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Louisiana Senate Bill No. 165 Limits the Use of Non-Compete Agreements with Physicians

Louisiana Senate Bill 165, recently signed by our Governor, limits the use of non-compete agreements with most physicians. The new law is effective January 1, 2025. For “primary care physicians”, any provision restraining them from practicing medicine shall not exceed three years from the effective date of the initial agreement. This is being commonly referred to as a “burn down” provision. If the primary care physician remains with that employer for three years, the non-compete provision is no longer enforceable. Any subsequent agreement between that employer and the primary care physician after the initial three-year term cannot include non-compete provisions.

Caution: It appears from the language in the Bill that current agreements may need to be re-written to recognize the three or five-year “burn down” of the non-compete provision in physician contracts as well as the three-parish limitation.

If the agreement is terminated by the primary care physician, however, prior to the initial three-year term, the non-compete provision can be enforced against that physician for the standard two-year period from the date of termination of employment. It can only be enforced, however, in no more than three parishes, including the parish in which the primary care physician’s principal practice is located, and no more than two additional contiguous parishes in which the employer carries on a like business.

“Primary care physician” is defined as “a physician who predominantly practices general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology.

For those not meeting the definition of a “primary care physician”, Senate Bill 165 also limits the use of non-compete agreements for these physicians. The limitations are exactly the same as those of a “primary care physician”, except the burn down period is five years. Neither of these provisions containing either a three or five-year burn down period apply to certain other physicians specifically listed in Senate Bill 165. Those include physicians employed or under contract with a rural hospital, or any physician employed or under contract with a federally qualified health care center. These physicians are subject to the standard rules for non-compete agreements.

While Senate Bill 165 applies to all contracts entered into after January 1, 2025, it additionally affects current contracts. The three and five-year burn down periods for current contracts with physicians, as well as the three-parish geographical limitation, begins to run as of January 1, 2025, the effective date of the Act.

Louisiana Senate Bill No. 165 Limits the Use of Non-Compete Agreements with Physicians

Louisiana Senate Bill 165, recently signed by our Governor, limits the use of non-compete agreements with most physicians. The new law is effective January 1, 2025. For “primary care physicians”, any provision restraining them from practicing medicine shall not exceed three years from the effective date of the initial agreement. This is being commonly referred to as a “burn down” provision. If the primary care physician remains with that employer for three years, the non-compete provision is no longer enforceable. Any subsequent agreement between that employer and the primary care physician after the initial three-year term cannot include non-compete provisions.

Caution: It appears from the language in the Bill that current agreements may need to be re-written to recognize the three or five-year “burn down” of the non-compete provision in physician contracts as well as the three-parish limitation.

If the agreement is terminated by the primary care physician, however, prior to the initial three-year term, the non-compete provision can be enforced against that physician for the standard two-year period from the date of termination of employment. It can only be enforced, however, in no more than three parishes, including the parish in which the primary care physician’s principal practice is located, and no more than two additional contiguous parishes in which the employer carries on a like business.

“Primary care physician” is defined as “a physician who predominantly practices general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology.

For those not meeting the definition of a “primary care physician”, Senate Bill 165 also limits the use of non-compete agreements for these physicians. The limitations are exactly the same as those of a “primary care physician”, except the burn down period is five years. Neither of these provisions containing either a three or five-year burn down period apply to certain other physicians specifically listed in Senate Bill 165. Those include physicians employed or under contract with a rural hospital, or any physician employed or under contract with a federally qualified health care center. These physicians are subject to the standard rules for non-compete agreements.

While Senate Bill 165 applies to all contracts entered into after January 1, 2025, it additionally affects current contracts. The three and five-year burn down periods for current contracts with physicians, as well as the three-parish geographical limitation, begins to run as of January 1, 2025, the effective date of the Act.

Louisiana Senate Bill No. 165 Limits the Use of Non-Compete Agreements with Physicians

Louisiana Senate Bill 165, recently signed by our Governor, limits the use of non-compete agreements with most physicians. The new law is effective January 1, 2025. For “primary care physicians”, any provision restraining them from practicing medicine shall not exceed three years from the effective date of the initial agreement. This is being commonly referred to as a “burn down” provision. If the primary care physician remains with that employer for three years, the non-compete provision is no longer enforceable. Any subsequent agreement between that employer and the primary care physician after the initial three-year term cannot include non-compete provisions.

Caution: It appears from the language in the Bill that current agreements may need to be re-written to recognize the three or five-year “burn down” of the non-compete provision in physician contracts as well as the three-parish limitation.

If the agreement is terminated by the primary care physician, however, prior to the initial three-year term, the non-compete provision can be enforced against that physician for the standard two-year period from the date of termination of employment. It can only be enforced, however, in no more than three parishes, including the parish in which the primary care physician’s principal practice is located, and no more than two additional contiguous parishes in which the employer carries on a like business.

“Primary care physician” is defined as “a physician who predominantly practices general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology.

For those not meeting the definition of a “primary care physician”, Senate Bill 165 also limits the use of non-compete agreements for these physicians. The limitations are exactly the same as those of a “primary care physician”, except the burn down period is five years. Neither of these provisions containing either a three or five-year burn down period apply to certain other physicians specifically listed in Senate Bill 165. Those include physicians employed or under contract with a rural hospital, or any physician employed or under contract with a federally qualified health care center. These physicians are subject to the standard rules for non-compete agreements.

While Senate Bill 165 applies to all contracts entered into after January 1, 2025, it additionally affects current contracts. The three and five-year burn down periods for current contracts with physicians, as well as the three-parish geographical limitation, begins to run as of January 1, 2025, the effective date of the Act.

Louisiana Senate Bill No. 165 Limits the Use of Non-Compete Agreements with Physicians

Louisiana Senate Bill 165, recently signed by our Governor, limits the use of non-compete agreements with most physicians. The new law is effective January 1, 2025. For “primary care physicians”, any provision restraining them from practicing medicine shall not exceed three years from the effective date of the initial agreement. This is being commonly referred to as a “burn down” provision. If the primary care physician remains with that employer for three years, the non-compete provision is no longer enforceable. Any subsequent agreement between that employer and the primary care physician after the initial three-year term cannot include non-compete provisions.

Caution: It appears from the language in the Bill that current agreements may need to be re-written to recognize the three or five-year “burn down” of the non-compete provision in physician contracts as well as the three-parish limitation.

If the agreement is terminated by the primary care physician, however, prior to the initial three-year term, the non-compete provision can be enforced against that physician for the standard two-year period from the date of termination of employment. It can only be enforced, however, in no more than three parishes, including the parish in which the primary care physician’s principal practice is located, and no more than two additional contiguous parishes in which the employer carries on a like business.

“Primary care physician” is defined as “a physician who predominantly practices general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology.

For those not meeting the definition of a “primary care physician”, Senate Bill 165 also limits the use of non-compete agreements for these physicians. The limitations are exactly the same as those of a “primary care physician”, except the burn down period is five years. Neither of these provisions containing either a three or five-year burn down period apply to certain other physicians specifically listed in Senate Bill 165. Those include physicians employed or under contract with a rural hospital, or any physician employed or under contract with a federally qualified health care center. These physicians are subject to the standard rules for non-compete agreements.

While Senate Bill 165 applies to all contracts entered into after January 1, 2025, it additionally affects current contracts. The three and five-year burn down periods for current contracts with physicians, as well as the three-parish geographical limitation, begins to run as of January 1, 2025, the effective date of the Act.

Louisiana Senate Bill No. 165 Limits the Use of Non-Compete Agreements with Physicians

Louisiana Senate Bill 165, recently signed by our Governor, limits the use of non-compete agreements with most physicians. The new law is effective January 1, 2025. For “primary care physicians”, any provision restraining them from practicing medicine shall not exceed three years from the effective date of the initial agreement. This is being commonly referred to as a “burn down” provision. If the primary care physician remains with that employer for three years, the non-compete provision is no longer enforceable. Any subsequent agreement between that employer and the primary care physician after the initial three-year term cannot include non-compete provisions.

Caution: It appears from the language in the Bill that current agreements may need to be re-written to recognize the three or five-year “burn down” of the non-compete provision in physician contracts as well as the three-parish limitation.

If the agreement is terminated by the primary care physician, however, prior to the initial three-year term, the non-compete provision can be enforced against that physician for the standard two-year period from the date of termination of employment. It can only be enforced, however, in no more than three parishes, including the parish in which the primary care physician’s principal practice is located, and no more than two additional contiguous parishes in which the employer carries on a like business.

“Primary care physician” is defined as “a physician who predominantly practices general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology.

For those not meeting the definition of a “primary care physician”, Senate Bill 165 also limits the use of non-compete agreements for these physicians. The limitations are exactly the same as those of a “primary care physician”, except the burn down period is five years. Neither of these provisions containing either a three or five-year burn down period apply to certain other physicians specifically listed in Senate Bill 165. Those include physicians employed or under contract with a rural hospital, or any physician employed or under contract with a federally qualified health care center. These physicians are subject to the standard rules for non-compete agreements.

While Senate Bill 165 applies to all contracts entered into after January 1, 2025, it additionally affects current contracts. The three and five-year burn down periods for current contracts with physicians, as well as the three-parish geographical limitation, begins to run as of January 1, 2025, the effective date of the Act.

Louisiana Senate Bill No. 165 Limits the Use of Non-Compete Agreements with Physicians

Louisiana Senate Bill 165, recently signed by our Governor, limits the use of non-compete agreements with most physicians. The new law is effective January 1, 2025. For “primary care physicians”, any provision restraining them from practicing medicine shall not exceed three years from the effective date of the initial agreement. This is being commonly referred to as a “burn down” provision. If the primary care physician remains with that employer for three years, the non-compete provision is no longer enforceable. Any subsequent agreement between that employer and the primary care physician after the initial three-year term cannot include non-compete provisions.

Caution: It appears from the language in the Bill that current agreements may need to be re-written to recognize the three or five-year “burn down” of the non-compete provision in physician contracts as well as the three-parish limitation.

If the agreement is terminated by the primary care physician, however, prior to the initial three-year term, the non-compete provision can be enforced against that physician for the standard two-year period from the date of termination of employment. It can only be enforced, however, in no more than three parishes, including the parish in which the primary care physician’s principal practice is located, and no more than two additional contiguous parishes in which the employer carries on a like business.

“Primary care physician” is defined as “a physician who predominantly practices general family medicine, general internal medicine, general pediatrics, general obstetrics, or general gynecology.

For those not meeting the definition of a “primary care physician”, Senate Bill 165 also limits the use of non-compete agreements for these physicians. The limitations are exactly the same as those of a “primary care physician”, except the burn down period is five years. Neither of these provisions containing either a three or five-year burn down period apply to certain other physicians specifically listed in Senate Bill 165. Those include physicians employed or under contract with a rural hospital, or any physician employed or under contract with a federally qualified health care center. These physicians are subject to the standard rules for non-compete agreements.

While Senate Bill 165 applies to all contracts entered into after January 1, 2025, it additionally affects current contracts. The three and five-year burn down periods for current contracts with physicians, as well as the three-parish geographical limitation, begins to run as of January 1, 2025, the effective date of the Act.