By Michael S. Byrd, JD, ByrdAdatto

Starting September 1, 2025, Texas health care providers will see major changes in how non-compete agreements are enforced. With the passage of Senate Bill 1318, the state has introduced stricter requirements aimed at protecting physicians, nurses, dentists, and physician assistants from overly restrictive employment contracts. These new rules limit the duration and geographic scope of noncompete clauses, mandate clear language, and require buyout options, especially in cases of involuntary termination without cause. Health care employers and professionals alike must understand these updates to stay compliant and protect their rights.

SB 1318 changes non-compete agreements for Texas health care professionals

Texas has enacted a new law that significantly alters the enforceability of non-compete agreements for health care professionals. Senate Bill 1318, signed into law by Governor Greg Abbott on June 20, 2025, introduces new statutory restrictions that apply to non-compete agreements entered into or renewed on or after September 1, 2025. Existing covenants signed prior to September 1, 2025, are not subject to the new law, at least until the covenant is renewed or a new one is entered. This legislation supplements, but does not replace, existing law.

Who is affected by the new non-compete rules?

• Section 15.50(b) continues to apply exclusively to physicians.
• Section 15.501 now extends non-compete regulation to dentists, nurses (APRNs, RNs, LVNs), and physician assistants (PAs).
• Neither statute covers podiatrists, non-clinical administrators and individuals in purely administrative or leadership roles.

Key provisions of SB 1318: What’s changing

Senate Bill 1318 imposes several key restrictions on non-compete agreements for covered health care professionals. Below is a breakdown of the provisions and their applicability.

Geographic limitations

Non-compete agreements may not restrict a provider from practicing beyond a five-mile radius from their primary practice location at the time of termination.

• Applies to: Physicians [under §15.50(b)] and dentists, nurses and physician assistants (under §15.501).

Duration of restriction

The duration of a non-compete may not exceed one year following the termination of employment or contract.

• Applies to: Physicians [under §15.50(b)] and dentists, nurses and physician assistants (under §15.501).

Buyout clause

Under both §15.50(b) and the new §15.501, non-compete agreements must include a buyout clause to be enforceable.

• Applies to: Physicians [under §15.50(b)] and dentists, nurses and physician assistants (under §15.501).

Buyout caps

If a buyout clause is included in a non-compete agreement, the amount must not exceed the provider’s total annual salary and wages at the time of termination.

• Applies to: Physicians [under §15.50(b)] and dentists, nurses and physician assistants (under §15.501).

Clarity of terms

All non-compete provisions must be clearly stated in writing.

• Applies to: Physicians [under §15.50(b)] and Dentists, nurses, and physician assistants (under §15.501).
• Note: Agreements with ambiguous or hidden terms may render the agreement unenforceable.

Automatic voiding upon termination without good cause

If a physician is involuntarily terminated without good cause—a reasonable basis for discharge related to the physician’s conduct, including violations of employer policies, patient care standards, or applicable laws—the non-compete is automatically void.

• Applies to: Physicians [under §15.50(b)], but does not extend to dentists, nurses or physician assistants 

Patient care protections 

SB 1318 includes safeguards to ensure continuity of care for patients, particularly when a provider leaves a practice. If a physician is terminated, they must be allowed to continue treating patients with acute illnesses and maintain access to patient lists and records for patients seen in the year prior to termination. These protections, however, are not explicitly extended to dentists, nurses or physician assistants under SB 1318.

Implications for health care employers and providers

Employers

Employers should take immediate steps to review and revise their non-compete agreements to ensure compliance of non-competes entered into or renewing after September 1, 2025, with both §15.50(b) and the new §15.501. The agreements should include the following considerations:

• Ensuring geographic and temporal scopes are within statutory limits.
• Including buyout clauses (and capping them appropriately).
• Using clear, unambiguous language.
• Recognizing that failure to comply may render the agreement unenforceable.

Health care professionals

The updates to the law not only impact employers, but also health care professionals as well. SB 1318 enhances job mobility and reduces financial burdens for many health care professionals, such as:

• Greater freedom to change employers within a reasonable geographic area;
• Protection from excessive buyout demands; and
• Additional safeguards in the event of termination without cause (for physicians).

To fully understand the impact of SB 1318, it is important to consider how the law reshapes the responsibilities for employers and expands protections for health care professionals alike.

Contact ByrdAdatto for guidance on non-compete agreements in Texas

SB 1318 reflects a growing national trend toward limiting the use of non-compete agreements in health care. The law seeks to balance the interests of employers with the rights of health care professionals and the needs of patients. By establishing clear, enforceable standards, Texas aims to promote fairness, mobility and access to care across its health care system.

If you are a health care provider or employer with questions about how SB 1318 may impact your contracts, ByrdAdatto’s legal team is here to guide you through the changes. Contact ByrdAdatto to review your current agreements and ensure your practice remains compliant in this evolving legal landscape.

As the son of a doctor and entrepreneur, Michael S. Byrd, JD, has a personal connection to both business and medicine. As the father of five, he has learned the importance of listening closely and thinking creatively. Byrd has blended these life experiences to become a leading advocate for doctors throughout the United States. He routinely lectures at continuing medical education seminars on the various business and legal issues medical professionals face. With his background as both a litigator and transactional attorney, Byrd brings a comprehensive perspective to business and health care issues. He has been named to Texas Rising Stars and Texas Super Lawyers, published by Thompson Reuters, for multiple years (2009-2024), recognized as a Best Lawyer in Dallas by D Magazine (2013, 2016-2024), and selected to Best Lawyer in America by Best Lawyers (2022-2025). Byrd enjoys serving at his church, hunting, fishing, tennis and outdoor activities. He is also active on the board of directors of the LEAP Foundation, an organization that provides pro bono medical services to those in need.