Wow, that’s crazy. I think it’s a good disruption. They’re dumb.
They make sense in some circumstances. Take a private medical practice, for instance. Two physician/owners are looking to expand so they recruit an associate. This new physician employee, often a new grad, is hired with a guaranteed salary for 2 years and often a considerable signing bonus. In turn the practice gets a new doc that is typically going to take a year or more to ramp up production since they are new to the area and unknown to the referral base. Additionally, the process of getting a new doc reimbursed by insurance plans is a nightmare of burocracy and delay/deny. So, the practice is taking on significant overhead with the hope that the associate will be a long term, productive employee or even a partner. If not for the non-compete clause, the new doc essentially could get his first 1-2 “lean years” subsidized by the practice, then quit and open up his own competing practice across the street, taking his patients with him. If this ruling sticks, I predict that employment contracts are going to shift away from salary to pay-for-production from day one. That’s going to be tough for new docs looking for stability early in their career.