Date sent:                Thu, 24 Jul 1997 16:06:33 -0500
Send reply to:    "EMED-L a list for emergency medicine practitioners."
              <EMED-L@ITSSRV1.UCSF.EDU>
From:             Sam Heard <ersam@MINDSPRING.COM>
Subject:               Re: Non-compete clauses
To:               EMED-L@ITSSRV1.UCSF.EDU

To all interested in this idea:
        As I had mentioned in recent discussion on this issue and the basic
unenforcability of non-compete clauses ( I beat one in Virginia), the
Alabama Supreme Court has just issued a ruling that validates my claim.(
Surely you bigger states aren't going to let ole Ala lead the pack?)
        The following was lifted from "The Alabama MD", July 17, 1997, our state
medical society newsletter:


        State High Court Voids Physician Practice Restraints


In a March 7, 1997 decision, the Alabama Supreme Court has declared
unenforceable a contract provision which attempted to penalize an employed
physician for practicing medicine within one year and within a 25 mile
radius of his former group.
Citing a state law which declares that contracts which restrain the
practice of a lawful profession are void as against public policy. Justice
Gorman Houston, joined by five other justices of the Supreme Court, ruled
that a $20,000.00 forfeiture provision in a physician's  employment
contract imposed if the physician terminates his employment with group and
engaged in the practice of medicine within one year at a location within
25-mile radius of the city in which the group was located, is against
public policy and void.
After reviewing prior Alabama case law and case law in other jurisdictions,
the Court concluded, "the purpose of the provision is to penalize the
defendant if he terminates his employment with the plaintiff and engages in
the practice of medicine in Tallapoosa County within twelve months
thereafter. In effect, it requires him to forfeit $20,000.00 in order to
pursue the practice of medicine in that county within that period of time.
It is a restraint on the exercise of a lawful profession in violation of
(s.8-1-1a], supra, and is therefore void."
In the same case, the Court decided that a second contract provision
requiring the employed physician to give the group nine calendar months
advance written notice of his intention to voluntarily terminate or suffer
a $20,000.00 reduction in the value of his professional corporation shares
is not an unlawful restraint on the practice of a profession and sent the
case back to lower court for disposition.
According to the Court's opinion, this covenant merely required the
employed physician to give nine months written notice of intention to
terminate employment and did not restrain the physician from practicing
medicine for any period of time or restrain him from practicing medicine
within a specified geographical area.
The Court concluded, "We fail to see how enforcement of the first
covenant-by requiring [the physician] to continue to practice medicine as
an employee of [the professional corporation] for nine months, so as to
enable the corporation to retain another physician, or by requiring [the
physician] to, in essence, pay compensation to the corporation for failing
to give the required notice-would violate the public policy underlying
s.8-1-1 4 (a):

Message: Get a fair non-compete clause in your contract, but don't be
bullied or be afraid to fight one that is unfair or that unfairly restricts
your ability to practice ED medicine.

Sam Heard, MD, FACEP