On April 23, 2024, the Federal Trade Commission (FTC) made a landmark decision to ban noncompete clauses across various industries, including veterinary services. For practicing veterinarians, this may have profound implications for the profession. Several states, including California, Minnesota, North Dakota, and Oklahoma, have long prohibited employers from entering agreements to prevent their employees from leaving to compete against them.
In California, noncompete agreements in the employment context are generally void, with exceptions related to the sale of a business or a partial ownership stake. States that have already adopted this stance against contractual restraints on post-employment noncompetes believe it promotes employee mobility, economic growth, improved working conditions, and innovation.
Let’s take a closer look at how this ruling may impact veterinary professionals.
Understanding noncompete agreements
Noncompete agreements restrict employees from joining competitors or starting similar businesses for a set period after leaving their current employer. In the veterinary sector, these clauses have been used to protect patient bases, confidential information, and investments in staff training.
For practice owners, noncompetes prevent associate veterinarians from leaving their practice and joining another practice within the noncompete area and potentially taking clients along with them. Besides the possibility of limiting a veterinarian’s earning potential, growth opportunities, and career autonomy, these noncompete agreements can cause significant distress to veterinarians who often feel trapped in working conditions or clinics that may not be a good fit for them.
It is important to note this recent ruling exempts veterinarians who have entered into agreements as part of selling a practice or ownership in a practice, as well as those involved in existing actions that accrued prior to the issuance of the final rule,1 which took place on May 7, 2024.
Enhanced job mobility
The FTC’s recent decision abolishes the constraints of noncompete agreements, granting veterinarians the freedom to pursue various career paths aligned with their professional aspirations, as well as significantly reduce the stress being bound to a noncompete clause can cause.
Veterinarians can now freely transition between employers or start their own practices without the fear of legal repercussions. This change opens a range of career opportunities, including full-time roles, part-time engagements, and gig work, such as relief shifts, telehealth services, mobile services, or at-home end-of-life pet care.
With enhanced job mobility, veterinarians gain greater flexibility and more choices, enabling them to pursue passions and sub-specialties. This can alleviate stress, improve work-life balance, and contribute to a more innovative and responsive industry.
Improved working conditions
Noncompete agreements may be perceived as creating power imbalances, trapping veterinarians in suboptimal work environments due to contractual obligations. Without these restrictions, veterinary professionals can now negotiate better working conditions, including flexible schedules, comprehensive benefits, and ongoing mentoring support.
Employers may be incentivized to create more attractive workplaces to recruit and retain skilled professionals. This competitive job market could lead to enhanced job satisfaction and overall well-being for veterinary staff. Additionally, the elimination of noncompetes can empower veterinary professionals to advocate for more supportive work environments, fostering a culture of respect and collaboration.
Improved working conditions can also contribute to better mental health and work-life balance for veterinary professionals.2 With more options available, veterinarians have greater flexibility to choose workplaces, or a combination of jobs, that align with their values and personal needs, reducing burnout and increasing overall job satisfaction. This positive work environment can enhance productivity and the quality of care provided to patients, benefiting both veterinary professionals and their clients.
Potential challenges
It is possible a Federal District Court might issue a nationwide injunction to the FTC’s noncompete rule that will both delay and confuse enforcement procedures. It will take months for the Appellate Courts to weigh in before the Supreme Court decides whether to take up the issue. If this happens, clarity on noncompete agreements and clauses for employers and employees will be in limbo as well as timing.
Another potential challenge is the likely increase in pet care costs for pet owners. Many veterinary employers struggle with staff shortages and retention, which has become a serious nationwide issue. A study3 estimates a shortfall of approximately 24,000 veterinarians by 2030. With such high demand for veterinarians, employers may find it increasingly difficult to recruit staff and will need to increase the benefits they provide to attract veterinary professionals. Consequently, they may be forced to pass these additional costs onto pet owners, resulting in higher pet care expenses in an already challenging economic environment.
A potential game-changer
The FTC’s ruling offers veterinarians greater job flexibility and autonomy, opening new avenues for career growth, higher wages, improved working conditions, and enhanced innovation and collaboration. While this change may increase the cost of veterinary care, the benefits for veterinary mental health and well-being outweigh the potential risks, especially in an industry with a high risk of burnout. According to a study, veterinarians are at 155 percent higher risk of burnout compared to the general population, and nearly at 40 percent higher risk than physicians.4
As a California veterinarian who already benefits from a regulatory environment free from noncompetes, I feel fortunate. This freedom has allowed me to pivot my career without legal concerns, leading to greater happiness and economic empowerment. I am excited for my fellow veterinarians across the country to have the same opportunities to pursue their career aspirations.
Karen Whala, DVM, MPH, DACVPM, is the co-founder of CodaPet.
References
- AVMA News “FTC to ban most noncompete agreements” American Veterinary Medical Association, April 26, 2024. https://www.avma.org/news/ftc-ban-most-noncompete-agreements
- American Veterinary Medical Association. (2023). “Addressing the causes of burnout in veterinary medicine.” Journal of the American Veterinary Medical Association. Retrieved from https://www.avma.org/news/addressing-causes-burnout-veterinary-medicine
- Lloyd, J.W. “Tackling the Veterinary Professional Shortage.” Mars Veterinary Health. Mars Veterinary Health, May 17, 2022. https://www.marsveterinary.com/tackling-the-veterinary-professional-shortage
- American Veterinary Medical Association. (2023). Addressing burnout and mental health in veterinarians: A critical need. Journal of the American Veterinary Medical Association, 262(3), 354-368. https://doi.org/10.2460/javma.23.06.0354