June 2026 | Client Alert
On May 28, 2026, the Puerto Rico Supreme Court issued a landmark decision in MCG Therapy Group, LLC v. Maestre Rivera, addressing for the first time the validity and enforceability of non-compete clauses in assigned contracts within the context of professional services relationships. The Supreme Court ruled that non-compete agreements are enforceable where their temporal, geographic, and substantive restrictions are reasonable, protect legitimate business interests, and do not impose disproportionate burdens on the professional or adversely affect the public interest. The Supreme Court emphasized that this analysis must be conducted on a case-by-case basis, considering the particular circumstances of each arrangement.
The controversy arose after a psychological services provider, The Able Child, assigned its professional services contracts to MCG Therapy Group (“MCG”). MCG asserted that, prior to the transition, it notified all professional services contractors of the assignment and, as a corporation, continued providing the same services to the Puerto Rico Department of Education. Following the assignment, the contracted psychologist, Ms. Maestre Rivera, continued rendering services under MCG without objection and remained bound by a contractual non-compete clause requiring her to refrain, for one (1) year after termination or non-renewal, from providing services to the same client population she attended to through the corporation (subject to penalties for non-compliance).
However, during the contractual relationship, Ms. Maestre Rivera began servicing the same clients independently through her own entity while simultaneously maintaining her relationship with MCG and entering into a contract with the Department of Education. After subsequently notifying MCG of her decision to cease providing services, MCG filed suit to enforce the non-compete provision. Ms. Maestre Rivera argued that MCG was not part of the original contract, that she never ratified it in writing, and that the assignment was invalid. Both the Court of First Instance and the Court of Appeals dismissed the claim, reasoning that the clause required express written ratification between the parties; however, the Supreme Court reversed.
In rejecting the lower courts’ approach, the Supreme Court clarified that a valid assignment transfers the contract in its entirety, including all ancillary provisions such as restrictive covenants. The Supreme Court further held that enforceability of a non-compete clause does not require a separate written agreement with the assignee, as consent to the assignment may be established either expressly or tacitly. In this case, Ms. Maestre Rivera’s continued performance, billing, and acceptance of compensation after receiving notice of the assignment over a period exceeding six (6) months constituted sufficient tacit consent, thereby validating the assignment and binding her to the contract under the same terms and conditions originally agreed upon, including all ancillary and restrictive provisions.
Applying the “reasonableness standard”, the Supreme Court concluded that the non-compete clause was valid and enforceable. It found that MCG had a legitimate commercial interest in protecting its client base, goodwill, and operational structure; that the restriction did not impose a disproportionate burden on Ms. Maestre Rivera; and that enforcement did not adversely affect the public interest, given the absence of evidence suggesting diminished access to essential psychological services. The Supreme Court also confirmed that the contract did not prohibit assignment nor involved obligations of a strictly personable nature. Accordingly, the Supreme Court held that MCG had stated a viable cause of action for breach of contract.
Notably, the Supreme Court reaffirmed that the reasonableness standard for non-compete agreements is more stringent in the employment context than in independent contractor relationships. Under Arthur Young & Co. v. Vega III, non-competes in employment are subject to a demanding standard—requiring clear legitimate interests, strict proportionality (including temporal and geographic limits), valid consideration, and a written agreement—reflecting the unequal bargaining power and the strong public policy protecting the right to work. By contrast, in independent contractor relationships, a more flexible case-specific analysis is applied given the parties’ greater autonomy and bargaining parity.
This decision represents a significant clarification in Puerto Rico law by confirming that non-compete clauses may survive and remain enforceable following a valid assignment without the need for formal re-execution, provided that consent—whether express or tacit—is established. For employers and service providers, the ruling reinforces the enforceability of well-drafted restrictive covenants and underscores the importance of managing assignments carefully. For independent contractors, it highlights the legal implications of post-assignment conduct and the potential binding effect of continued performance under an assigned contract.
In light of this ruling, employers and service providers should take the opportunity to review and enhance their contractual frameworks, particularly in relation to independent contractor agreements. Special attention should be given to drafting narrowly tailored non-compete provisions supported by legitimate business interests and to implementing clear processes for communicating and documenting contractual assignments.
O’Neill & Borges LLC is currently monitoring developments and is available to help employers assess how this decision may impact their operations or compliance strategies.
For additional information or assistance, please contact your regular O’Neill & Borges attorney or write to info@oneillborges.com.
This O’Neill & Borges Client Alert is prepared for general information purposes only. It does not constitute legal advice or a legal opinion; nor does it establish an attorney-client relation with the recipient. For further information or to establish an attorney-client relation please contact us at info@oneillborges.com or your prime contact attorney at O&B.