Invalid Restrictive Covenants in Health Care
SB 942 revises Florida’s law on invalid restrictive covenants to make certain noncompete-style provisions in physician employment and related agreements unenforceable. The bill targets physicians licensed under chapters 458 and 459 and declares that restrictive covenants are not supported by a legitimate business interest in two main situations: first, where one entity effectively controls all physicians practicing a specialty in a county, and second, where a covenant bars a physician from practicing medicine in any geographic area for any period after a contract, employment, partnership, independent contractor, or professional relationship ends.
The bill also creates exceptions. It does not apply to covenants tied to research, so long as patient care is not impaired, and it does not apply to certain higher-compensated physicians earning at least $250,000 annually. In addition, it preserves the ability to enforce noncompete-like restrictions in connection with the sale of a medical practice, ownership interest, management services organization, or related assets and goodwill, where the restriction is reasonably necessary to protect the buyer’s legitimate business interest. The act applies to restrictive covenants entered into on or after July 1, 2025, and takes effect that same date.
The bill amends s. 542.336, Florida Statutes, by narrowing the circumstances in which restrictive covenants can be enforced against physicians and by expressly declaring certain physician noncompete agreements void and unenforceable. It would affect physicians, medical practices, hospitals, management services organizations, and buyers of medical businesses, while also potentially improving patient access in areas where physician specialty markets are concentrated. The legislation would not disturb all physician noncompetes, but it would substantially limit their use in ordinary employment and professional arrangements.
The available vote history suggests generally favorable committee support, with the Senate Health Policy Committee approving the bill 8-2. The bill’s framing emphasizes patient access and cost concerns, indicating support from lawmakers concerned about physician mobility and competition. At the same time, the existence of dissenting votes suggests some concern about limiting contractual freedom and the ability of medical employers or practice owners to protect business interests.
The main points of contention are the bill’s broad prohibition on physician restrictive covenants and the extent to which it overrides existing employer protections. Supporters appear to view the covenants as barriers to patient access, competition, and lower costs, especially in counties where one entity dominates a specialty. Opponents likely focus on preserving legitimate business interests, particularly for practice sales, ownership transitions, and high-compensation physicians, which the bill partially preserves through exceptions. The carve-outs for research, high earners, and sale-of-business transactions reflect the compromise areas most likely to draw debate.