Update Applicable to:	Effective Date
All Covered Healthcare Professionals	September 1, 2025

What happened?

On June 20, 2025, Texas Governor Greg Abbott signed Senate Bill 1318, a law that significantly limits the use of non-compete agreements for physicians and other healthcare professionals. The law takes effect September 1, 2025, and applies to agreements entered into or renewed on or after that date.

Overview:

The New Rules for Non-Competes

1. Who’s Covered?

• The law applies to:
• Physicians.
• Dentists.
• Nurses (professional or vocational).
• Physician Assistants.

• It does not apply to:
• Podiatrists.
• Non-clinical administrators.
• Physicians working only in administrative or leadership roles.

2. New Requirements for Enforceable Non-Competes: To be valid, non-compete agreements must:

• Expire within one year of the provider’s termination.
• Be limited to a five-mile radius from the provider’s primary practice location.
• Include a buyout option capped at the provider’s total annual salary and wages at the time of termination.
• Be clearly and conspicuously written.

3. Additional Protections for Physicians

• Termination Without Good Cause: If a physician is terminated without “good cause” (defined as a reasonable basis related to conduct, performance, or employment record), the non-compete is void.

• Access to Patient Information: Physicians must be allowed access to:

• A list of patients seen in the past year.

• Medical records (with patient consent), provided in their existing format for a reasonable fee.

• Continuity of Care: Physicians cannot be restricted from treating patients during an acute illness, even after leaving their job.

4. Legal Clarifications

• The law preempts all other laws, including common law, regarding non-compete enforceability.
• It applies only to agreements signed or renewed on or after September 1, 2025. Older agreements remain under previous law.

5. What Employers Should consider:

• Document termination decisions to support claims of “good cause.”

• Explore alternatives to non-competes, such as:
  • Non-solicitation and non-disclosure agreements
  • Retention bonuses
  • Training repayment clauses

Source References

• Texas SB 1318 – Relating to restrictions on covenants not to compete for physicians and certain health care practitioners

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