Non-Competes for Physicians and Other Professionals in Texas

The general test still applies, with a second layer

Every Texas non-compete must satisfy the two-part test in Business and Commerce Code section 15.50(a): it must be ancillary to or part of an otherwise enforceable agreement, and its limits on time, geography and scope must be reasonable and no greater than necessary to protect the employer's goodwill or other business interest. That test is explained in whether a non-compete is enforceable in Texas. For physicians, and since 2025 for several other licensed practitioners, the statute adds a second layer of specific requirements that must also be met. Section 15.50(a) is expressly subject to them, and section 15.52 makes the statutory criteria exclusive.

Physicians: what section 15.50(b) requires

A covenant not to compete relating to the practice of medicine is enforceable against a physician licensed by the Texas Medical Board only if it meets every one of these conditions:

1. Patient list. It must not deny the physician access to a list of the patients the physician saw or treated within one year before the contract or employment ended.
2. Medical records. It must provide access to the records of the physician's patients on the patient's authorization, with copies available for a reasonable fee as set by the Texas Medical Board under Occupations Code section 159.008, and it may not require the list or records to be provided in a format different from the one in which they are kept unless both sides agree.
3. Buyout. It must provide for a buyout of the covenant by the physician in an amount not greater than the physician's total annual salary and wages at the time the contract or employment terminated.
4. Continuing care. It must provide that the physician is not prohibited from continuing to treat a specific patient during the course of an acute illness even after the contract or employment has ended.
5. One year. It must expire not later than the first anniversary of the date the contract or employment terminated.
6. Five miles. It must limit the restricted area to no more than a five-mile radius from the location at which the physician primarily practiced before the termination.
7. Clear writing. Its terms and conditions must be clearly and conspicuously stated in writing.

Items 1 through 4 existed in earlier versions of the statute, although the buyout was formerly set at a “reasonable price” that an arbitrator could fix if the parties disagreed. Items 5 through 7, and the salary-based buyout cap, were added by Senate Bill 1318 in 2025.

The 2025 changes, and whom they reach

Senate Bill 1318 took effect September 1, 2025, and applies to covenants entered into or renewed on or after that date. Agreements signed earlier remain governed by the prior version of section 15.50(b) until they are renewed, so a practice with physicians hired in different years may be administering two different sets of rules at once.

The bill made four further changes beyond the physician list above:

• Administrative roles. New subsection (b-1) provides that, for purposes of the physician rules, the practice of medicine does not include managing or directing medical services in an administrative capacity for a practice or other health care provider. A physician whose covenant restricts only an administrative role, such as serving as a medical director for a competitor, is outside subsection (b) and under the general test.
• Discharge without good cause. New subsection (d) provides that a physician non-compete is void and unenforceable if the physician is involuntarily discharged from the contract or employment without good cause. The statute defines good cause as a reasonable basis for discharge directly related to the physician's conduct, including conduct on the job or otherwise, job performance, and contract or employment record. A practice that terminates a physician for economic reasons, or without a documented performance basis, should expect the covenant to fall.
• Hospital and surgical center ownership. Subsection (c), which predates the bill, continues to exclude a physician's business ownership interest in a licensed hospital or licensed ambulatory surgical center from the physician rules.
• Other practitioners. New section 15.501 extends four of the requirements to “health care practitioners,” defined as dentists licensed by the State Board of Dental Examiners, professional and vocational nurses licensed under Occupations Code chapter 301, and physician assistants licensed under chapter 204. A covenant against one of them is unenforceable unless it provides a buyout of no more than the practitioner's total annual salary and wages at termination, expires within one year, is limited to a five-mile radius from the primary practice location, and is clearly and conspicuously stated in writing. The patient-list, records and continuing-care provisions of the physician rule are not repeated in section 15.501.

Who is not covered by the special rules

The physician rules reach persons licensed as physicians by the Texas Medical Board. Section 15.501 reaches dentists, nurses and physician assistants. Everyone else in a health care business, including practice administrators, technicians, therapists, pharmacists, veterinarians and sales staff, remains under the general two-part test, with no statutory time or distance limit and no buyout requirement. The same is true for other licensed professionals outside health care: accountants, engineers, architects, financial advisers and brokers are judged under section 15.50(a) alone. Lawyers are the exception, governed by the disciplinary rules of their profession rather than by this statute.

For those general-rule employees the question is reasonableness in light of the person's actual role and the interest the employer is protecting, and an overbroad covenant is reformed rather than voided; see whether a Texas court will rewrite or throw out an overbroad non-compete.

What the physician will argue

• A missing element. The physician rules are a checklist, and a covenant that omits one item, such as the continuing-care clause or the records-access provision, fails as a whole. Older agreements that set a “reasonable” buyout rather than a capped figure, if renewed after September 1, 2025, are the most exposed.
• Discharge without good cause. Any involuntary termination will be presented as one without a reasonable, conduct-related basis, which voids the covenant entirely. The practice's documentation of the reason decides this.
• The radius was measured from the wrong place. Five miles from where the physician “primarily practiced,” which for a physician who rotated among several clinics is a factual question.
• The buyout tender. A physician who tenders the capped buyout amount is released; disputes then shift to whether the tender was for the right figure.
• The general test. Even a covenant that passes every physician-specific requirement must still be ancillary to an otherwise enforceable agreement and reasonable in scope. A covenant barring all medicine, rather than the physician's specialty, invites reformation.

Example

Suppose a Dallas orthopedic group hires a surgeon in October 2025 under an agreement with a two-year non-compete covering a ten-mile radius from any of the group's four locations, a buyout equal to two times annual compensation, and standard patient-list, records and continuing-care clauses. The group terminates her in 2026 because referral volume in her subspecialty fell short of projections, and she opens a practice four miles from the clinic where she spent most of her time.

The covenant was entered into after September 1, 2025, so the amended statute governs. The two-year term, the ten-mile radius measured from four locations, and the two-times buyout each exceed the statutory limits, and the termination for low volume is not a reasonable basis directly related to her conduct or performance in the statute's sense, so subsection (d) would void the covenant regardless. A court applying section 15.51(c) might reform the time and distance of a covenant that failed only the general reasonableness test, but a covenant that fails the specific requirements of section 15.50(b) is not enforceable against a physician at all. The group's remaining protections are its confidentiality agreement and trade secret law.

What practices should do now

1. Sort every physician, dentist, nurse and physician assistant agreement by signing or renewal date; agreements renewed on or after September 1, 2025 must meet the new rules.
2. Rewrite the templates: one year, five miles from the primary practice location, buyout capped at total annual salary and wages with a defined formula, and for physicians the patient-list, records, format and continuing-care clauses.
3. Define and document “good cause” processes, because the covenant's survival now depends on the reason for any involuntary termination.
4. Decide whether administrative-only restrictions on physician executives should be drafted separately under the general test.
5. For everyone else in the organization, apply the general two-part test and keep the restraint matched to the role.

Enforcement against a departing physician moves on the same timeline as any other non-compete case, with the temporary injunction hearing as the decisive event; the steps are in how to enforce a non-compete against a former employee in Texas. Tina Wysk represents medical practices and other employers in non-compete disputes in Dallas state and federal courts.