On July 1, 2021, South Dakota Codified Law 53-9-11.1 went into effect. The new law prohibits the inclusion of non-compete clauses in employment contracts, partnership contracts, or any other contracts for professional relationships for physicians, physician assistants, certified nurse practitioners, certified nurse midwives, certified registered nurse anesthetists, registered nurses, and licensed practical nurses.
Introduced as House Bill 1154, employment contracts for the identified healthcare providers explicitly states that those contracts cannot restrict the right of that professional to: (1) practice and provide services in any geographic area for any period of time after termination; (2) treat, advise, consult with, or establish a provider-patient relationship with any current patient; or (3) solicit or seek out a provider-patient relationship with any current patient. This limitation on the inclusion of non-compete clauses is explicitly applicable for employment contracts executed after July 1, 2021. It is unclear if the restrictions apply to any employment contracts executed before July 1, 2021, or if enforcement of a non-compete signed prior to July 1, 2021, will be subject to the new restrictions. However, there is established law that provides new legislation generally does not have a retroactive effect.
HB 1154 was not universally accepted. When this bill was first heard in the Judiciary Committee, two of South Dakota’s largest health systems, Sanford and Avera, opposed the bill. The South Dakota Association of Healthcare Organizations also opposed the prohibition on employment contracts restricting competitive healthcare practices. However, the South Dakota Association of Nurse Anesthetists and the State Medical Association of South Dakota both supported the bill. HB 1154 was signed into law by the Governor on March 25, 2021.
For additional information regarding employment law, including the incorporation of non-compete provisions in employment contracts, contact the Goosmann Law Firm at info@goosmannlaw.com or 855-843-4531.