Health Law Highlights

FTC Rule Addressing Noncompete Covenants: Impact of Senior Executive Exception on Health Care Entities

Summary of article from ArentFox Schiff, by Douglas a. Grimm, Moyosore O. Koya:

The new Rule, effective September 4, introduces potential confusion and regulatory risks for health care providers, especially concerning noncompete covenants for senior executives. Defined as individuals earning at least $151,164 annually and holding policy-making positions, the implementation of this Rule is complicated by legal challenges and ambiguities around what constitutes policy-making authority. For multi-provider systems, determining whether C-suite members or subsidiary leaders qualify as senior executives is particularly complex. Health care organizations must carefully review job descriptions and responsibilities to ensure compliance and consider executing or renewing noncompete agreements before the Rule’s effective date. Continuous monitoring and analysis by legal experts are advised to navigate these changes effectively.