Are you concerned about or searching for information regarding recent changes in non-compete issues for healthcare in San Diego?  The structure of physician and healthcare related employment agreements and non-compete language must be reconsidered here in San Diego and Southern California.

California has placed an end on all non compete agreements.  Not only are non-compete agreements unenforceable in California, they are against the law.  It is UNLAWFUL in the State of California for an employer to request, offer or require a non-compete agreement and it is UNLAWFUL to even attempt to enforce a non-compete agreement.  The prohibition on the misappropriation of trade secrets to prohibit competition or solicitation of customers/employees is still lawful in California.

Employers must notify all employees, past and present, by February 14, 2024 that any non compete contract, clause or agreement they have entered into or signed in the past (and specifically from 1/1/2022) is void.  Employers are required to notify these employees in writing at their last known address in the employee file.  It is ok to email them, but employers are required to send physical notice through the mail (certified mail with receipt or attempt to deliver notice is highly recommended).

There is no specific language or clause you must communicate under the law.  Simply inform any employee who has signed a non-compete agreement of any sort in the past (except a trade secret agreement) of the name of the contract they signed, or the specific provisions, paragraphs or clauses contained within any employment-related document that they are void, no longer enforceable and that you will take no action to enforce them going forward.

Remember, you have until February 14, 2024 to notify in writing any worker who has agreed to any form of non-compete in the past that the agreement, paragraph(s) or clause(s) are void and you will not enforce them.

Federal and State Limitations on Non-Compete Agreements

Agreements which restrict when and where an individual can work after leaving a company – known as non-compete or non-competition agreements – are highly regulated by federal law and all but illegal under California law.  Why? The State of California, in practice, generally considers the right to earn an income to be very beneficial not only to the individual but to the success of society itself.  The new legislation not only makes makes non-compete clauses unenforceable here in California, but workers can sue for signing a non-compete agreement and receive financial damages as well as costs, injunctive relief and their plaintiff’s attorneys fees. The recent changes in non-compete issues for a San Diego healthcare company will have a substantial impact on many Southern California healthcare businesses.

California took the lead on this issue and was the first state to pass comprehensive laws regarding the elimination of non-compete agreements.  California has literally eliminated non-compete agreements, and imposed harsh penalties for those who attempt to require them.  This will make it exceptionally difficult (if not outright impossible) for any employer, including those in a medical or healthcare business, to prevail in Court when challenged on a non-compete clause.

The changes in non-compete issues for healthcare in San Diego also extend to substantial limitations in federal law.  In his first year as President of the United States, Joe Biden issued an executive order which further limits the use of non-compete tactics by employers across the country.

Misappropriation of Trade Secrets and Non-solicitation Agreements in California

Legally, from a federal and state law perspective there are substantial barriers which all but preclude non-compete strategies for a San Diego healthcare company.  However, The medical practice and healthcare business attorneys at the Watkins Firm have served the San Diego and Southern California medical and healthcare business community for more than four decades.  It is possible to contractually limit the solicitation of former patients in specific circumstances.  It is also possible to establish protections under federal and state laws regarding trade secrets.

While new laws eliminate non-compete agreements as an option, the primary goals of these agreements may be achieved when contracts are carefully crafted and applied in the right circumstances. It is possible to prevent employees in the medical and healthcare industry from taking properly identified and protected trade secrets (known as the misappropriation of trade secrets) to compete against your company or practice in the future.

A non-solicitation clause was a legal promise for the employee of a Southern California or San Diego healthcare company or practice not to solicit patients served under their contract after they are fired or end their employment.  The non-solicitation clause would often be extended to prevent “poaching” of employees, staff or other licensed professionals during or after employment. The violation of a non-solicitation clause was ba breach of contract which carries genuine legal and financial “teeth” (read “risk” for anyone who violates the agreement).

A recent decision by the First Appellate District Court (California) held that non-solicitation clauses can be applied in the case of the sale of Goodwill of any business. This “Blue Mountain” case may apply to mergers and acquisitions in the San Diego and Southern California healthcare business community.

Proven Strategies Regarding Changes in Non-Compete Issues for Healthcare in San Diego

Are you searching for enforceable and proven strategies regarding changes in non-compete issues for healthcare in San Diego and competitive market issues?  There are substantial non-compete risks for employers in the Southern California and San Diego medical and healthcare industry.

The Watkins Firm has decades of experience serving the medical and healthcare business sector in San Diego and Southern California.  We understand the proper application of contract terms of an employment agreement with specific protective language in a healthcare setting.  We carefully craft medical and healthcare agreements which are tightly focused and protect the trade secrets, non-solicitation interests, patients, employees and practices of our corporate, medical and healthcare business clients.

We invite you to review our recent podcast Episode 41 – Employer Updates for 2024 as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.