The Death of the Non-Compete

How MovementX was accused of “Tortuous Interference,” and why we are thrilled it won’t happen again.

Non-Competes have been troubling me for a long time, both as a physical therapist and an employer.

One story was so painful that I used it as an example of poor management in a class I teach at George Washington University DPT Program. Here’s the real situation:

An owner of a private practice outpatient clinic had a problem with turnover. A few of her most productive physical therapists and staff members exited her practice for another clinic. To prevent more costly turnover, the owner decided to change her employment contract to include a ‘non-competition’ clause.

The non-compete stated that physical therapists cannot practice outpatient physical therapy within a 10 mile radius of the clinic for 2 years following termination of their employment with the company. She planned to ask all employees to sign it at their next staff meeting.

This non-compete banned physical therapists from practicing physical therapy in the entire region for multiple years if they were to leave the company.

When we discuss this scenario with DPT students, I am always reminded just how little most students are aware of non-competes and what they mean. Their most common questions are:

What are non-competes?

Why would anyone sign one?

How is this fair?

The lack of attention and knowledge about non-competes led to many signing them and considering it normal. After all, most new grads are thinking about getting a job, starting to repay their loans, and growing clinically, it’s rightfully the last thing on their minds.

The normalization of non-competes led to widespread use and I’d venture to say they did exactly what they intended: kept people in jobs for longer than they desired.

Why Non-Competes Worked

While non-competes have been virtually non-enforceable for a long time and some states have outright banned them, they instilled sufficient fear in their employees to work.

Rather than the threat being a successful lawsuit, the threat was the lawsuit itself. Legal proceedings are time consuming, expensive, full of unknown, and stressful. Corporations also have way more resources at their disposal, including large companies that have in-house legal counsel, making it easier for them to pursue a lawsuit.

Pit an individual physical therapist against a large corporation, and it’s no secret who has the advantage.

We have seen this work firsthand—most notably when MovementX first launched. A MovementX physical therapist was holding an event at a local CrossFit Gym and just before the event we received a ‘Cease and Desist’ letter that threatened legal action if we did not cancel the event and stop treating there.

Here’s the redacted Cease and Desist Letter:

After consulting with our provider, she was scared enough that it worked. She stopped spreading the word about the value she could deliver to her local community and, as part of the team invested in seeing her succeed, it felt like a rock and a hard place because her fear of legal action made perfect sense.

Multiply new grads signing non-competes by the fear of a lawsuit, and you have a situation where non-competes worked well and many large corporations implemented them across the board.

The Wrong Place to Focus

All of the above said, I empathize with employers. One of the most frustrating experiences as a leader is seeing your organization pour its heart and soul into supporting its people, only to see them leave as soon as they are successful.

But legally restricting them from leaving and instilling fear if they do is the wrong approach. In fact, it only puts a band-aid on the underlying problem.

Instead of focusing on preventing people from leaving, I believe in focusing on making people want to stay. The phrase that comes to mind is:

Make the grass so green you don’t even look to the other side.

We don’t want to build a community who is only here because they are legally obligated; rather, we want to build a thriving community that is fired up to come to work every day, that feels the autonomy and flexibility to craft a daily routine that makes them thrive.

The MovementX Approach

At MovementX, we have never asked anyone to sign a non-compete, or for that matter a non-solicit. Philosophically, we don’t agree with instilling fear or threatening lawsuits.

Have we gotten burned in the past because of it? Probably. Once, we have had a provider leave and try to take MovementX partnerships with them—a cardinal sin in the business world.

Instead, we practice what we preach in attempting to build a thriving community. Here are a few strategies we have deployed amidst a larger more comprehensive strategy to drive retention:

• During the onboarding process, we ask providers to set personal and professional goals, so that we can be sure their experience with us aligns with what they are looking for in life and in a career. We are working on strategies to consistently review their goals and ensure we are reaching big milestones throughout their journey.
• Twice per year, we survey our entire team to gauge where we can improve as an organization. More importantly, we listen to what is shared and hold our team accountable for identifying and implementing action that results from the survey.
• We hold ‘stay interviews,’ where my favorite question to ask is: ‘what could keep you with MovementX for the rest of your career?’ and are working to make this a standard part of each provider’s journey. Their insights to this question are gold to us.

While we can never claim to be perfect, we are actively doing our best on each of these fronts and more to build a workplace people love. It involves building a culture of learning, growing, and catalyzing positive change together.

The Way Forward

With non-competes illegal, I’d advocate for the industry to move forward in 3 important ways:

1. Focus on what matters

First, more companies should focus on what makes people stay. Instead of spending time erecting barriers to make it more difficult for people to leave, spend your time making people love where they are.

Will your employees still leave? Potentially—there’s no guarantee. But in this case, the best offense is a great defense.

2. Have an abundance mindset

Study after study continues to show that even though physical therapy is proven to save time and money for conditions such as low back pain, utilization of physical therapy services remains low.

There are plenty of patients out there who need our care. Quite frankly, more people providing good quality physical therapy care is a good thing for our society. If more people are educating our communities about the value of physical therapy services, our society will be collectively healthier.

Multiply the above by the need for physical therapy services continuing to grow for decades to come, and we should all have plenty of patients coming through our doors.

3. Listen and continuously improve

You cannot be the perfect employer for every physical therapist or the perfect company for every patient, but you can learn from each one. Focus on listening to your people and they will guide your next steps.

Just as the subjective interview is enlightening during a patient evaluation, the subjective feedback employees give can shape your treatment plan for improving your organization.

The elimination of the non-compete is a fantastic step forward for our industry and for quality of life—for both patients and providers alike. It will challenge employers to be better than ever and hopefully spur innovative thinking for physical therapists across the country.

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At MovementX, we are committed to building a community of 100 thriving physical therapists by the end of 2025. You can read our Vision of Greatness (aka, exactly what we hope to look like when we achieve that Vision) here: 100 Thrive in ‘25.

Editor’s Note

We are monitoring ongoing developments regarding the effective date of the FTC’s Non-Compete ruling and potential efforts to overturn it. This article may be updated to reflect these changes as they happen.

References

1. Sharpe JA, Martin BI, Fritz JM, Newman MG, Magel J, Vanneman ME, Thackeray A. Identifying patients who access musculoskeletal physical therapy: a retrospective cohort analysis. Fam Pract. 2021 Jun 17;38(3):203-209. doi: 10.1093/fampra/cmaa104. PMID: 33043360; PMCID: PMC8679185.
2. Thackeray A, Hess R, Dorius J, Brodke D, Fritz J. Relationship of Opioid Prescriptions to Physical Therapy Referral and Participation for Medicaid Patients with New-Onset Low Back Pain. J Am Board Fam Med. 2017 Nov-Dec;30(6):784-794. doi: 10.3122/jabfm.2017.06.170064. PMID: 29180553.