On April 25, 2023, the Indiana Senate passed an amendment banning non-compete agreements with primary care physicians (defined as physicians practicing family medicine, general pediatric medicine, and internal medicine) executed on or after July 1, 2023. The current version, originally introduced as an outright ban, represents a series of compromises between the Indiana House and Indiana Senate. Governor Eric Holcomb is expected to sign the bill into law.

In addition to categorically banning non-compete agreements with primary care physicians, the bill significantly narrows the enforceability of non-competes with physicians practicing in other areas. Non-compete agreements with any physician will be unenforceable if the employer terminates the physician without cause, the physician terminates employment for cause, or the physician’s employment contract expires and both parties have fulfilled their contractual obligations.

The amendment comes only three years after Indiana passed a previous law placing greater restrictions on physician non-competes. The 2020 legislation prohibited physician non-competes unless the agreement contained a buy-out provision, ensured accessibility to patient medical records, and had provisions protecting patient preferences. In addition to expanding restrictions on physician non-competes, the new law provides some clarity regarding buy-out provisions.

Assuming the bill is signed into law, employers and physicians in Indiana wondering whether a particular non-compete agreement is enforceable will need to pay special attention to the date on which the agreement was executed. Agreements executed prior to July 1, 2020, will be analyzed under Indiana common law. Agreements executed between July 1, 2020, and July 1, 2023, will be analyzed under the 2020 law, and agreements executed after July 1, 2023, will be analyzed under the amended statute.

Indiana’s Senate Enrolled Act No. 7 is but one more data point in the rising national criticism of non-compete agreements and falls closely on the heels of the FTC’s recent proposal to ban non-compete agreements nationwide.