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Pennsylvania Statutes Title 35 P.S. Health and Safety § 10324. Noncompete covenants

Current as of January 01, 2025 | Updated by Findlaw Staff

(a) Applicability.--Except as provided under subsection (b), a noncompete covenant entered into after the effective date of this subsection is deemed contrary to the public policy and is void and unenforceable by an employer.

(b) Exception.--An employer may enforce a noncompete covenant if the length of the noncompete covenant is no more than one year, provided that the health care practitioner was not dismissed by the employer.

(c) Construction.--Nothing in this section shall be construed to:

(1) Prohibit the enforcement of a contract provision that allows an employer to recover reasonable expenses from a health care practitioner, if the expenses are:

(i) Directly attributable to the health care practitioner and accrued within the three years prior to separation, unless separation is caused by dismissal of the health care practitioner.

(ii) Related to relocation, training and establishment of a patient base.

(iii) Amortized over a period of up to five years from the date of separation by the health care practitioner.

(2)(i) Except as provided under subparagraph (ii), void or render a noncompete covenant entered into with a health care practitioner with an interest in a business entity unenforceable as a direct result of:

(A) the sale of an ownership interest or all or substantially all of the assets of the business entity;

(B) a transaction resulting in the sale, transfer or other disposition of the control of the business entity, including by merger or consolidation. For purposes of this clause, the term “control” shall mean the possession, directly or indirectly, of the power to direct the management and policies of a business entity, whether through the ownership of voting securities, by contract or otherwise; or

(C) the health care practitioner's receipt, by purchase, grant, award, issuance or otherwise, of an ownership interest in the business entity.

(ii) A preexisting noncompete covenant may be rendered void and unenforceable under this act if a health care practitioner is not a party to the sale, transfer or other disposition under subparagraph (i).

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Cite this article: FindLaw.com - Pennsylvania Statutes Title 35 P.S. Health and Safety § 10324. Noncompete covenants - last updated January 01, 2025 | https://codes.findlaw.com/pa/title-35-ps-health-and-safety/pa-st-sect-35-10324/

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