FTC Noncompete Ban Stalled By Lawsuits, States Take Action For Healthcare Workers

State legislators across the United States are taking decisive steps to limit or ban noncompete agreements for doctors and other healthcare professionals, in efforts to increase opportunities within the healthcare sector.  

This legislative trend emerges as the Federal Trade Commission’s (FTC) broader attempt to prohibit these clauses nationwide faces legal challenges. One notable challenge was initiated by the U.S. Chamber of Commerce, which claims that the FTC is exceeding its legal authority.  

According to a report published by Reuters, the pending legal challenges have led the Chamber to block the rule from taking effect until the outcome of its lawsuit is known.   

In the face of the almost instant wave of lawsuits, two days after the FTC’s controversial rule Maryland emerged as the first state to ban noncompete agreements for healthcare professionals.  

According to a report published by Bloomberg Law, Governor Wes Moore signing bipartisan legislation that prohibits noncompete agreements for healthcare professionals earning $350,000 annually or less —while imposing limitations on those above this income threshold. 

The legislation by the state of Maryland coincides with efforts in at least 11 other states reportedly moving to enact similar restrictions. It also sheds light on a growing recognition of the detrimental impact such agreements can have on healthcare accessibility and the mobility of the healthcare workforce. 

The push against noncompete clauses is reportedly being fueled by a combination of factors — including the rise in hospital consolidations and the potential for these agreements to restrict medical professionals’ ability to practice freely, particularly in underserved areas of the U.S.  

This concern is compounded by predictions of significant physician and registered nurse shortages in the coming years, further suggesting an urgency to remove barriers to healthcare employment and work flexibility within the sector. 

However, just like the broader FTC ruling to restrict noncompete agreements, the more specific healthcare movement faces opposition from some major hospital groups, which argue that these clauses are necessary to protect investments in staff and maintain competitive advantages.  

The legislative trend represents a critical path for the future of healthcare work. It could suggest a shift towards greater workforce mobility in the U.S., and it could influence other sectors to push for similar state legislation, especially in fields that are experiencing high employee demand.