Physician Non-Competes in 2025: State by State Updates and Next Steps

Navigating the complexities of physician contracts is a constant challenge, and restrictive covenants, particularly non-compete agreements, remain a significant point of focus and confusion. As we move through 2025, the landscape continues to shift. While the much-discussed federal ban proposed by the Federal Trade Commission (FTC) hit significant roadblocks, the action has undeniably moved to the states, creating an increasingly complex patchwork of regulations that every physician must understand.

Back in August 2024, we discussed the potential impact of the FTC’s proposed rule. Now, it’s time for an update. The ground is still moving, and staying informed is crucial for protecting your career and maximizing your opportunities. Let’s summarize the current situation and offer key takeaways for physicians navigating non-compete clauses in 2025.

The Federal Front: FTC Rule Stalled, NLRB Position Shifting

Remember the buzz around the FTC’s final rule announced in April 2024? It aimed to implement a near-total ban on new non-compete agreements and invalidate most existing ones, citing worker mobility and wage suppression concerns. The rule was scheduled to take effect in September 2024.

However, as predicted by many legal experts, the rule faced immediate legal challenges. Federal courts in Texas and Florida issued injunctions, effectively blocking the rule’s implementation nationwide. While the FTC initially appealed these rulings, the change in administration following the recent election makes it highly unlikely that these appeals will be pursued vigorously. The previous administration’s focus on limiting non-competes is not shared by the current one. Similarly, the National Labor Relations Board (NLRB) General Counsel’s 2023 memo suggesting non-competes violate the National Labor Relations Act is also expected to be rescinded under new leadership.

The bottom line for physicians: The sweeping federal ban is effectively on ice for the foreseeable future. Non-compete agreements remain permissible under federal law. However, the intense focus the FTC and NLRB brought highlighted the national debate, and the real action is now firmly at the state level.

State Laws: The Crucial Battleground in 2025

With the federal initiative stalled, understanding the state's specific laws where you practice (or intend to practice) is more critical than ever. States continue to enact legislation to limit or regulate non-competes, creating a diverse and often confusing map of restrictions.

Several states have outright bans on employee non-competes, including California, North Dakota, Oklahoma, and Minnesota (since July 2023). Many others have implemented restrictions based on salary thresholds, specific professions (especially healthcare), duration, geographic scope, or the circumstances under which a non-compete can be enforced.

Visualizing this complex landscape can be helpful. Maps like the one below (based on data compiled by firms like Frost Brown Todd) illustrate the different approaches states are taking:

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Key States of Interest: Critical Non-Compete Developments for Physicians

South Dakota: South Dakota generally permits non-competes (up to two years, reasonable geography). However, a crucial law effective July 1, 2023, voids non-competes for most healthcare practitioners, including physicians, unless tied to a practice sale. Non-solicitation and confidentiality agreements likely remain enforceable.

Iowa: Iowa’s non-compete enforceability relies on judicial precedent, applying a reasonableness test (balancing employer need, employee hardship, and public interest). While there isn’t a broad physician ban, a recent law restricts non-competes for licensed mental health professionals, indicating a potential trend towards more specific limitations.

California: California remains one of the most restrictive states; Business and Professions Code Section 16600 generally voids employee non-competes, explicitly including physicians. Legislation in 2024 further strengthened this ban. The main exception for physicians is tied to the sale of a business where they hold significant ownership. For most employed physicians, non-competes are effectively banned.

Colorado: Colorado law generally voids non-competes except for highly compensated employees (>$127,091 in 2025). Covenants restricting their practice are typically void for physicians, except for practice sales or trade secret protection. A new bill (SB 25-083, awaiting signature for Aug 2025 effect) aims to restrict physician non-competes further and eliminate damage provisions for violations.

Texas: Texas permits physician non-competes with strict statutory requirements (Business & Commerce Code § 15.50(b)). They must be reasonable (time, scope, activity), allow patient list/record access (with consent), and include a reasonable buyout provision. Failure to meet these renders the agreement unenforceable.

Florida: Florida generally enforces reasonable non-competes that protect a legitimate business interest (FS § 542.335). A specific, limited restriction for physicians (FS § 542.336) voids a non-compete if it restricts practice in a county where the employer is the sole specialty provider. Broader legislative bans for physicians failed in 2024-2025, so they remain generally enforceable if standard criteria are met.

New York: New York disfavors non-competes, enforcing them only if reasonable and necessary to protect legitimate employer interests. Public interest (access to care) is a key consideration for physicians. While a broad non-compete ban was vetoed in late 2023, a new bill (S4641A) introduced in February 2025 proposes significant restrictions, with the specifics for physicians still under debate. The legislative landscape is evolving, requiring close monitoring.
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‍Salary Thresholds: Many states now prohibit non-competes for employees earning below a certain annual salary. These thresholds vary widely, for example (as of early 2025, subject to change): Colorado ($123,750), Washington D.C. ($154,200), Illinois ($75,000), Virginia ($73,320), and Washington ($120,559). Physicians generally exceed these thresholds, but it highlights the legislative trend.

‍Healthcare Professional Restrictions: Beyond South Dakota and Iowa’s specific examples, many states have laws limiting non-competes for healthcare professionals. States like Pennsylvania, Louisiana, and Maryland introduced or expanded such limits in 2025, joining others like Colorado, Indiana, Kentucky, Tennessee, and Texas. Pennsylvania’s law, for instance, limits healthcare practitioner non-competes to one year and voids them if the practitioner is dismissed without cause.

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Complete State-by-State Non-Compete Reference Guide*

Below is a state by state guide sorted from the most physician friendly policies to the most restrictive

Courts Increasing Scrutiny

Even where non-competes are permitted, state courts are increasingly scrutinizing their terms. Recent decisions underscore that agreements must be reasonable and supported by adequate consideration.

For example, the Delaware Supreme Court invalidated an overly broad non-compete tied to a business sale, finding its terms complex and the restrictions essentially indefinite (Sunder Energy, LLC v. Tyler Jackson et al., 2024). The Pennsylvania Supreme Court refused to enforce a non-compete signed two months after employment began, even though it was presented beforehand, because no new consideration was given at the time of signing (Rullex Co., LLC v. Tel-Stream, Inc.).

These cases show that courts may not enforce unfair or overly restrictive agreements. They might not even “blue pencil” (modify) the agreement to make it enforceable or invalidate it entirely.

One thing is for sure: To find out if your non-compete will stand up in court, you must challenge it, which many physicians do not wish to do.

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Top 10 Takeaways for Physicians in 2025*:

In summary, 2024 and 2025 have seen much change in these critical provisions and restrictions. Here are the key takeaways for physicians regarding non-compete agreements as of mid-2025 -

1. Federal Ban Remains Stalled
Don’t assume the FTC rule has eliminated non-competes. Legal challenges have put it on hold indefinitely, and the current administration is unlikely to pursue it. Federal law still permits non-competes.

2. State Law is Paramount
‍Your rights and obligations are primarily determined by the state's laws where you work. The landscape is a patchwork, and you must know the specific rules in your state.

3. Physician-Specific Rules Increasing
‍More states are creating specific rules for healthcare professionals. South Dakota’s ban for most practitioners (post-July 2023) and Iowa’s limits for mental health professionals are key examples. Check if your state has physician-specific legislation.

4. Scrutiny is High
Courts are looking closely at non-competes. Overly broad geographic scopes, long durations, or a lack of clear connection to a legitimate business interest can render them unenforceable. Reasonableness is key.

5. Consideration Matters
‍A non-compete needs valid consideration. An offer of initial employment usually suffices if signed before or at the start of work. For current employees, new consideration (like a bonus or promotion) is often required for a new non-compete to be valid.

6. Non-Solicitation/Confidentiality Still Strong
‍Even where non-competes are restricted or banned (like for physicians in South Dakota), agreements preventing you from soliciting former patients or employees, or misusing confidential information, are generally enforceable. Expect employers to rely more heavily on these.

7. Negotiation is Still Possible
‍While enforceability varies, non-competes are part of the contract negotiation. Understand your state’s laws to know your leverage. Can the scope or duration be reduced? Can a buyout clause be added?

8. Review Your Existing Agreement
‍Don’t assume your old non-compete is invalid or enforceable. Changes in state law or court interpretations might affect it. Understand its terms in light of current regulations.

9. Beware of “Choice of Law” Clauses
‍Contracts might specify that the laws of a different state (perhaps the employer’s headquarters) govern the agreement. While courts sometimes disregard these if they conflict strongly with the employee’s state public policy, it adds complexity. Be aware of which state’s law is intended to apply.

10. Proactive Planning is Essential
‍Whether you’re signing a new contract or considering a move, understand the restrictive covenants involved. Don’t wait until a conflict arises. Get expert advice before you sign or make a career change.

Conclusion: Take Control of Your Contract

The non-compete landscape for physicians remains complex and dynamic in 2025. While the threat of a sweeping federal ban has receded, state legislatures and courts continue to shape the rules, often with specific attention to healthcare. Understanding these nuances is not just a legal exercise; it’s critical for your career mobility, earning potential, and peace of mind.

Don’t navigate this alone. If you’re facing a new contract with restrictive covenants or are unsure how current laws affect your existing agreement, seeking expert review is crucial. My firm, Contract Diagnostics, specializes in helping physicians understand every aspect... career goals. You can schedule a Free Consultation here.

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About the author

Jon Appino is the Founder and CEO of Contract Diagnostics. Over fourteen years ago, Jon pioneered a new national physician contract review approach. Since then, he has built a team that shares his passion for empowering physicians through their contracts and compensation. Jon inspires a proactive approach to career and compensation management. Contract Diagnostics reviews thousands of contracts annually and offers clients a comprehensive compensation database.**

References:

Contract Diagnostics. (August 14, 2024). FTC’s Non-Compete Ban: 10 Key Takeaways for Physician Contracts

Beck Reed Riden LLP. Fair Competition Law. Accessed May 2025.

Beck Reed Riden LLP. (January 11, 2025 Update). The Changing Landscape of Trade Secrets Laws and Noncompete Laws Around the Country

Frost Brown Todd LLP. (February 3, 2025). The Non-Compete Agreement Landscape in 2025

Woods, Fuller, Shultz & Smith P.C. (September 17, 2024). New Non-Competes Explained in South Dakota, Minnesota, and Iowa

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*All data within is accurate to the best of our knowledge as of the publication date and based on publicly available information.

** Jon Appino is not an attorney, and the content of this article should not be construed as legal advice. The information provided is for general informational purposes only and reflects publicly available data as of the date of publication. Contract Diagnostics recognizes that each contract and situation is unique and may require state-specific legal counsel. We are happy to refer you to qualified professionals as needed.

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