Can Associate Dentists Throw Away Non-Compete Contracts?

By Olivia Wann, JD

As many of you are aware, the Federal Trade Commission issued its final rule on April 23, 2024 banning the use of non-compete agreements.  Dentists fear that the provisions of their employment agreements with associate dentists will not be upheld. This means that potentially an associate could easily set up their own practice within minutes of where they associated and pull patients away from the practice where they were employed. How should we react to this ban on non-compete agreements? 

First, the non-compete ban does not go into effect until 120 days after publication in the Federal Register. The U.S. Chamber of Commerce has not wasted time in filing a lawsuit challenging this ban.  In the meantime, dental practices should take steps to understand what will take place should the new law survive being challenged.

It appears that all new non-compete agreements are banned. Review existing employment agreements and consult with legal counsel about revising the language in agreements that are being utilized.

This new law does not, however, apply to non-compete agreements for a seller dentist who is selling substantially all of the dental practice’s operating assets. 

Non-compete agreements already in place will no longer be enforceable once the new law is in effect. 

Dentists who have non-competes in place must notify their associates that by the effective date, non-compete clauses will not be enforced.

What should you do right now? Take a deep breath. The new rule does not go into effect until late August or early September. This gives you time to prepare and consult counsel. 

If you are in negotiations with an associate dentist, you may want to replace the non-compete language with simply a fixed-duration employment contract. Make certain that no PHI is in the possession of the associate dentist who is leaving your practice. This includes lists of patients.