Magazine article Developments in Mental Health Law

Employment Contract Intended to Limit Psychologist's Ability to Compete with a Group Practice after Employment Relationship Ends Is Not Enforceable

Magazine article Developments in Mental Health Law

Employment Contract Intended to Limit Psychologist's Ability to Compete with a Group Practice after Employment Relationship Ends Is Not Enforceable

Article excerpt

When mental health professionals join a group practice, their employment contract may include a restrictive covenant that is intended to limit their ability to compete with the group practice for a period of time should the employment relationship end. In New Jersey, a corporation providing neuropsychological services to clients sued one of its former employees, a licensed psychologist, to enforce a restrictive covenant in their employment contract. The restrictive covenant stated that after the termination of employment the psychologist could not practice his profession within ten miles of the corporation's facility and not solicit any of the corporation's patients for two years.

The Appellate Division of the Superior Court of New Jersey concluded that these restrictions interfered with the right of patients to receive continued treatment from the psychologist and refused to enforce them.

The court acknowledged that restrictive covenants in employment contracts involving physicians are enforceable under existing New Jersey law if they protect a legitimate interest of the employer, impose no undue hardship on the employee, and are not injurious to the public. …

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