The S.C. General Assembly may consider a proposed new law this legislative term that would, in effect, ban hospitals from enforcing non-competes. House Bill 3273 was filed by Rep. J. Todd Rutherford of Richland County in early December 2024, and it was referred to the Committee on Labor, Commerce, and Industry. [Read the whole proposed bill here: House Bill 3273]
Non-compete agreements, remember, prevent an employee from leaving and going to work for a competitor within a certain geographic territory for a period of time. [Read more about non-competes on our blog: Non-Compete Agreements]
Which Non-Profit Companies Would This Bill Apply To?
The bill would add a new section to the Labor and Employment Code of Laws for South Carolina that prevents any non-profit/not-for-profit company in South Carolina with an annual gross revenue that is more than one billion dollars from enforcing a non-compete agreement against current or former employees. Any existing non-compete agreements would be declared void and unenforceable. The non-profits would also be prevented from making an employee sign a non-compete agreement as part of employment.
But which companies would this bill primarily impact? Well, according to my extensive research/quick Google search, the six non-profits with gross revenue over $1,000,000,000 in 2023 are five hospital systems and one power cooperative. Given the language in the bill, this non-compete ban is clearly aimed mostly at physician contracts. This doesn’t surprise me. I can personally attest to the prevalence of non-compete provisions in doctors’ contracts of employment, as I regularly meet with and advise doctors and other professionals on their non-compete agreements. The American Medical Association (AMA) estimates that between 37% and 45% of doctors are subject to non-compete agreements.
The major trend in healthcare recently is the massive consolidation of medical systems in the U.S. Here in South Carolina, Prisma Health has become the biggest player in this marker. If you’re in Greenville, you can choose Prisma or Bon Secours, and that’s about it, unless you want to drive to another county. For doctors subject to heavy-handed non-competes, that means that taking another job, whether for salary or career advancement, will almost always result in moving to a different part of the state–or at the least a very long commute. Limited the movement of doctors has a negative impact on patient care.
Do Other States Ban Non-Competes for Doctors?
Several states have already banned non-compete agreements for physicians completely, including New Hampshire, Delaware, Massachusetts, and Rhode Island. Other states such as Oklahoma, California, and North Dakota have banned all non-competes outright, for all employees.
I don’t know whether Rep. Rutherford’s bill will actually become law–given the influence of Prisma and other large companies who would be forced to be more fair if the law passes, as well as South Carolina’s feet-dragging on anything that helps employees, I sort of doubt it–but I’m glad the proposal is out there. It’s a conversation worth having, both about doctors’ abilities to move freely from job to job, as well as to areas where they are needed–along with the bigger questions about any employee’s right to work wherever he or she can best support their family.
Takeaways for South Carolina Employees
The proposed bill that would ban hospitals from enforcing non-competes is miles away from becoming law, so South Carolina employees are still subject to the existing standards for non-competes. Not all such restrictive covenants are enforceable, so it’s always advisable to speak with a South Carolina non-compete lawyer before you sign the agreement–or, if you’ve already signed it, before you leave your current employer. If you have questions, feel free to reach out to our office today to schedule a consultation via phone at (864) 233 -4351 or on our Contact Us page.
