There’s been an explosion of activity in state legislatures the past couple of years when it comes to restricting physician noncompete agreements. It is a phenomenon that resident physicians should track closely as they consider a state’s legal landscape in the mix of factors that drive where they search for work in their transition to practice.
Legally called a “covenant not to compete,” these agreements can make it very difficult for the employed physicians signing them to leave a health care employer because they are, for example, prohibited from practicing medicine within a certain radius or must pay out a dollar amount that they just don’t have on tap. However, owners of physician private practices often invest heavily when they hire and training a doctor and may believe they need reasonable noncompete agreements to help gird against the encroachment of large health systems.
As physicians continue to trend away from owning their own practices to instead being employed physicians, an AMA analysis shows that states are trending toward passing laws that aim to protect employed physicians signing contracts.
The laws vary—a few ban noncompetes outright, while some set limits on punitive measures in the agreements such as how long the noncompete is valid or to how far reaching the geographic area is. And among the other creative things states are trying are carve outs by physician specialty, practice size, practice type or even by physician salary.
To help physicians and other health professionals understand the landscape, the AMA Advocacy Resource Center recently updated a 90-page resource, “Legislative Template: Covenants to not-to Compete in Physician Contracts.” The comprehensive document is designed to help “state medical associations, national medical specialty societies and physician members navigate the sensitive intricacies of restrictive covenant policy at the state level.” The guidance is based on noncompete laws that states have enacted.
Those interested in obtaining a copy of the Legislative Template can send an email to AMA Senior Attorney Wes Cleveland.
How states are addressing noncompetes
In 2025, Arkansas and Wyoming joined Massachusetts and New Hampshire in seemingly prohibiting noncompetes in all contexts and not explicitly allowing for damages.
Meanwhile, a number of states have recently created bans that carve out various exceptions. Here are some examples.
Type of practice. Earlier this year, Oregon enacted two bills that ban many physician and health care provider noncompetes, making noncompetition agreements that restrict the practice of medicine or the practice of nursing “void and unenforceable” between a medical licensee and a person, management services organization, a hospital or a hospital-affiliate clinic. However, the law says physician noncompetes can be used in certain situations, including by “professional medical entities.”
Compensation amount. Maryland last year passed a law that differentiates between physicians and health care practitioners earning more or less than $350,000, banning noncompetes for those who make less than $350,000 in annual compensation. Those earning more than $350,000 can be subject to noncompetes; however, it must be limited to one year and cannot cover more than 10 miles from the physician’s primary place of employment.
Business transactions. In 2025, Colorado simplified its noncompete ban, making it apply more broadly. However, the new law created an exception for certain business transactions, including the purchase and sale of a business, a direct or indirect ownership share in a business or all or substantially all of the assets of a business that restricts competition by an owner of an interest in the business. These noncompetes are time-limited, with the length of time depending on whether the physician selling their ownership interest is a minority owner in the practice.
Type of employer. This year, Indiana changed its law to say that a hospital, parent company of a hospital, an affiliated manager or a hospital or a hospital system is prohibited from entering into a noncompete with employed physicians The state banned all noncompetes between health systems and employed physicians that are “originally entered into” on or after July 1, 2025.
Physician specialty. Louisiana in 2024 adopted a ban that went into effect Jan. 1 that distinguishes between primary care physicians and nonprimary care physicians. There’s an initial three-year limit on the non-compete and then an outright ban for primary care physicians. For non-primary care physicians, there is an initial five-year limit and then an outright ban. Noncompetes that remain enforceable until they are outright banned at the end of the three- and five-year time periods will have time and geographic restrictions. The law, however, does not prohibit noncompetes for physicians working with rural hospitals and physicians working with a federally qualified health center that operates in a rural parish.
Number of physicians in the practice. Connecticut has a law that limits physician noncompetes to no more than one year; however, in 2023 a section was added to distinguish between larger and smaller physician practices when it comes to using noncompetes. Certain restrictions apply to practices that have more than 35 physicians than those that do not.
Time limits. In 2024, Pennsylvania law passed that says a noncompete covenant may not last more than a year and that it is only enforceable if the physician voluntarily terminates employment.
Geographic limits. Texas amended its noncompete statute this year, limiting the duration of the physician noncompete to no more than one year and limiting the geographic scope of noncompetes to no more than a five-mile radius from the physician’s primary practice location.
Buyout limits. Texas this year defined that a buyout amount in a contract couldn’t be greater than the physician’s total annual salary and wages at the time of the physician’s employment or contract end.
The AMA has teamed up with Resolve, a contract review and negotiation firm specializing in physician employment, to provide custom contract review to AMA members at a discount. Resolve offers personalized legal experience to help physicians secure the best employment contract terms no matter where they are in their careers. Ready to access your AMA-member Resolve discount? Learn more now.
Among other resources, Resolve offers state-by-state information relevant to physicians on laws covering noncompete agreements, telemedicine and more.
What’s happening at the federal level
The recent state laws come as the Federal Trade Commission (FTC) announced a final rule in 2024 that looked to implement, with few exceptions, a ban on new noncompete agreements for all workers and sought to invalidate most existing noncompetes.
The rule was immediately challenged in federal court, and a Texas court stopped the rule from being implemented nationally. The FTC has appealed these rulings.
The House of Delegates adopted policy at 2025 AMA Annual Meeting that, among other things, directs the AMA to “strongly oppose the enforcement of noncompete clauses (restrictive covenants) following any material change in practice ownership or control.”
The policy also says that the AMA will advocate at the state and federal levels for legislative and regulatory solutions that “prohibit the assignment or automatic transfer of noncompete clauses in the event of ownership transitions, mergers or acquisitions.”
This comes after delegates adopted policy in 2024 opposing all restrictive covenants between employers and physician employees.
Learn more with the AMA about understanding physician employment contracts.
