The landscape of healthcare employment contracts in Pennsylvania is about to change significantly. With the recent passage of the Fair Contracting for Health Care Practitioners Act (the “Act”), set to take effect on January 1, 2025, healthcare practices must prepare for a new regulatory environment that affects non-compete and training contracts for healthcare workers. This legislation marks a substantial shift in employment practices within the healthcare industry, aiming to promote fairness and protect healthcare workers from restrictive employment agreements.
Key Provisions of the Act
The Fair Contracting for Health Care Practitioners Act introduces several critical changes:
Restrictions on Non-Compete Clauses: The Act places stringent limitations on the enforceability of non-compete agreements for healthcare workers. Non-compete clauses, which have traditionally restricted healthcare professionals from working within a certain geographic area or for a specific period after leaving a practice, will face new constraints under this law. The Act aims to balance the protection of healthcare practitioners’ career mobility with the interests of healthcare practices.
Restrictions on Recovering Expenses Related to Relocation, Training, and Establishing a Patient Base: The Act also addresses the recovery of relocation, training, and similar expenses, which often require healthcare workers to remain with an employer for a certain period in exchange for companies investment in the employee training. These contracts will now be subject to new rules ensuring they are fair and do not unduly restrict healthcare workers’ freedom to move between employers.
The Act marks an important shift by making non-competition covenants void and unenforceable if they restrict healthcare practitioners from treating or accepting new patients. This is aimed towards retaining and attracting top talent, enhancing patient access and care, and creating a more competitive healthcare market. Providers affected by this include physicians, registered nurse practitioners, and physician assistants.
The Act does include some important exceptions, and Voluntary and Involuntary termination are two of these. For voluntary termination, non-compete agreements of up to one year remain enforceable if a practitioner chooses to leave their employment voluntarily. This allows for some level of protection for employers, while keeping the freedom of practitioners. Alternately, with involuntary termination non-compete agreements are entirely unenforceable if the practitioner is dismissed involuntarily, regardless of the reason. This includes terminations for cause as well.
Non-competes tied to the sale or transfer of a business will remain enforceable if the healthcare practitioner is a party to the transaction. This provision helps maintain the value and continuity of healthcare businesses during transitions.
Implications for Healthcare Practices
Healthcare practices in Pennsylvania must understand and adapt to these new regulations to ensure compliance and maintain a positive work environment. Here are some key considerations:
– Review and Revise Contracts: Practices should review existing employment agreements to ensure they align with the new legal requirements. Non-compete clauses and training contracts may need to be revised or removed to comply with the Act.
– Consult Legal Experts: Given the complexity of the new regulations, consulting with legal experts specializing in healthcare law is crucial. They can provide guidance on how to structure employment agreements moving forward.
– Focus on Retention Strategies: With the restrictions on non-compete clauses, practices may need to develop new strategies to retain talent. This could include offering competitive salaries, benefits, and professional development opportunities to make the practice an attractive place to work.
One of the important features of this Act is its focus on ensuring continuity of care for patients. Businesses are now required to notify patients within 90 days if their healthcare practitioner, who has had an ongoing outpatient relationship with the patient for at least two years, departs. This notice must: 1) Inform patients of the practitioner’s departure, 2) provide instructions on how patients can transfer their health records if they choose to receive care from another provider, and 3) explain that patients may be assigned a new practitioner within the existing employer if they choose to continue their care there. This provision aims to reduce disruption and maintain the quality of care during provider transitions.
Going Forward
Non-compete agreements entered into before the Act’s effective date of January 1, 2025, will remain unaffected. Both employers and healthcare practitioners should review their existing contracts to understand their current obligations and how the new law might impact future agreements.
As we move closer to the implementation date, Lengea will be watching closely to see how this new act influences employment practices. The act represents a significant step towards more freedom for healthcare practitioners in Pennsylvania, with the ultimate goal of enhancing the state’s healthcare system.
The response from the healthcare community has been mixed. Many practitioners welcome the Act, seeing it as a long-needed reform that prioritizes patient care and provider freedom. Some healthcare organizations and employers express concerns about the potential challenges in protecting their investments in training and development. Balancing these interests will be crucial as the Act comes into effect.
Legislative Background
House Bill 1633, introduced by Rep. Dan Frankel (D-Pittsburgh), originally aimed for a complete ban on non-compete agreements for healthcare workers. The motivation behind this proposal was to improve patient care and address the challenges faced by rural healthcare providers. Through legislative negotiations, the bill was refined to a more balanced approach, resulting in significant and targeted restrictions on non-compete agreements.
The Act is particularly significant for these rural healthcare providers, who often face difficulties in recruiting and retaining qualified healthcare providers. By limiting the use of non-compete agreements, the Act encourages more practitioners to work in underserved rural areas without the fear of restrictive agreements. This could lead to improved healthcare access and quality in these regions, addressing long-standing issues with rural healthcare services.
The Broader Non-Compete Landscape in the US
The Fair Contracting for Health Care Practitioners Act is part of a broader trend in the United States toward re-evaluating the use of non-compete agreements. The Federal Trade Commission (FTC) has proposed a nationwide ban on non-compete clauses, arguing that they stifle competition and harm workers’ ability to seek better employment opportunities. While the FTC’s ban is currently set to go into effect on September 4th, 2024, the ban is under consideration by a few courts who may look to overturn it. Nonetheless, the ban reflects a growing movement to limit or eliminate non-compete agreements across various industries. This scrutiny emphasizes the importance of ensuring that such agreements are reasonable and not overly restrictive.
The Fair Contracting for Health Care Practitioners Act represents a significant change for healthcare practices in Pennsylvania. By understanding the new requirements and proactively adjusting employment practices, healthcare providers can navigate this transition smoothly. Staying informed about the broader national trends regarding non-compete agreements will also be essential as the legal landscape continues to evolve.
At Lengea Law, we are committed to helping healthcare practices understand and comply with the latest legal developments. Our team of experienced healthcare attorneys is here to provide the guidance and support you need during this time of change. Contact us today to learn more about how we can assist you in navigating the new regulations and ensuring your practice remains compliant and competitive.
This post is not considered Legal Advice and is intended for informational purposes only. If you have any questions, please contact us for any further assistance/legal advice on navigating this new legislation.