If you’re a physician in Texas, there’s a significant legal change on the horizon that could dramatically impact your employment contracts.
A new law—Senate Bill 1318—updates the enforceability standards for physician noncompete agreements and introduces additional restrictions for dentists, nurses, and physician assistants. These changes take effect on September 1, 2025, and apply to all new or renewed agreements from that date forward.
Here’s what you need to know.
Key Changes to Physician Noncompetes
The Texas Business & Commerce Code §15.50 has long allowed noncompete clauses for physicians—but only under specific conditions. S.B. 1318 tightens these rules further:
1. Time and Distance Limits
- Must expire within one year of the termination date, and
- Cannot restrict practice beyond a five-mile radius of the primary practice location.
2. Mandatory Buyout Option
Physicians must be given the right to buy out their noncompete for an amount not exceeding their total annual salary and wages at the time of termination.
3. Access to Patients and Records
Upon departure, a physician must:
- Be given access to a list of patients seen within the previous year,
- Be allowed to access patient records with proper authorization, and
- Not be required to receive records in a format different than how they were originally stored (unless agreed to).
4. Continuation of Care During Acute Illness
Even after termination, physicians cannot be prohibited from continuing to treat a patient with an acute illness.
5. Termination Without Good Cause = Noncompete Void
Perhaps most notably, a physician noncompete becomes void and unenforceable if the doctor is fired without “good cause.” Good cause includes job performance issues, misconduct, or negative employment record—but the burden will be on the employer to show it.
Noncompetes for Dentists, Nurses, and PAs
A brand new section of the statute—§15.501—applies similar limitations to:
- Dentists,
- Nurses (RNs and vocational nurses), and
- Physician assistants.
For these professionals, any noncompete must:
- Include a buyout capped at one year’s salary,
- Expire within one year,
- Be limited to a five-mile radius, and
- Be clearly and conspicuously stated in writing.
What Employers Need to Do Now
If you employ physicians or any of the newly covered health care practitioners, now is the time to:
- Review your existing employment agreements, especially those that are up for renewal,
- Update contract templates to reflect the new requirements,
- Reconsider your approach to post-employment restrictions in light of the one-year cap and narrow geographic scope.
And remember: these changes only apply to agreements entered into or renewed on or after September 1, 2025. Existing contracts remain subject to the old rules.
Questions? Let’s Talk.
As an employment attorney who advises physician groups and healthcare employers across Texas, I can help you navigate this new landscape. Whether you need help drafting enforceable agreements or evaluating the risks tied to termination decisions, I’m here to ensure you stay compliant—and protected.
Contact me today to review your contracts before the new law takes effect.