Banning non-compete clauses would prevent hospitals and health systems from protecting investments in physicians: Oppose HB 2931

February 9, 2016

Two bills have advanced through the House Labor & Workplace Standards Committee that would limit the use of non-compete clauses in employment contracts in Washington State.

Many hospitals and physician groups in Washington State use non-compete clauses in physician contracting. Hospitals that use non-compete clauses consider them an important and necessary tool to protect hospital investments in physicians.

House Bill 2931 broadly applies to all employers and employees in the state. The bill proposes to ban non-compete clauses for workers who are temporary, seasonal, terminated without just cause, laid off or are independent contractors. It also creates a presumption that non-compete clauses are limited to a one-year duration, and that non-compete clauses cannot be used unless an employee meets the definition of an “executive” employee. Non-compete clauses are an important tool for hospitals to protect their investments in physicians, especially in communities where recruiting primary or specialty physicians can be difficult. These communities often need to heavily subsidize physicians to recruit them. Non-compete clauses enable hospitals to be good stewards of resources and ensure their investments are recouped. HB 2931 would stunt any employer’s ability to use non-compete clauses, and in many cases ban them entirely. WSHA strongly opposes it.

House Bill 2406 bans the use of non-compete agreements for hair designers, cosmetologists, barbers, manicurists, estheticians, drywall applicators, musicians and fast-food workers. WSHA is neutral on the bill as drafted. However, we are watching it closely as the bill’s broad title could allow other professionals to be added to the list.

Both bills now go to the House Rules Committee for consideration. Senate Bill 6625 sought to ban non-compete clauses for hourly workers, but it did not move beyond its committee. For more information, contact Zosia Stanley. (206/216-2511).


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