Under a new Indiana law, a physician may not enter into a noncompete agreement on or after July 1, 2025, with the following:
- a hospital;
- a parent company of a hospital;
- an affiliated manager of a hospital; or
- a hospital system.
“Noncompete agreement” means a contract, or any part of a contract, to which a physician is a party that has the purpose or effect of restricting or penalizing a physician’s ability to engage in the practice of medicine in any geographic area, for any period of time, after the physician’s employment relationship has ended. The term includes any provision that does the following:
- Prohibits the physician from engaging in the practice of medicine with a new employer.
- Imposes financial penalties or repayment obligations, or requires reimbursement of bonuses, training expenses, or similar payments that:
- apply to a physician that has been employed for at least three years; and
- are based solely or primarily on the physician’s decision to continue engaging in the practice of medicine with a new employer.
- Requires the physician to obtain employer consent or submit to equitable relief to engage in the practice of medicine with a new employer, regardless of geographic area or specialty.
- Imposes indirect restrictions that have the effect of limiting or deterring the physician’s practice of medicine with a new employer.
“Noncompete agreement” does not include the following:
- A nondisclosure agreement that protects confidential business information or trade secrets.
- A nonsolicitation agreement that prohibits solicitation of current employees for a period not exceeding one year after the physician’s employment ends. However, the nonsolicitation agreement may not restrict:
- patient interactions;
- patient referrals;
- clinical collaboration; or
- the physician’s professional relationships.
- An agreement made in connection with the bona fide sale of a business entity when the physician owns more than fifty percent (50%) of the business entity at the time of sale.
The ban does not apply to a noncompete agreement originally entered into before July 1, 2025.
