Noncompete clauses
Noncompete clauses are contractual agreements that prohibit physicians from engaging in the practice of medicine within a defined geographic area and time period after leaving a job. To be enforceable, the noncompete must be reasonable in scope and duration.
The FTC noncompete rule
On April 23, 2024, the Federal Trade Commission (FTC) attempted to ban nearly all noncompete clauses, deeming them an “unfair method of competition” in a rule (PDF) published in the Federal Register. The rule would have stopped employers from making new noncompete contracts with employees, except for senior executives, and also would have limited enforcement of many existing agreements.
However, the FTC noncompete rule was blocked by a U.S. District Court on Aug. 20, 2024. The court halted enforcement of the rule nationwide and questioned the FTC’s authority over unfair competition practices. The FTC appealed this decision in 2024 but dropped the appeal in September 2025. As a result, the FTC rule is currently not in effect and cannot be enforced.
State noncompete laws
Absent federal regulation, laws governing noncompete clauses are set by states. Some states completely ban noncompete agreements, while most allow them in some circumstances. About a dozen states do little to regulate noncompete agreements at all. For example, noncompete clauses are completely void in such states as Colorado, Delaware, and Massachusetts. But Ohio, Mississippi, and Wisconsin do not restrict noncompete clauses. Be sure to check the laws in your state and remember that states have passed a number of new laws to restrict noncompete clauses in recent years.
Legal analysis of the FTC rule
Read a DermWorld Legally Speaking article on the overturned FTC noncompete rule.
Understand the impact of noncompete clauses
With noncompete clauses still allowed in many states, dermatologists should carefully consider the terms of contracts that include these restrictive covenants. Some noncompete clauses are vague or overly broad, banning competition for years over a wide geographic area.
For dermatologists, the restrictions may include a ban on soliciting patients and former colleagues. Each of these restrictions may be problematic.
Non-solicitation of patients forbids you from notifying patients of contact information for your new practice, which can affect your ability to maintain continuity of care or rebuild your patient base.
Non-solicitation of former colleagues may interfere with staffing and recruitment, even when you’re not actively recruiting from the former employer.
Additional AAD resources
Employment contracts: Read our guidance on contract language and red flags.
Tips on improving your compensation package: Read DermWorld interviews with dermatologists on contracts and compensation.
Questions to ask a potential dermatology employer: Access expert advice on topics you should cover during the interview process.
This content was created with the particular needs of early-career dermatologists in mind. See the rest of our Career Launch resources for young physicians.
