Texas Legislature Passes Bill Limiting Noncompete Agreements for Health Care Professionals

Strategic Insights -

The Texas Legislature recently passed a bill (SB 1318) that limits the terms of noncompete agreements applicable to health care professionals, including physicians, dentists, and mid-level practitioners. The law, signed by Gov. Greg Abbott on June 20, modifies the Texas Business & Commerce Code to add further limitations on noncompete agreements. The new provisions include a maximum duration of one year following termination of the contract or employment, a maximum geographic scope of five miles, unenforceability if physicians are terminated without cause, and a buyout option limited to one year's salary or wages. The law also adds equivalent protections for dentists, nurse practitioners, and physician assistants.

Key Takeaways:

  • The Texas Legislature passed a bill (SB 1318) limiting noncompete agreements for health care professionals, including physicians, dentists, and mid-level practitioners.
  • The law modifies Section 15.50(b) of the Texas Business & Commerce Code to add further limitations on noncompete agreements.
  • The new provisions include a maximum duration of one year following termination of the contract or employment, a maximum geographic scope of five miles, unenforceability if physicians are terminated without cause, and a buyout option limited to one year's salary or wages.
  • The law adds equivalent protections for dentists, nurse practitioners, and physician assistants.
  • The law does not require noncompete agreements entered into before September 1, 2025, to be amended, nor do limits on enforceability apply retroactively.
  • The law takes effect on September 1, 2025.

Statistics:

  • The bill (SB 1318) was passed by the Texas Legislature.
  • The law modifies Section 15.50(b) of the Texas Business & Commerce Code.
  • The new provisions limit noncompete agreements for health care professionals to one year.
  • The law applies to physicians, dentists, and mid-level practitioners.
  • The law takes effect on September 1, 2025.

Sources:

  • (c) Mondaq Ltd, 2025
  • United States, Texas Business & Commerce Code, Section 15.50(b)
  • (c) Mondaq Ltd, 2025, Tel. +44 (0)20 8544 8300 - http://www.mondaq.com