Recent Developments in Physician Non-Compete Agreements: A State and Federal Landscape in Flux

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06.29.2026

The regulation of physician non-compete agreements has undergone substantial change over the past year. Although federal efforts to impose a nationwide ban on non-competes through the Federal Trade Commission (FTC) have been abandoned, as of September 2025, the agency has shifted to aggressive case-by-case enforcement, with the healthcare sector as a primary focus. At the same time, state legislatures have made efforts to restrict or outright prohibit non-compete agreements with physicians and other healthcare professionals. This article provides an overview of the most significant developments over the past year, drawing primarily from a comprehensive state law analysis current as of 2026.

Federal Trade Commission Enforcement Activity

Withdrawal of the Nationwide Ban

On September 5, 2025, the FTC announced it was abandoning its pursuit of a proposed nationwide ban on non-compete agreements, voting to dismiss its appeals of two federal court decisions that had enjoined the Biden administration rule. However, this did not represent a retreat from enforcement. In a joint statement, FTC Chairman Andrew Ferguson and Commissioner Melissa Holyoak announced that the FTC "will continue to enforce the antitrust laws aggressively against noncompete agreements" by targeting "specific" cases it deems overbroad and harmful.

Healthcare Industry Focus

The healthcare sector has emerged as a central priority for FTC enforcement. On September 10, 2025, the FTC issued warning letters to multiple employers and staffing firms in the healthcare space, urging them to "conduct a comprehensive review of [their] employment agreements" and discontinue "using noncompetes that are unfair or anticompetitive." Chairman Ferguson further stated: "If your company is currently using noncompetes that are unfair or anticompetitive under the FTC Act, I strongly encourage you to discontinue them immediately and to notify relevant employees of the discontinuance." For more information, see: FTC Chairman Ferguson Issues Noncompete Warning Letters to Healthcare Employers and Staffing Companies.

Enforcement Guidelines

On January 27, 2026, the FTC held a workshop titled "Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements." During the webinar, Chairman Ferguson stated that the "[d]ays of unreflective, unjustified, and anticompetitive noncompete agreements are over," and "if a company wants to execute a non-compete agreement, they had best be prepared to defend it." FTC Commissioner Mark Meador outlined four principles the agency will consider when evaluating non-compete agreements: (1) employee wage and skill level; (2) whether the agreement is limited in scope and duration to one or two years and the geographic scope of the employer's work area or area of operation; (3) the employer's market power; and (4) evidence of economic impact on the industry from the non-competition agreements.

For more information, see: FTC Workshop: Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements.

State Legislative Developments Over the Past Year

Notwithstanding federal efforts to prohibit non-competes nationwide, regulation of these agreements continues to be a state law matter, with rules varying considerably from one jurisdiction to another. Although courts generally view non-competes with skepticism as restraints on trade, many states will enforce restrictions deemed reasonable under the circumstances. Non-competes involving physicians and other healthcare providers present distinctive policy challenges, particularly the risk of reducing patient access to care in underserved or rural communities. The following summarizes state laws that have been enacted or become effective over the past year.

Arkansas

On March 4, 2025, Arkansas enacted S.B. 139, effective July 15, 2025, providing that non-competes are void with physicians and surgeons licensed under the Arkansas Medical Practices Act and osteopathic physicians. Prior to this enactment, the state's general non-compete statute expressly did not apply to employees in the medical field holding a professional license. It remains unclear whether the new law applies to non-compete agreements entered into before the law's effective date. For other healthcare professionals not included in the amendment such as chiropractors, dentists, nurses, psychologists, and podiatrists, those non-compete enforceability remains subject to common law analysis.

Colorado

Through S.B. 25-083, effective August 6, 2025, Colorado expanded its existing restrictions on physician non-competes. Although the state previously banned non-competes with physicians subject to narrow exceptions, the 2025 legislation extends these prohibitions to cover non-competes and customer non-solicitation agreements with a broader range of healthcare practitioners—without regard to whether those practitioners qualify as highly compensated workers under Colorado law. The amended statute bars non-competes and customer non-solicits executed on or after August 6, 2025, with practitioners of medicine, advanced practice registered nursing, and dentistry.

Under the statute, an agreement is considered restrictive if it prohibits or significantly limits a healthcare provider from informing patients about: (1) the provider's ongoing practice and updated contact details; or (2) the patient's freedom to select their own healthcare provider. A narrow carve-out exists for restrictive covenants entered into as part of a business sale or transfer of ownership interests.

Indiana

On May 6, 2025, Indiana enacted Senate Bill 475, generally prohibiting non-competes between all physicians and hospitals (including parent companies, affiliated hospital management companies, and hospital systems) for agreements originally entered into on or after July 1, 2025. This builds on earlier amendments that banned non-competes with primary care physicians (those practicing family medicine, general pediatric medicine, or internal medicine) for agreements entered into on or after July 1, 2023.

Under the 2025 amendments, the term "non-compete" is interpreted expansively to encompass clauses that: (1) bar a physician from practicing medicine with a new employer; (2) mandate reimbursement of training costs or expenses (commonly known as TRAPs); or (3) condition a physician's ability to practice with a new employer on obtaining prior approval or accepting equitable remedies. 

However, the statute explicitly does not apply to: (1) non-disclosure agreements protecting trade secrets and/or confidential business information; (2) employee non-solicits for up to one year, provided it does not restrict patient interactions or referrals, professional relationships, or clinical collaborations; and (3) agreements made in connection with the sale of a business (however, the physician must own at least 50% of the business at the time of sale).

Louisiana

Louisiana revised its non-compete statute as of January 1, 2025, incorporating new provisions specifically addressing physician non-competes. The revised law places caps on physician non-competes and specifically applies stricter limitations to agreements with primary care physicians: those whose practice focuses primarily on family medicine, internal medicine, pediatrics, obstetrics, or gynecology.

Following the amendment, the maximum duration of a non-compete for primary care physicians is three years measured from the start date of the initial contract, while non-competes with other physicians may run up to five years. Agreements entered into after the original contract term may not contain non-compete provisions. Where a physician ends the arrangement before its scheduled expiration, a non-compete is enforceable only if it runs for two years or less following the termination of employment and designates the physician's home parish plus no more than two adjoining parishes in which the employer operates a comparable business.

Maryland

As of July 1, 2025, Maryland introduced substantial new limits on non-competes with healthcare professionals. Under the new law, a non-compete is unenforceable against a healthcare employee who: (1) must hold a license under the Health Occupations Article; (2) provides direct care to patients; and (3) receives total annual compensation of $350,000 or less.

For healthcare employees whose annual earnings surpass $350,000, non-competes may be enforced only when the restrictions are limited to one year following the employment relationship and do not extend beyond a 10-mile radius of the employee's principal work location. Additionally, if a patient requests it, an employer of such a higher-compensated healthcare employee must inform the patient where the departing employee has relocated their practice.

Montana

Montana broadened its restrictions through amendments to House Bill 620, effective January 1, 2026, to prohibit non-competes with all licensed physicians. Before this change, the statutory prohibition covered only psychiatrists, addiction medicine specialists, and select mental health professionals. The expanded prohibition governs contracts executed or renewed on or after January 1, 2026.

The amended statute further covers registered professional nurses, advanced practice registered nurses, and physician assistants. Notably, the prohibition does not reach agreements connected to practice sales, nor does it apply to declining-balance repayment obligations—such as those for legitimate loans, relocation expenses, signing bonuses, educational costs, or tuition reimbursement arrangements.

Pennsylvania

Pennsylvania's Fair Contracting for Health Care Practitioners Act (FCHCPA), which took effect January 1, 2025, restricts the enforceability of non-competes with specified healthcare practitioners (HCPs). The statute covers medical doctors, osteopathic physicians, certified registered nurse anesthetists, certified registered nurse practitioners, and physician assistants.

The FCHCPA renders post-employment non-competes with covered HCPs void as contrary to public policy, though an employer may still enforce a non-compete provided: (1) the restriction lasts no longer than one year; and (2) the employer did not terminate the HCP's employment. Employers are also obligated to notify patients - within 90 days of an HCP's departure - if those patients were seen within the prior year and maintained an ongoing outpatient relationship with the HCP for at least two years.

South Carolina

At present, South Carolina lacks a statute specifically governing physician non-competes. While employee non-competes are viewed skeptically as trade restraints and interpreted narrowly, courts will generally uphold restrictions deemed reasonable.

However, the South Carolina House of Representatives recently debated and passed H.4767, a bill that would prohibit non-compete clauses in physician contracts. If enacted, this legislation would represent a significant departure for South Carolina, which currently relies on common law reasonableness analysis for physician non-competes.

Texas

Texas passed Senate Bill 1318 on June 20, 2025, substantially strengthening the requirements for physician non-competes and, for the first time, applying comparable restrictions to dentists, professional and vocational nurses, and physician assistants. These provisions govern agreements executed or renewed on or after September 1, 2025.

Under agreements entered into or renewed on or after September 1, 2025, physician non-competes must satisfy the following conditions: (1) the physician must have the option to purchase release from the non-compete at a cost not exceeding the physician's annual salary and wages as of termination; (2) the restriction cannot extend beyond one year following termination; (3) the geographic scope must be limited to within five miles of the physician's primary practice site; and (4) the terms must be set forth clearly and conspicuously in writing.

Furthermore, a physician non-compete is rendered void if the physician was terminated without good cause as defined by the statute. This termination-based protection, however, is not available to the other healthcare providers subject to the law.

Utah

Utah's Senate Bill 288, effective May 7, 2025, bars health care services platforms from imposing non-compete requirements on healthcare workers or limiting their ability to seek or accept shifts or employment through competing platforms or with other healthcare providers and facilities. The statute defines a "health care services platform" as an entity that operates or makes available an electronic program, system, or application enabling healthcare workers to accept shifts as independent contractors at healthcare facilities.

Washington

House Bill 1155, enacted by Washington, will render virtually all post-employment non-compete agreements with employees and contractors void as of June 30, 2027. The law constitutes a sweeping, retroactive prohibition—non-competition covenants will become unenforceable on that date irrespective of when they were originally signed.

Wyoming

Wyoming's Senate File 107, effective July 1, 2025, renders void any non-compete agreements within an employment, partnership or corporate agreement between physicians that restricts the right of a physician to practice medicine upon termination of that relationship. This prohibition covers agreements executed on or after July 1, 2025.

Additionally, the statute allows physicians to inform any patient with a rare disorder – as classified by the National Organization for Rare Disorders or its successor – with whom they had been consulting or treating before termination about their continued practice and new contact information. The law shields both the physician and the physician's employer from liability to other parties to the prior agreement for any damages arising from such disclosures or from the physician's post-termination treatment of the patient.

Conclusion

The regulation of non-compete agreements in the health care sector continues to evolve rapidly at both the state and federal levels. While the FTC has shifted from pursuing a nationwide ban to targeted case-by-case enforcement, state legislatures have enacted a wave of new restrictions specifically targeting healthcare professional non-competes.

For multi-state healthcare employers, compliance presents significant challenges: a standard employment agreement might be valid in one state but violate another state's law. Healthcare employers should audit their current workforce for compliance with applicable laws, consult counsel to review and revise restrictive covenants as necessary, and pay particular attention to the FTC's enforcement priorities when evaluating whether their agreements are defensible.

As additional states amend their statutes and the FTC pursues its enforcement agenda, the legal terrain will only grow more complex - demanding careful attention to the specific requirements of each jurisdiction where healthcare professionals are employed.