What happened?

On May 6, 2025, the Governor of Indiana signed Senate Enrolled Act No. 475 (SB 475) into law, creating Public Law 207. This legislation prohibits hospitals and affiliated entities from entering into non-compete agreements with physicians for contracts signed on or after July 1, 2025.

Overview:

SB 475 is part of Indiana’s ongoing effort to improve physician mobility and access to care. It builds on previous laws from 2020 and 2023 by establishing a new legal framework specifically targeting hospitals and their affiliates.

Main Changes:

• Non-compete agreements between physicians and hospitals, hospital systems, parent companies, or affiliated managers are void and unenforceable if entered into on or after July 1, 2025.

• The law applies to all licensed physicians in Indiana, regardless of specialty. It does not apply to physician assistants or advanced practice providers.

• “Non-compete agreement” is broadly defined to include:
  
  • Bans on working for a new employer.
  • Financial penalties or repayment obligations (e.g., bonuses, training costs) after three years of employment.
  • Requirements for employer consent or legal relief to change jobs.
  • Indirect restrictions that deter physicians from practicing elsewhere.

What Is Still Allowed:

• Non-disclosure agreements protecting confidential business information or trade secrets.
• Non-solicitation agreements (limited to one year) that do not restrict patient interactions, referrals, or professional collaboration.
• Agreements that are tied to the sale of a business where the physician owns more than 50% of the entity.

Additional Information:

• Existing non-compete agreements signed before July 1, 2025, remain valid, even if amended or renewed later.
• Hospitals and affiliated entities must review and revise physician contracts to remove prohibited clauses.
• Financial penalties tied to employment termination may only be enforced within the first three years of employment.
• Employers should focus on alternative retention strategies and ensure contracts include permitted non-disclosure and non-solicitation provisions.

Source References

• Indiana SB 475 – Physician noncompete agreements
• Indiana Busch Senate Press Release

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