If you work in health care in Texas, you have probably signed something with a radius in it. Maybe twenty-five miles. Maybe every location your employer operates. What the document says and what Texas law will let an employer actually enforce are two different questions, and as of September 1, 2025, the second question has a different answer than it used to.

Senate Bill 1318 amended Section 15.50 of the Texas Business and Commerce Code and added a new Section 15.501. For the first time, the statute’s specific requirements reach past physicians.

What the statute requires

For a covenant governed by the new provisions, the agreement is not enforceable unless it satisfies each of the following:

1. It expires no later than one year after the employment ends.

2. The restricted area is no larger than five miles from the location where the practitioner primarily practiced.

3. It provides a buyout option that does not exceed the practitioner’s total annual salary and wages at the time of termination.

4. Its terms are stated clearly and conspicuously in writing.

For physicians, a covenant is void and unenforceable if the physician is discharged without good cause.

A covenant that fits inside all four still has to clear Section 15.50(a), which requires that a restraint be ancillary to an otherwise enforceable agreement and impose no greater restriction than is necessary to protect a legitimate business interest. 

Who the new section covers

Section 15.501 reaches dentists licensed by the Texas State Board of Dental Examiners, nurses licensed under Chapter 301 of the Occupations Code (LVNs, RNs, and APRNs), and physician assistants licensed under Chapter 204. Physicians are covered by the amended Section 15.50.

Dates matter, and so does the word renewed

The new caps apply to agreements entered into or renewed on or after September 1, 2025.

Health care contracts frequently run on annual renewal cycles, and many are amended when someone takes a raise, changes titles, or moves to a different site. If any of that happened after the effective date, there is a serious argument that the new requirements govern the agreement.

An agreement that predates September 1, 2025 is not beyond challenge either. Every covenant in Texas has to meet the reasonableness requirements of Section 15.50(a). Physician agreements have long carried additional statutory conditions addressing access to patient lists, medical records, a buyout, and continuing care for patients under acute treatment. Whether a specific covenant satisfies any of that is a fact question, and the answers usually live in details the employer would rather not put in front of a judge.

Clinical work and administrative titles

The new provisions govern covenants relating to a practitioner’s health care practice. Employers sometimes argue that a management or medical director title moves a restriction outside them. That argument does not end the inquiry, however. Any covenant still has to satisfy Section 15.50(a), and Section 15.52 makes the statutory criteria exclusive, preempting other law, including common law and equitable grounds for enforcement.

Before you make a move

Read the agreement before you resign, not after. Note the date you signed, along with every renewal and amendment since. Write down the radius, the term, and the buyout figure.

Then have a lawyer read it with you. Whether a covenant can be enforced against a particular person, in a particular job, on a particular set of facts is a legal question with a lot of moving parts. The document your employer drafted does not settle it.

This post is general information about Texas law, not legal advice, and it does not address any specific agreement or situation. If you are a health care worker in Texas with questions about a non-compete, reach out to schedule a consultation by phone at 512-271-5527 or at https://www.wileylawyers.com/contact-us/