SJBird55
Posts: 2362
Joined: May 10, 2004
From: Michigan
Status: offline
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MI just had a change with noncompete agreements. Supposedly a physician signed an employment agreement that included a noncompete clause. The noncompete stated that he wouldn't be allowed to work within a 7 mile radius of 2 offices that he was practicing for a period of 1 year from his termination date. If he breached the agreement, he would owe $40,000 to his employer.
Obviously, since I'm mentioning this, yep, he quit and he took a position at a different medical facility within the 7 mile radius. So, of course, his previous employer sued to enforce the noncompete.
Recommendations for those of you who either signed or use noncompete clauses (and I would assume that this could be for any state, but in particular for MI):
1) the agreement language cannot be ambiguous - if there is any question to its meaning, before a court can even enforce the written agreement, there would have to first be a trial to determine which party's interpretation was correct
2) it also has to be enforceable under the state law... for MI, the agreement has to be reasonable as to its duration, geographic area and type of employment (7 miles and 1 year were considered reasonable)
3) In this particular case, the court identified that the noncompete could protect against competition by protecting patient lists, protecting investment in specialized training, prevent loss of patients. The court recognized this, but the employer did not have any evidence that the physician received specialized training and there was not a clear agreement if the physician had access to confidential business info or patient lists. But... the court did uphold the noncompete clause because it was to prevent a loss of patients. The court viewed the situation that the employer had invested in advertising and creating the environment patients trusted... so technically, since the physician left, the employer would need about a year to maintain and keep the trust of the patients through the process of change.
This particular noncompete was upheld.
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