UPDATE

Texas’s S.B. 1318 was signed into law. As a result, restrictive covenants entered into or renewed on or after September 1, 2025, for the following healthcare practitioners in Texas must comply with the new law:

• Physicians;
• Dentists;
• Nurses; and
• Physician assistants.

To comply with the law, new covenants related to the clinical practice must:

1. provide for a buyout in an amount that is not greater than the practitioner’s total annual salary and wages at the time of termination of the practitioner’s contract or employment;
2. expire not later than the one-year anniversary of the date the contract or employment has been terminated; and
3. limit the geographical area subject to the covenant to no more than a five-mile radius from the location at which the health care practitioner primarily practiced before the contract or employment terminated.

These provisions must be clearly and conspicuously stated by using bold face type, capital letters, or contrasting colors so that a reasonable person would notice them.

Physician non-competes are subject to the additional provisions of the Act discussed below.

Takeaways

• SB 1318 would expand non-compete limitations on physicians, dentists, nurses, and physician assistants.
• Restrictive covenants would be limited to one year in duration and a five-mile geographic scope.
• If enacted, the law would take effect September 1, 2025, and apply only to new or renewed agreements, prompting employers to review and revise their current contracts.

A significant proposal that would limit non-compete agreements for physicians, dentists, nurses, and physician assistants in Texas is headed to Governor Abbott’s desk. Senate Bill 1318 (SB 1318), authored by Senator Charles Schwertner seeks to balance employer protections with workforce mobility and patient care.

For healthcare employers, the legislation will require substantial changes to new non-compete contracts in Texas.