MT Coach

Non-Competition Clauses

Dear Don:

“I’m a recent graduate of a massage therapy school applying for work in various clinics. I’m finding that some clinics have a contract which has exclusionary parts, such as not being able to treat clients that I have treated in the clinic in any other venue, and not practicing within a certain geographical area for a number of years after leaving the clinic. These seem really restrictive and unfair! What do you suggest I do about these types of clauses?”

                                                                                           Recent Grad (RG)

Dear RG:  

Your question begs two further questions; “Are you an independent contractor or employee?” and “What are your long term goals?”

Your primary question relates to what is called a “non-competition clause”. It’s natural and important for the clinic to protect its asset – its patient/client list. The clinic manager has taken a great deal of time, money and energy to establish the location and reputation, and any clinic manager should preserve that.

If you’re an independent contractor, you’re providing services in someone else’s business. If your long term goal is to work for yourself, then working in another business and planning to attract those patients when you leave is analogous to working a farmer’s field as a farm hand, only to take all the produce (and the wages you’ve earned) at harvest time! 

If your long term goal is to create your own business, I suggest you become an associate in an existing clinic and learn all you can about accounting, marketing, patient retention and other key systems essential to successful business. This is the best business education you can get, and it will save you a lot of money and grief by attempting to launch your own business without this experience. But don’t expect to take any patients with you…many will choose to stay at the existing location, and it can be very damaging to the original business. I’ve heard many sad stories from clinic managers who worked hard to build a business from the ground up, only to have it disrupted by associates focusing only on their own interests.

If you’re an employee, your goal is to become more valuable to the clinic. Many therapists are better off being employees because they lack the business skills – sales, accounting, investing and leadership – to run their own business.

Specifically speaking to non-competition clauses, here’s what I’ve written in Better Business Agreements: A Guide for Massage Therapists (1):

“A clinic owner/manager may be inclined to protect their business by trying to limit an associate from opening up shop down the street. The manager attempts to ensure this with a non-competition clause in the agreement.

My understanding is that the courts may view non-competition clauses skeptically due to the potential to negatively impact the employee’s right to earn a living. However,  Leanne Standryk (2)  writes that “if the clause is drafted to protect the reasonable interests of the employer within a geographic area the employer would normally provide services, and within a reasonable period of time, the clause may be upheld by the courts.”

The clinic manager/owner may wish to utilize a non-solicitation clause instead, restricting the employee from contacting existing customers of the business for a specific period of time. However, massage therapy governing bodies may also have expectations or regulation that are at odds with this. For example, the College of Massage Therapists of Ontario policies state that the departing therapist must contact her or his clients/patients to ensure the proper transfer of health records and care. Consult your lawyer to determine if this clause can work for your situation.”

Finally, I recommend having a clear agreement in place up front, so each party knows exactly what happens should the relationship come to a close in the future.

Welcome to the profession, and best wishes on your new career!

References:

1. Dillon D: Better Business Agreements: A Guide for Massage Therapists. MT Coach, 2006. Available at: http://www.mtcoach.com

2. Standryk L: The Written Employment Contract. Lancaster, Brooks & Welch  LLP. Bulletin. Pg 4

Further Invited Comments: Kelly McAuley writes….

Dear RG:
 
It can be an incredibly frustrating and yet rewarding time to be looking at your very first massage therapist contract. 

One of the many items you'll see is the exclusionary parts and geographical restrictions.  It's not uncommon to see this in any form of a contract, however many exclusionary or non-competition clauses generally are not strong enough to stand up in a court of law. These types of clauses (non-competition/non-solicitation) are in place to protect the most valuable assets in the business - the clientele. As Don states, you need to fully understand whether you are an independant contractor or an employee, as each scenario will have different restrictions and freedoms.

  As an independent contractor, the clinic manager has hired/contracted you to provide specific services for their business which in turn will generate more clientele for the clinic. They have not hired you to be there to build your own massage clientele or generate business for your specific career goals. These clients that are "sent" to you for the most part, or have been referred by the business advertising or location - Many clients will choose to stay at the location, not follow you to your new massage practice. 

When a clinic has hired you as an independent contractor, it is reasonable for the clinic to ask for small geographical restrictions (ie one mile) as that would be the target audience for the clinic. A clinic should not be able to restrict entire geographical areas as they would then be limiting your ability to earn your living.

As an employee, the clinic realizes the value of your services and time and is committed to seeing your schedule fill up quickly. Don’s response is the most appropriate -  you want to become more valuable over time to the clinic therefore your wages, responsibilities etc would rise.

When faced with contracts that have seemingly extraordinary requests, a lawyer and/or a mentor may be your best source of advice.  

Keep in mind of your responsibilities as a RMT! Have a good conversation with the prospective clinic regarding client files, client contact when you are leaving for another position and try to gain a good understanding of the reasoning from the clinic as to why they are asking for these types of restrictions.  It's possible that they may have answers that surprise you.

Kelly McAuley, RMT
www.massageformoms.ca