Understanding non-compete agreements for therapists

If you’re a mental health therapist working for a group practice or an agency, you may have signed a non-compete agreement when you were hired. These documents can feel intimidating, especially when you’re thinking about leaving to start your own practice or join another one. What does it actually mean for your career? Can your employer really stop you from practicing?

This blog post will walk you through what non-compete agreements are and what you can do if you have one. A quick note: This post is meant to share general information, not legal advice. Non‑compete rules can vary a lot depending on where you live and your specific situation. If you’re dealing with a non‑compete and need guidance tailored to you, it’s a good idea to talk with an employment attorney who understands your state’s laws.

What is a non-compete agreement?

A non-compete agreement is a contract, or a clause within a contract, where an employee agrees not to work for a competitor or start a similar business for a certain period of time and within a specific geographic area after leaving their job.

For a therapist, this could mean the agreement tries to prevent you from opening a private practice within a 10-mile radius of your current office for one year after you leave. The goal for the employer is to protect their business, client base, and investment in training. However, these agreements can also limit your career options and, in some cases, disrupt care for your clients.

Are non-compete agreements enforceable?

This is the big question, and the answer is: it depends. There isn’t a single federal law that covers all non-compete agreements for therapists. Instead, the rules change from state to state.

A nationwide ban on non-competes was proposed by the Federal Trade Commission (FTC) but was ultimately blocked in court. This means we’re back to a patchwork of state laws.  You can check where your state stands using this interactive map. Here’s a general overview of what that looks like:

• States with full bans: Some states, like California, Minnesota, North Dakota, and Oklahoma, have banned non-compete agreements for employees entirely. In these states, your non-compete is likely unenforceable.

• States with healthcare-specific rules: Other states have laws specifically targeting non-competes in the healthcare field. They may ban them for certain licensed professionals, including therapists, recognizing the importance of patient continuity of care.

• States with income rules: In some areas, a non-compete is only enforceable if the employee earns over a certain amount of money. The idea is that these restrictions should only apply to highly compensated employees.

“Reasonableness” states: Most states fall into this category. Here, a court will decide if the non-compete is “reasonable.” To be considered reasonable, the agreement must be limited in:

• Time: A restriction lasting for five years is less likely to be enforced than one lasting for six months.

• Geography: A 50-mile radius is harder to justify than a 5-mile one.

• Scope: The agreement shouldn’t prevent you from working in roles that don’t actually compete with your former employer.

Courts are also paying more attention to how non-competes affect the public, especially in healthcare. If an agreement prevents clients from continuing with their trusted therapist or limits access to mental health services in an underserved area, a judge may refuse to enforce it.

Beyond the non-compete: Other clauses to watch for

Even if your state restricts non-compete agreements, employers may use other types of clauses to achieve a similar result. It’s important to know what these are.

Client choice and non-solicitation agreements

Non-solicitation agreements are very common. They don’t stop you from practicing, but they do prevent you from actively reaching out to your former employer’s clients or employees and asking them to follow you to your new practice.

• Client non-solicitation: You agree not to directly contact or encourage clients from your old practice to join you after your move.

• Employee non-solicitation: You agree not to recruit former colleagues to leave your previous employer and join you.

However, it’s a fundamental principle in healthcare that clients have the right to choose their therapist. While you cannot reach out or market to your former clients, non-solicitation clauses do not generally prevent clients from finding you on their own and deciding to continue care with you if they wish. Ethical guidelines and court decisions often recognize the importance of client autonomy and continuity of care. If a client learns about your new practice independently and wants to follow you, it’s typically within their right to do so.

Confidentiality agreements

You’ll always be bound by confidentiality agreements (and ethical duties like HIPAA) to protect patient information and your employer’s trade secrets. Make sure this clause isn’t written so broadly that it defines your general clinical skills as “confidential.” Its purpose should be to protect specific business information, like client lists or billing rates, not to prevent you from working.

Training Repayment Agreements (TRAPs)

Some practices require employees to pay back the cost of training if they leave before a certain date. These are called TRAPs, and they are facing increased legal scrutiny. In some cases, they can be considered an unfair way to trap an employee in a job. Be wary of these and understand the terms before you sign.

A practical plan for leaving a practice with a non-compete

If you’re planning your exit, being strategic and proactive can make all the difference. Don’t wait until you’ve already given notice to think about your non-compete.

1. Review your contract carefully

Your first step is to find your employment agreement and read it thoroughly. Identify every clause that restricts your activity after you leave. This includes the non-compete, non-solicitation, and confidentiality clauses. Pay close attention to the specified time, geographic radius, and the “governing law” section, which identifies the state’s laws that apply.

2. Understand your state’s laws

Next, research the laws in your state regarding non-compete agreements for mental health professionals. Is there a ban? An income threshold? Knowing your legal rights is your most powerful tool. This information can often be found through your state’s professional licensing board or by consulting with an attorney.

3. Prioritize ethical and continuity of care

Your ethical duty to your clients is paramount. Courts and licensing boards take patient abandonment very seriously. Before you do anything else, create a transition plan that ensures your clients’ care is not interrupted.

This plan could include:

• Giving your employer ample notice (e.g., 30-60 days).

• Offering to help transition clients to other therapists in the practice.

• Providing clients with a list of referral options.

• Arranging for emergency coverage after you leave.

Having a thoughtful, client-focused plan is not just ethically sound. It also makes you look better in any potential legal dispute.

4. Try to negotiate a solution

Your former employers could be willing to negotiate. They would probably rather find a middle ground than engage in a costly legal battle they might lose.

You can approach your employer and propose changes to the agreement. For example, you could ask to:

• Reduce the geographic area: “I’d like to open my practice 15 miles away, even though the agreement says 25.”

• Reduce the time: “Can we agree to a 6-month non-compete period instead of one year?”

• Get a “carve-out” for existing clients: This would allow you to continue seeing specific clients who want to follow you, while still agreeing not to solicit others.

When you negotiate, frame your requests around continuity of care for your clients. This focuses the conversation on a shared professional responsibility rather than just your personal interests.

5. Plan your communication

How you announce your departure matters. To avoid violating a non-solicitation clause, you cannot actively poach clients. However, you can inform them that you are leaving the practice.

You could work with your employer to create a joint letter or a script for telling clients. This letter should let them know you are leaving, give them their options for continuing care (whether with another therapist at the practice or elsewhere), and explain how they can have their records transferred if they choose. You can also set up a professional website or social media profile for your new practice, which allows clients to find you independently.

What if your employer refuses to cooperate?

Ideally, an employer will work with you to create a thoughtful transition plan that puts clients first. Unfortunately, that doesn’t always happen. Some practices may refuse to discuss your departure, deny a transition plan, or insist on strict silence until your last day. If you’re in this situation, you still have options.

First, document everything

If your employer won’t engage, keep records of your attempts to do the right thing. Save emails where you asked to coordinate a transition, requested guidance on client communication, or offered reasonable notice. If conversations happen verbally, jot down dates, who was present, and what was said. This documentation can be important if your actions are later questioned.

Focus on your ethical obligations, even if your employer doesn’t

Your professional ethics don’t disappear just because your employer is uncooperative. Licensing boards pay close attention to issues like client abandonment and continuity of care. Even if you’re blocked from implementing a full transition plan, prioritize steps that protect clients, such as providing appropriate notice when possible and ensuring emergency coverage or referrals are available through the practice.

Stick closely to your contract and ethical guidelines

If you’re unsure what you’re allowed to do, err on the side of caution. Avoid soliciting clients, taking records, or communicating beyond what your contract and ethical rules allow. At the same time, remember that ethically informing clients you are leaving (without directing them to follow you) is often appropriate and, in some cases, required.

Consider getting outside support

When an employer refuses to collaborate, this is a strong signal to speak with an employment attorney familiar with healthcare and noncompete law in your state. An attorney can help you understand what’s enforceable, suggest compliant ways to communicate with clients, and, if needed, send a letter on your behalf to clarify expectations. Sometimes, simply involving counsel can shift an employer’s willingness to negotiate.

Protect yourself emotionally and professionally

A hostile or rigid exit can be stressful and demoralizing. Reach out to trusted colleagues, supervisors, or professional networks for support and perspective. Many therapists have navigated similar situations, and hearing how others handled it can help you feel less alone and more confident in your decisions.

Cooperation works both ways

If you can show that you made good faith efforts to prioritize clients and act ethically, you put yourself in a much stronger position, legally and professionally. Even when an employer isn’t willing to work with you, your integrity and documentation can speak for you later.

Navigating a non-compete agreement can be stressful, but it doesn’t have to be a roadblock to your career goals. Understanding the law, prioritizing your clients, and approaching the situation proactively can help you find a path forward. The legal landscape is shifting to favor therapist mobility and client choice, putting you in a stronger position than ever before. If you feel stuck, consider seeking advice from an attorney who specializes in employment law for healthcare professionals. They can provide guidance tailored to your specific situation and state.