On June 20, 2025, Texas Governor Greg Abbott signed into law Senate Bill 1318 (SB 1318), which will further restrict noncompete agreements for health care professionals in Texas, starting September 1, 2025. Most notably, SB 1318 limits the duration and scope of a noncompete to one year post-employment and five miles from the provider’s primary practice site. It also takes restrictions that previously applied only to physicians and makes them applicable to dentists, physician assistants, and nurses. 

Backdrop: Existing Texas Law

Section 15.50(b) of the Texas Business and Commerce Code governs noncompete agreements for physicians licensed by the Texas Medical Board. It provides that noncompete agreements for physicians are only enforceable when the agreement:

• Does not deny the physician access to the list of patients whom the physician had seen or treated within one year of the end of the employment relationship;
• Provides access to customary patient medical records for a reasonable fee;
• Provides a buy-out provision for a reasonable price or as agreed by the parties; and
• Allows the physician to continue treating specific patients or those with acute illnesses after employment has been terminated.

In practice, many physicians in Texas have been permitted to buy out their noncompete agreements for one year’s compensation.

SB 1318 Amendments

SB 1318, which is not retroactive, amends Section 15.50(b). In addition to expanding the scope of the restrictions in Section 15.50(b) to include dentists, physicians’ assistants, and nurses, SB 1318 includes the following key provisions:

• A noncompete’s temporal scope cannot exceed one year post-employment;
• A noncompete’s geographic scope cannot exceed five miles from the provider’s primary practice site;
• A noncompete’s required buyout provision must be “in an amount that is not greater than the physician’s total annual salary and wages at the time of termination of the contract or employment,” which codifies what has been common practice relating to such buy-outs; and
• With respect to physicians, a noncompete is void if the physician is involuntarily discharged without good cause. “Good cause” is defined as “a reasonable basis for discharge of a physician from contract or employment that is directly related to the physician’s conduct, including the physician’s conduct on the job or otherwise, job performance, and contract or employment record.”

Under SB 1318, “nurse” encompasses any person licensed under Chapter 301, Occupations Code, to engaged in vocational nursing. Chapter 301 imposes licensure requirements on registered nurses, licensed vocational nurses, vocational nurses, licensed practical nurses, practical nurses, professional nurses, graduate nurses, and “any other designation tending to imply that [a] person [is] entitled to practice nursing.” 

Conclusion

In light of these new restrictions, employers expecting to enter noncompete agreements with physicians, nurses, dentists, or physician assistants in Texas should work with counsel to make sure their agreements meet these new standards. Because SB 1318 is not retroactive, employers likely do not need to amend existing agreements to bring them into compliance with the new law. However, they should bear in mind that any arrangements entered into after September 1, 2025, will be limited to the strict one-year/five-mile requirements. State law regarding noncompetition agreements is frequently changing, so employers are encouraged to take a close look at their agreements to determine whether there is a reason to update them. We will continue to monitor and report on developments in this highly dynamic area of law.

This article was prepared with the assistance of 2025 Dallas summer associate JJ Gramlich.