FOR THE LAST several years, one of the most popular legal subjects of inquiry by physicians has been the validity and effect of a covenant not to compete, as used in physician employment contracts. These agreements are commonly referred to as restrictive covenants. A restrictive covenant may be defined as an express provision of an employment contract which restricts the right of the employee, after the conclusion of his term of employment, to engage in a business similar to or competitive with that of the employer. Such restrictions are, in most cases, limited to a specified period of time and a specified geographical area.
There can be little doubt that such covenants are common in physician employment contracts. A survey made by the American Association of Medical Clinics in 1954 revealed that 58% of the clinics contacted utilized restrictive covenants in their employment contracts. The survey also showed that