New Louisiana Law Restricting Non-compete Clauses with Physicians

On May 29, 2024, Governor Landry signed a bill that would limit non-compete clauses with physicians effective January 1, 2025. This alert provides a brief summary of the new law; this summary is only intended to make the reader aware of some of the provisions of the new law and does not constitute legal advice.

How does the new law affect primary care physicians?

The new law defines a primary care physician as a physician who predominantly practices general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology.

The new law provides that a contract or agreement provision which restrains a primary care physician from practicing medicine must not exceed three years from the effective date of the initial contract or agreement. Any subsequent contract or agreement between the employer and primary care physician executed after the initial three-year term shall not include non-compete provisions.

If the initial three-year contract or agreement is terminated by the primary care physician "prior to the initial three-year term," the primary care physician may be prohibited from carrying on or engaging in a business similar to that of the employer in the parish in which the primary care physician's principal practice is located and no more than two contiguous parishes in which the employer carries on a like business. The parishes must be specified in the contract or agreement. The prohibition must not exceed a period of more than two years from termination of employment.

It is unclear if a primary care physician terminates a contract or agreement during the initial three-year term but after the first year, whether the non-compete may only extend to the end of the three-year initial term or may extend further to two years from termination of employment.

How does the new law affect non-primary care physicians?

The statute has a different time limit for non-primary care physicians. A contract or agreement provision that restrains a non-primary care physician must not exceed five years from the effective date of the initial contract or agreement. The same parish and two-year from termination provisions as for primary care physicians apply.

Are any physicians excepted?

The new law provides that its non-compete limits for primary care physicians and non-primary care physicians do not apply to any physician employed by or under contract with a rural hospital or any physician employed by or under contract with a federally qualified healthcare center. For such physicians, the pre-existing provisions of Louisiana's noncompetition statute continue to apply.