Non-Compete Clauses In Intraoperative Neuromonitoring

(Joe’s notes: In today’s GUEST POST I interview Greg Barthelette, a lawyer in Boca Raton, Florida. Greg practices in a few different areas, most important to us is business law. I’ve used his services every time I’ve joined a new company, except for one. When I went from an in-house program to a contractual company, I did not have much in my contract for restrictions, including a non-compete clause. So I was free to make the move without having to consider any legal obligations in that manner. As a matter of fact, that contract was very simple to understand overall. Kind of  a rare deal nowadays and the only reason I felt comfortable moving on without an attorney’s review.

Non-compete in IONM is usually only one of the sections you need to fully understand when you’re starting employment with a new company, leaving a company to start employment with another company or to start up your own company. These contracts can sometimes get a bit confusing because of the many ways one might interpret what’s said. But for myself, it’s often the “spirit” in which something should be interpreted that is often times the easiest to screw up if you’re not someone that deals with these things. In our legal system, past court findings are important to best understanding how something can, and should, be interpreted. I don’t know that stuff, but lawyers do. So getting an attorney to review contracts becomes a necessary expense of starting a new position or starting a new practice.

The rest of this article has some questions that I had for Greg that were purely for educational and informational purposes. These do not reflect any of the terms in my contracts. This is also not legal advice for you in particular. The only advice I can give is that if you need advice as it pertains to your particular situation, contact Greg here.)

Q and A With An Attorney: Non-Compete Clauses In Contracts

Joe: Let’s start with a hypothetical. A person is interviewing for his or her first job in the intraoperative neuromonitoring field and is asked to sign a non-compete agreement. What should he or she do?

Greg: I can understand that a first-time employee would be excited to start a career in his chosen field, and maybe not think of all the consequences of signing a non-compete agreement. But they can, of course, be serious. So I strongly suggest meeting with a lawyer before signing any non-compete agreement, so you can understand all the ramifications of signing a non-compete agreement.

Joe: Why? What kind of consequences is there?

Greg: For example, in the intraoperative neuromonitoring field, employers will often spend quite of bit of money training employees new to the field. In addition to having employees sign non-compete agreements which can restrict where they may work if the relationship ends, they may also include contracts that if the employee leaves before a certain period of time he or she might have to pay back some or all of the costs of training. Hopefully, you enjoy working for your new employer and never have to deal with these issues. But it’s important to be aware of these issues, and see whether some of the risks can be alleviated at the outset of the relationship.

(Joe’s notes: This is one of the most common questions I get from people looking to get into the field… How do I get trained? Truth is, it’s difficult and expensive. Some companies don’t have the financial, or even appropriately trained staff, to hire someone new to train. You’ll never get your first job with them. Other companies spend a great amount of time and money taking newbies and making them IONM studs. They know investing in their people means investing in the company. These are the companies you need to seek out. But that high cost to get trained comes with some strings attached in some cases, just as Greg has pointed out. But if you consider what they are spending in paying their staff to train you, covering your salary/benefits/malpractice, covering your travel, cost to credential you in hospitals, etc. they are spending the equivalent of a college education. So it makes sense for them to mitigate their risk by having you stay with the company for a certain period of time, or repay the money. That isn’t something exclusive to the IONM industry either. You’ll see the same thing in places like the police academy.) 

Joe:    Staying with this example, can the employee negotiate the terms of the non-compete agreement?

Greg: Well, it all depends on the employer. Generally, it might be a little harder for a fresh-out-of-school employee to negotiate, simply because he or she may not have leverage yet. As a personal example, I had a friend who is a doctor who tried to negotiate the terms of her employment contract for her first job. Her employer would not agree; in fact, the employer was not willing to negotiate anything. It was a take-it-or-leave-it deal. Now that doesn’t mean you shouldn’t try because a prospective employer might be willing to do so. But her employer wasn’t.

But even if the employer doesn’t agree to negotiate, it’s still a good idea to meet with a lawyer so you can understand the potential ramifications. For example, you should assume the worst case scenario. What if the non-compete agreement is enforced and you are now prohibited from working in a certain geographical area for a period of time. Are you comfortable with this? Is your family comfortable with this? What financial impact could it have? You have to ask yourself these serious questions, and hopefully find a solution that’s best for you and your family.

Joe:    Let’s say you already signed the non-compete agreement and you are working, but now want to change jobs. What can you do? Could you gain anything from meeting with a lawyer?

Greg: Yes, absolutely. Hopefully, your lawyer can help guide you on how your new job may impact the non-compete agreement. If the non-compete agreement does not, then great – you can move on having peace of mind.  If it does impact your new job, then a lawyer can go over your options with you, including negotiating with your current employer to see if there is a way you can leave amicably.

Joe:    Well, what would the cost differences be between having a lawyer review your non-compete versus going to court?

Greg: Generally, the differences in cost can be dramatic. A one or two-time meeting with a lawyer to review an employment contract will be way less expensive than a court case. Typically, you pay your attorney by the hour for this service.

Joe:  Can you give a rough breakdown?

Greg: Sure. You’re typically paying the lawyer by the hour. So a meeting or two with a lawyer, plus his or her time to review your employment agreement and the non-compete agreement will not be that time consuming. Court cases, on the other hand, can drag on for many months, and often times years. As you can imagine, legal fees will be much, much higher, given the fact that they can spend hundreds of hours on your case.

(Joe’s notes: I honestly don’t have much experience with this. I have spoken with some people that were taken to court. $30K later they ran out of money and had to drop their defense. Out of money and out of the job. Now, I have no idea if that is high, low or about right. All I know is that it is possible. That being said, I’ve also heard of people that took the risk and the company didn’t have the financial means themselves to pursue legal action. They rolled the dice and got what they wanted.)

Joe:  What kinds of legal costs and expenses could an employee face if he or she violated a non-compete agreement and his or her employer takes him or her to court?

Greg: First, you have to remember that you will be responsible for your own attorney’s fees. Your attorney will likely bill you by the hour. You will also be responsible for various costs. These costs can include the court reporters fee for taking depositions, paying for documenting copying, and many other types of incidental costs – which can add up quickly.

Joe:  What about if the employee loses the case? Besides being out of work for a period of time, what kind of costs and expenses could an employee face?

Greg: Good question, because it’s important to think about what can happen if you lose. First, it’s possible that your employer could get a monetary judgment against you. If you violated the terms of the non-compete agreement – such as taking your former employee’s customers – and your employer can show it was damaged, then you may get monetary judgment entered against you. On top of this, it’s possible you will also be responsible for your employer’s attorney’s fees – in addition to your own. Now, there are a lot of variables, but if things do not turn out well it could be very costly.

Joe:    What about the situation with your new employer? How would it be impacted?

Greg: Your new employer could be part of the lawsuit as well. Your old employer could include your new employer as a defendant, especially where the new employer reviewed the employee’s non-compete, and still hired the employee nonetheless.

(Joe’s notes: This is the ugly side of the field. Management and owners of a company feel slighted if someone is trying to poach their customers. Often times other people’s jobs are on the line. Not only is it in the company’s best interest to protect their accounts, but they also have an ethical obligation to their staff to do what’s needed to provide them jobs. Should someone leave and take business with them, it could lead to a domino effect of lost jobs. 

The employee wanting to leave, on the other hand, usually feels like the company is trying to trap them. It seems un-American that someone can stop you from getting a job to earn a living.  

I’ve been on both sides of the situation. They both stink.

The way things usually play out is the employee turns in their letter of resignation and the company’s HR department sends them a letter reminding them of contractual obligations. Should the former employee ignore that obligation, the company will have their lawyers draft a letter to the former employee and their current employer that they are in violation of their contract. From there, it can go a number of different directions.

By entering into this field (and honestly most every other professional field), it’s your obligation to understand the rules of the game. They can be confusing and mistakes can be costly – that’s the reality of our legal system. The cost of hiring an attorney when taking a new job should be seen as the cost of insuring against a financial catastrophe.)