When Dr. Johnny Lamb was getting ready to open Animal Intermediate Care last year in Webster, she was cautious about choosing the name of the new business.
Even though it would function like an urgent care for pets, Lamb was wary of using that wording for fear of violating the terms of a non-compete agreement she had with her prior employer, Veterinary Specialists and Emergency Services (VSES) in Brighton.
"Because I thought that's too close to 'emergency care,' so I need to fly under the radar," Lamb said.
A non-compete agreement prohibits an employee from working for a competitor or opening their own competing business within a specific geographic area for a certain length of time.
In June, the New York state Legislature passed a bill that would ban non-competes. If Gov. Kathy Hochul signs it into law before the end of the year, New York would become one of a handful of states to do so.
According to Lamb's contract, she could not practice emergency veterinary care within 25 miles of VSES for two years after she left in November 2021.
"I did not want to wait two years before opening this," she said of her new practice.
A nationwide shortage of veterinarians has, for years, contributed to a lack of access to pet care — especially emergency care — across Greater Rochester.
Lamb was eager to help close that gap by treating pets with non-emergency problems that still require urgent attention, but which overbooked general practices aren’t always able to respond to quickly. Things like urinary tract infections, or ear and skin infections. The kinds of cases Lamb said VSES frequently turned away.
"They cause a lot of discomfort for our pets and certainly, if left untreated, they cause bigger problems," Lamb said. "So I wanted to be able to fill that void and provide other options for pet parents."
Non-compete agreements are common in veterinary medicine, according to veterinarian and attorney Lance Roasa. And the contract language has become more restrictive, he said, since private equity-backed companies began acquiring private-owned practices roughly 15 years ago.
When Roasa teaches employment law to veterinary students across the United States, he tells them non-competes, "can wreck a decade of your life.
"One paragraph that you sign can wreck where you live, where you kids are raised, where you work, because people have to move because of these," he said.
Groups such as the New York State Business Council, representing employers, have put pressure on Gov. Hochul to not sign the non-compete ban. They launched a $1 million ad campaign in October to thwart the legislation, warning of unfair competition and jobs lost to other states that don't have a ban. Hochul, seeking a compromise over concerns about protecting a company's trade secrets, has floated the idea of a compensation cap — possibly allowing non-competes to continue for those making more than $250,000.
Some states only limit non-competes for certain professions, such as healthcare workers.
If signed by Hochul, the New York ban only would affect non-compete agreements signed after the law goes into effect.
Action could come on the federal level, as well. The Federal Trade Commission proposed a regulation in January banning non-compete agreements, arguing that they hurt workers. A vote is expected in April.
Paul Diaz, an independent hiring consultant who recruits veterinarians for practices across the United States, agrees that business owners do have a right to protect their business. But he argued that there are other ways to accomplish this through copyrights, trademarks, and non-solicitation agreements.
In Diaz's opinion, the restrictions of non-compete agreements have no place in veterinary medicine.
"If (the business owner) has some type of proprietary process or tool or methodology that is going to help animals recover quicker or make a procedure less invasive and they truly aren't sharing that with the industry? Well, I firmly believe they are part of the problem," he said.
By restricting the movements of former employees, non-compete contracts also have the potential to limit the options of consumers if, for instance, a pet owner cannot follow their veterinarian to another practice or if the veterinarian is forced to leave the area altogether.
In 2016, Roasa analyzed 350 appellate and supreme court level cases in 50 states. In each instance, he said, the courts were unswayed by the public interest argument.
"The courts are basically saying that clients' freedom to choose is outweighed by the employer's freedom to contract and the freedom to protect their business," he added.
About a year ago, Diaz stopped working with veterinary clients who ask prospective employees to sign non-compete agreements. Business owners show their hypocrisy when they complain about the veterinary shortage, he said, but contribute to it by requiring these contracts.
"What I've experienced are these veterinarians who leave these toxic work environments (and) are unable to relocate and simply choose to not practice until that non-compete term expires," Diaz said. "It's difficult to get back into practice after a year or two, and they'll find a position in the industry that's non-clinical, so the industry just loses another veterinarian."
He tries to encourage veterinarians to refuse to sign non-competes, but so far, he hasn't had much success.
"They have been conditioned to believe non-compete is a standard part of becoming a veterinarian and you just accept what you're given," Diaz said.
Roasa said he knows of only one veterinarian who was successful in eliminating a non-compete from their contract. But he said it is possible to negotiate for a fair, more narrowly tailored agreement. And because of the labor shortage, veterinarians do have some leverage.
"At least we can limit the collateral damage to what is truly unfair competition," Roasa said. "And most practices, even the corporate practices, will accept that."
Dr. Lamb, the veterinarian who left the now-defunct Veterinary Specialists and Emergency Services in Brighton to start her own practice, said she did get a cease and desist letter from attorneys representing Thrive Pet Healthcare, the parent company of her former employer.
But after Lamb's lawyer responded, the matter went no further.
"My take on it was, if they hadn't sent me anything, and then if someone else did something similar to me, then they could argue, 'Well you didn't enforce it on this other person, so you can't enforce it on me.' "
But if she had been forced to defend herself against a lawsuit, Lamb could have paid thousands of dollars in legal fees.
This is why Roasa said he thinks counting the number of lawsuits surrounding non-competes is not a good measure of how they affect the veterinary industry. It is the mere threat of litigation which he believes illustrates the power dichotomy between a large corporation and a veterinarian, even when a veterinarian believes they have a solid legal case to challenge their contract.
When her business was new in the summer of 2022, Lamb was leery of recruiting other VSES doctors. She was concerned about attracting the attention of corporate lawyers on the lookout for competitors. She later hired a former VSES colleague just as VSES was closing for good in late November. Thrive Pet Healthcare ultimately released the hospital’s veterinarians from their non-compete agreements.
Now that she's a business owner, Lamb said she will not ask any employee to sign a non-compete.
"And I don't know that I ever will," she said. "I think just out of respect, I would hope that someone wouldn't open the same kind of business that I have, you know, right down the road."
Lamb's philosophy is, if she keeps her employees happy, they won't want to leave.
