetes in the next four years under the current administration is uncertain, but major changes to the restrictive covenant landscape seem more likely to come from additional states around the country than from the White House.
Disclaimer from sponsor: This content is subject to change without notice and is offered for informational use only. All statements are the sole opinions of the author. Synchrony and its affiliates, including CareCredit, make no representations or warranties regarding the content. You are urged to consult with your individual advisors with respect to any information presented.
Related Reading
- 2024 AAEP Convention Business Highlights
- Staying Ahead of the Curve: Navigating Legislation Affecting the Veterinary Profession
- Legal Aspects of Telemedicine in Equine Veterinary Practice
Stay in the know! Sign up for EquiManagement’s FREE weekly newsletters to get the latest equine research, disease alerts, and vet practice updates delivered straight to your inbox.
