Restrictive Covenants in Dental Employment Agreements

Easily the most common question our office fields relative to dental employment contracts is the non-compete. Some non-competes are fair, some are burdensome, some are ridiculously unenforceable, but nearly all of them are misunderstood in the context of dentistry.






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Restrictive Covenants in Texas

Texas law generally prohibits restrictive covenants, but permits them when certain criteria are met. In our experience, many dental practice owners and their dental contracts fail to understand this, or, at least fail to capture this understanding within the contract.

 

Reasonableness of Restrictive Covenants

Among other things, in order for a dental non-compete to be enforceable, it has to be reasonable. Unfortunately, there is no matrix with which to judge the reasonableness of any particular non-compete. The analysis is subjective, and must take into account the age of the practice, the density of the surrounding population, the level of competition around the practice, the access the employee has to sensitive practice information, and the employee's job alternatives in the event the employee leaves the practice.

Enforceability of Restrictive Covenants

Ultimately, whether a particular non-compete is enforeable is largely  mystery. In fact, dentists should be guarded against advice that interprets a non-compete as "obviously unenforceable," because rarely they are. At the same time, almost all non-competes we see have serious structural defaults, meaning that likely all non-competes swimming around in the dental marketplace have questions of enforcability. 

But whether a particular non-compete is enforceable is a complicated matter, and one dentist's interpretation of "reasonable" is certain to be different than the other's, and both may be proven faulty in a court of law.