Covenant not to compete

A clause of an employment contract which prohibits the employee from competing with the employer in their field of work in the event of termination of the employment relationship. Generally, a covenant not to compete will be enforced if it is (1) ancillary to a lawful contract, (2) supported by consideration (such as salary), and (3) is reason¬ able. For example, if the clause prohibited the employee from working in the same field as the employer forever, the clause would not be reasonable and would not be enforced. These clauses are becoming more important in the health care field as competition is increasing and physicians are working with more then one hospital. Hospitals are trying to get more control over the care within their service areas. Also called a “noncompete clause.”


 


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