Non-compete law in Texas

Exceptions and special rules

• Statute does not separately name sale-of-business covenants; they fall under the general 'ancillary to an otherwise enforceable agreement' test (§ 15.50(a)); the burden of proof differs depending on whether the agreement's primary purpose is personal services (§ 15.51(b))
• Physician (Texas Medical Board licensee). Covenant must: not deny access to list of patients seen/treated within the prior year; provide medical-records access on patient authorization; provide a buyout not greater than the physician's total annual salary and wages at termination; allow continuing care during an acute illness; expire within 1 year; limit area to 5 miles from the primary practice location; state terms clearly and conspicuously in writing. Void if physician is involuntarily discharged without good cause. Does not apply to ownership interests in licensed hospitals or ambulatory surgical centers; 'practice of medicine' excludes administrative management (§ 15.50(b)-(d)). The one-year, five-mile and void-on-discharge rules and the salary-capped buyout apply to covenants entered into or renewed on or after 2025-09-01 (SB 1318 s. 4); earlier covenants follow the former text. (Tex. Bus. & Com. Code § 15.50(b)-(d))
• Dentist, professional/vocational nurse, physician assistant. Unenforceable unless: buyout not greater than total annual salary and wages; expires within 1 year; area within 5 miles of primary practice location; terms clearly and conspicuously in writing (§ 15.501). Applies to covenants entered into or renewed on or after 2025-09-01 (SB 1318 s. 4). (Tex. Bus. & Com. Code § 15.501)

Non-solicitation clauses

Statute does not separately regulate non-solicitation covenants; § 15.50-.52 criteria apply to 'covenants not to compete' and preempt other law including common law (§ 15.52). Whether a non-solicit is within 'covenant not to compete' is case law.

Contracts naming another state's law

No statutory out-of-state choice-of-law or forum protection in Subchapter E.

Remedies

Court may award damages, injunctive relief, or both (§ 15.51(a)). If overbroad, the court shall reform and enforce as reformed, but only injunctive relief (no damages for pre-reformation breach); for personal-services agreements the promisor may recover costs and attorney's fees if the promisee knew the covenant was unreasonable and sought to enforce it beyond what was necessary (§ 15.51(c)).

Recent changes

• 2025-09-01. SB 1318 (2025 Ch. 816) took effect: tightened physician covenants (buyout cap, void on discharge without good cause, 5-mile/1-year) and added § 15.501 for dentists, nurses and physician assistants; applies to covenants entered into or renewed on/after this date; § 15.52 preemption broadened. Source