Letters to the Editor: August 2025

J Clin Aesthet Dermatol. 2025;18(8):12.

The Noncompete Agreement: The Current Ordeal and a Possible Solution

Dear Editor:

The recent Federal Trade Commission (FTC) ruling has made noncompete agreements (NCAs) or noncompete clauses (NCCs) a significant topic of discussion, including in dermatology. One positive consequence delineated by Gronbeck et al¹ state, “NCCs in dermatology are appropriate as they help to ensure the sustainability and growth of dermatology practices, enabling them to reliably treat patients for years to come.” Contrastingly, Zhou et al² highlight potential downsides, noting “the use of NCCs by healthcare employers deliberately stifles market competition, impedes patient access and autonomy, and limits physician mobility and workforce engagement.”

The American Medical Association (AMA) has sought to “oppose noncompete contracts for physicians in clinical practice employed by for-profit or nonprofit hospitals, hospital systems, or staffing company employers.” The AMA’s House of Delegates even voted to end NCAs. Notwithstanding the strides of the FTC ruling, nonprofit hospitals would feel limited impact despite making up 57 percent of the total number of United States hospitals.³  It would be beneficial to reconsider the use of NCAs in dermatologist contracts, as well as for physicians in general. The vast majority of physicians (87%) support the Federal Trade Commission’s (FTC) proposed new rule that would ban employers from imposing NCCs, according to a recent Doximity poll.⁴

One practical solution may be for state governments to ban NCAs.  One significant hurdle with the FTC removing NCAs is that the main claim postulated in the final decision of the FTC was that nonprofit entities such as hospitals are not under the purview of the FTC.⁵ This jurisdiction problem is a primary reason physicians within these nonprofit hospitals by the FTC remain unaffected. In the final decision document, the FTC acknowledges its lack of influence and repeatedly reiterates that it is not hindering state laws to ban NCAs more extensively. The FTC ruling discloses, “In proposed § 910.4, the Commission addressed State laws and preemption. Based on comments, the Commission adopts a modified provision clarifying and explaining that States may continue to enforce laws that restrict noncompetes and do not conflict with the final rule, even if the scope of the State restrictions is narrower than the final rule.”⁵

Based on the FTC ruling, the state government can enact practical changes to restrict or eradicate NCAs.⁵ Some examples of states with “covenants not-to-compete are already prohibited outright in several states, including California, North Dakota, and Oklahoma. Additional states such as New Hampshire, Delaware, Massachusetts, and Rhode Island ban noncompete covenants specifically for physicians.” ³ Maryland, for example, passed a state law imposing limitations on the NCA for every nonprofit hospital physician worker or anyone limited by an NCA within these hospitals as a response to the FTC ruling limitation. In Maryland, the NCA is null and void for physicians making $350,000 or less. Physicians making over $350,000 are not allowed to work for one year in a 10-mile radius. Following the year, the NCA is non-binding.⁶

Recently, a federal district judge of Texas ruled against the FTC ban. The judge stated, “The FTC lacks substantive rulemaking authority with respect to unfair methods of competition.” She went on to communicate that, “the role of an administrative agency is to do as told by Congress, not to do what the agency think[s] it should do.”⁷ This ruling fortifies the case about the limitations to the FTC’s authority to enact enforceable change.

In conclusion, the FTC and AMA have taken essential strides in banning NCAs. States that recognize the harm of NCAs have passed bills that cover the gap left by the FTC. Increasing the bills that protect physicians can be the next important step in expanding market competition, growing patient access, and adding better physician mobility to the current healthcare landscape.

With regard,

Anthony Aegwu, BS, and Travis W. Blalock, MD

Keywords. Noncompete agreements, Federal Trade Commission, noncompete clause, non-compete, covenants not-to-compete

Affiliations. Mr. Ajegwu is with the Morehouse School of Medicine in Atlanta, Georgia. Dr. Blalock is with the Department of Dermatology at the Emory University School of Medicine in Atlanta, Georgia.

Funding. No funding was provided for this article.

Disclosures. The authors declare no conflicts of interest relevant to the content of this article.

References

1. Gronbeck C, Aiudi D. Pros of noncompete clauses. J Am Acad Dermatol. 2024;90(6),1313–1314.
2. Zhou AE, Chen M, Grant-Kels, JM. Cons of noncompete clauses. J Am Acad Dermatol. 2024;90(6),1315–1316.
3. AMA to urge end of noncompete covenants in many physician contracts. American Medical Association. https://www.ama-assn.org/press-center/press-releases/ama-urge-end-noncompete-covenants-many-physician-contracts.
4. Wallace C. 87% of physicians support FTC move to ban noncompetes: Survey. Becker’s ASC. https://www.beckersasc.com/asc-news/87-of-physicians-support-ftc-move-to-ban-noncompetes-survey.html.
5. Non-compete clause rule. Federal Register. 2024. https://www.federalregister.gov/documents/2024/05/07/2024-09171/non-compete-clause-rule.
6. Pearson AM. Maryland extends reach of the FTC’s proposed noncompete ban to veterinary and healthcare professionals. Stevens & Lee. 2024. https://www.stevenslee.com/health-law-observer-blog/maryland-extends-reach-of-the-ftcs-proposed-non-compete-ban-to-veterinary-and-health-care-professionals.
7. Hsu A. Federal judge throws out U.S. ban on noncompetes. NPR. 2024. https://www.npr.org/2024/08/21/g-s1-18376/federal-judge-tosses-ftc-noncompetes-ban.
8. Austin A. State Noncompete Law Tracker. 2024. Economic Innovation Group. https://eig.org/state-noncompete-map.