Health Law Checkup - July 2012
Enforceability and Interpretation of Agreements Prohibiting "Direct and Indirect" Solicitation of Health Care Employees
Enforceability and Interpretation of Agreements Prohibiting “Direct and Indirect” Solicitation of Health Care Employees
By Kathryn Hackett King
Earlier this month, the U.S. Court of Appeals for the Fourth Circuit held that several nursing homes breached their non-solicitation agreements with a therapy firm, where the nursing homes had assisted a rival therapy firm in recruiting and hiring therapists stationed at the nursing homes. The court found that this conduct was in violation of the nursing homes’ agreement not to “directly or indirectly” solicit or hire the therapy firm’s employees for a one-year period. The court also upheld the provisions regarding liquidated damages, which resulted in the nursing homes having to pay $640,000 in liquidated damages, plus attorneys’ fees. See ProTherapy Associates, LLC v. AFS of Bastian, Inc., et al., 2012 U.S. App. LEXIS 13628 (4th Cir. July 2, 2012). This court decision is a reminder of the importance of review by local counsel of non-solicitation provisions (as well as other restrictive covenants) for enforceability issues as well as to explain the specific types of activities that are prohibited.