Healthcare noncompete agreements banned in South Dakota
A new South Dakota law took effect in July 2021 banning noncompete agreements in the healthcare industry. The law prohibits adding the restrictive clauses in employment, partnership, or other contracts covering professional relationships with physicians, physician assistants, certified nurse practitioners, certified nurse midwives, certified registered nurse anesthetists, registered nurses, and licensed practical nurses.
What new law covers
Introduced as House Bill (HB) 1154, the new law states employment contracts may not restrict the rights of the identified healthcare providers to:
- Practice and provide services in any geographic area for any period of time after termination;
- Treat, advise, consult with, or establish a provider-patient relationship with any current patient; or
- Solicit or seek out a provider-patient relationship with any current patient.
The limitation on including noncompete clauses applies to employment contracts signed after July 1, 2021. It’s unclear if (1) the restrictions apply to any employment contracts executed before that date or (2) their enforcement will be subject to the new limits. Under established law, however, new legislation generally doesn’t have a retroactive effect.
Not everyone agreed