In April of this year, the Federal Trade Commission (FTC) passed a nationwide ban on noncompetition agreements (NCAs) between employers and employees/independent contractors. The purpose of this bill is to render NCAs void and unenforceable, thereby fostering more competition and innovation in markets across the United States. The FTC found that current NCAs constitute an unfair method of competition, violating Section 5 of the Federal Trade Commission Act. This bill will go into effect 120 days from its passing.
What Does This Mean for Dentistry?
In the dental industry, noncompete agreements often include a radius within which a former employee or associate cannot practice dentistry for a period after employment (often 1-2 years). Depending on the size of the town or city, these NCAs can sometimes necessitate a geographical move to continue practicing. Following the FTC ban on NCAs, dental associates will be free to seek any employment opportunity regardless of proximity to a previous employer’s practice. While this ban addresses employment aspects of NCAs, it does not prevent non-solicitation agreements or exclusivity agreements while under contract.
Key Exceptions to the Ban
- Senior Executives: NCAs for senior executives are still allowed, although this category is narrowly defined and is unlikely to affect most associates leaving traditional practices.
- Sale of a Practice: The ban does not prohibit NCAs as part of the sale of a practice.
Impact on the Dental Profession
Although only time will tell how this ban will affect the dental profession, it is essential to stay informed and adapt to these changes. Here are some metrics to consider:
- Employee Mobility: Studies have shown that lifting noncompete agreements can increase employee mobility by 20-30%, allowing dental professionals more freedom to move between practices.
- Practice Competition: Increased competition can lead to innovations in patient care and service offerings, potentially improving overall patient satisfaction and retention rates.
- Hiring Trends: Dental practices may experience a more dynamic hiring environment, with a broader pool of candidates available due to the removal of geographic restrictions.
Being a part of a group such as Dental CoNexus will help you navigate the ever-changing world of dental contracts. At our virtual conference on November 8th, we will discuss the implications of the FTC ban on NCAs and provide guidance on how to adapt to this new landscape.
Join us to stay ahead of the curve and ensure your practice thrives in this evolving environment.
