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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Employment Law
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Experience:  20+ Years of Employment Law Experience
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I am helping a friend start a business. He is a physical therapist

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I am helping a friend start a business. He is a physical therapist working for PT company. When he joined the company they shared with him that ownership would be part of the plan. They do not offer health insurance. Now they owners have shared with him that ownership would not be offered, ever. He is very skilled, has quite a following, so would like to start his own business as a result. He recently shared with me that he has a non compete clause. I do not have all the details, but one stipulation is a 30 mile radius. I live in the state of Iowa. First I'd like to understand how strong this clause can be given he feels they broke their trust by changing their mind about the ownership promise. I assume that was not in writing. Can this clause be broken? They are really impacting him now, promising ownership, and recently saying no. Also with the 30 mile radius, could his business address be outside of the 30 mile radius, but he sees patients within the 30 mile radius? Thank you
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

Legally, in order to have a binding non-compete clause it must be in writing, just like their agreement to give him ownership in the company. If the non-compete is a written agreement, even if they broke their promise about ownership, then it can still be enforceable in Iowa as long as the interests the agreement protects are only those reasonable to protect the existing employer and as long as the geographic area is reasonable and time frame (not more than 2 years) is reasonable.

If he has a 30 mile radius clause, his office would have to be outside of that 30 mile radius to comply with the non-compete and if he is seeing patients within that 30 mile radius then he could be still sued for breach of the non-compete.

To break the non-compete, you have to prove that the time length or geographic scope is unreasonable or that the scope that is being protected is too broad to protect only the narrow scope the current employer needs protected. The other option is to negotiate a buyout of the non-compete, which would have to be in writing with the current employer to release him from that agreement.

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