Pennsylvania Limits Non-Compete Agreements for Healthcare Workers

Non-compete agreements have long been a flashpoint in healthcare employment. Pennsylvania addressed the issue directly with the Fair Contracting for Health Care Practitioners Act (HB 1633), signed by Governor Shapiro on July 17, 2024, and effective January 1, 2025.

What the Law Does

The Act applies to physicians (M.D. and D.O.), certified registered nurse anesthetists (CRNAs), certified registered nurse practitioners (CRNPs), and physician assistants (PAs). For agreements entered into on or after January 1, 2025, a non-compete covenant that restricts a covered practitioner’s ability to practice for more than one year is void and unenforceable.

If a covered practitioner is terminated by the employer, the non-compete is void entirely, regardless of its duration. This is a notable protection: practitioners who are fired cannot be simultaneously barred from practicing in their area.

Key Exceptions

The Act preserves non-compete enforceability in two situations. First, a non-compete of one year or less remains enforceable if the practitioner voluntarily resigned (as opposed to being terminated). Second, non-competes remain enforceable in connection with the sale of a business, a merger or acquisition, or a transaction in which the practitioner receives an ownership interest in the entity.

The Act also imposes notification requirements on healthcare employers, ensuring that practitioners understand the terms and limitations of any restrictive covenant before they sign.

What This Means for Non-Healthcare Non-Competes

The Act does not change the enforceability standard for non-compete agreements outside of healthcare. For other industries, Pennsylvania continues to enforce non-competes that meet the traditional requirements: a legitimate business interest, reasonable duration, reasonable geographic scope, and adequate consideration.

Courts continue to evaluate non-competes on a case-by-case basis, and the FTC’s attempted nationwide ban on non-competes was ultimately vacated. For now, the healthcare practitioner act is a targeted reform, not a general overhaul.

If you are a healthcare practitioner reviewing a non-compete, or a business owner drafting restrictive covenants, contact our office to discuss how the new law applies to your situation.