Healthcare employers in Texas face new requirements for non-competition agreements following the passage of Senate Bill 1318. The Texas Legislature passed this legislation on May 28, 2025, and on June 20, 2025, Governor Abbott signed the bill into law.

The legislation modifies existing requirements for physician non-competes under Section 15.50 of the Texas Business & Commerce Code and creates a new Section 15.501, which extends certain non-compete restrictions to dentists, nurses, and physician assistants for the first time.

Key Takeaways

• Effective Date: September 1, 2025 – applies to non-competes entered into or renewed on or after September 1, 2025.
• New Coverage: Dentists, nurses, and physician assistants are now subject to certain non-compete restrictions.
• Buyout Cap: All non-compete buy-outs are capped at annual salary and wages.
• Geographic Limit: Maximum five-mile radius restriction.
• Duration Limit: Maximum one-year non-compete period.
• “Good Cause” Voidance: Physician non-competes are “void and unenforceable” if the physician is involuntarily discharged without good cause.

When Does SB 1318 Take Effect?

The law takes effect September 1, 2025, and applies only to non-compete agreements “entered into or renewed” on or after that date. Non-compete agreements entered into or renewed before September 1 are governed by the law in effect on the date the covenant was entered into or renewed. The statute does not define what constitutes a “renewal.”

What Does SB...

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