Texas non-compete law

Pay figure in the law

None found in the statutes we read

Separate rules for professions

physicians, health care workers

Statutes and official texts quoted

Tex. Bus. & Com. Code § 15.50(a); Tex. Bus. & Com. Code § 15.50(b)(2); Tex. Bus. & Com. Code § 15.50(b)(4); Tex. Bus. & Com. Code § 15.50(d); Tex. Bus. & Com. Code § 15.501(b); Tex. Bus. & Com. Code § 15.501 (history note); Tex. Bus. & Com. Code § 15.51(c); Tex. Bus. & Com. Code § 15.51(b); Tex. Bus. & Com. Code § 15.52

Is a non-compete allowed?

Texas enforces a covenant not to compete if it is ancillary to or part of an otherwise enforceable agreement and its time, geographic and activity limits are reasonable and no greater than necessary to protect the goodwill or other business interest of the promisee.

“a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.”
Tex. Bus. & Com. Code § 15.50(a)

Health care and other professions

A physician covenant must, among other conditions, allow the physician to buy out the covenant for no more than the physician's total annual salary and wages at termination.

“the covenant must provide for a buyout of the covenant by the physician 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;”
Tex. Bus. & Com. Code § 15.50(b)(2)

A physician covenant must expire within one year after termination, be limited to a five-mile radius from where the physician primarily practiced, and have clearly and conspicuously written terms.

“expire not later than the one-year anniversary of the date the contract or employment has been terminated; (B) limit the geographical area subject to the covenant to no more than a five-mile radius from the location at which the physician primarily practiced before the contract or employment terminated; and (C) have terms and conditions clearly and conspicuously stated in writing.”
Tex. Bus. & Com. Code § 15.50(b)(4)

A physician covenant is void and unenforceable if the physician is involuntarily discharged without good cause.

“a covenant not to compete relating to the practice of medicine is void and unenforceable against a person licensed as a physician by the Texas Medical Board if the physician is involuntarily discharged from contract or employment without good cause.”
Tex. Bus. & Com. Code § 15.50(d)

For dentists, nurses and physician assistants, a covenant is not enforceable unless it has a buyout capped at annual salary and wages, expires within one year, is limited to a five-mile radius, and is clearly and conspicuously written.

“A covenant not to compete relating to the practice of dentistry or nursing, or practice as a physician assistant, as applicable, is not enforceable against a health care practitioner unless the covenant:”
Tex. Bus. & Com. Code § 15.501(b)

If it is challenged

If a covenant's limits are unreasonable, the court must reform it and enforce it as reformed, but may not award damages for breach before reformation; relief is then limited to an injunction.

“the court may not award the promisee damages for a breach of the covenant before its reformation and the relief granted to the promisee shall be limited to injunctive relief.”
Tex. Bus. & Com. Code § 15.51(c)

In a personal-services agreement, if the employee shows the employer knew the limits were unreasonable when signed and sought to enforce the covenant beyond what was necessary, the court may award the employee costs and reasonable attorney's fees for defending the enforcement action.

“the court may award the promisor the costs, including reasonable attorney's fees, actually and reasonably incurred by the promisor in defending the action to enforce the covenant.”
Tex. Bus. & Com. Code § 15.51(c)

If the main purpose of the underlying agreement is personal services (such as employment), the party enforcing the covenant must establish that it meets the statutory criteria.

“If the primary purpose of the agreement to which the covenant is ancillary is to obligate the promisor to render personal services, for a term or at will, the promisee has the burden of establishing that the covenant meets the criteria specified by Section 15.50 of this code.”
Tex. Bus. & Com. Code § 15.51(b)

Which state’s law and court

The statutory criteria and procedures are exclusive and preempt other law, including common law.

“are exclusive and preempt other law, including common law.”
Tex. Bus. & Com. Code § 15.52

When the rules took effect

The health care practitioner covenant section was added by S.B. 1318 (2025), effective September 1, 2025.

“Added by Acts 2025, 89th Leg., R.S., Ch. 816 (S.B. 1318), Sec. 2, eff. September 1, 2025.”
Tex. Bus. & Com. Code § 15.501 (history note)

Federal rules

On September 5, 2025, the FTC moved to dismiss its appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC and to accede to vacatur of the Non-Compete Clause Rule. FTC press release, Sept. 5, 2025

The FTC's final rule removes the Non-Compete Rule (16 CFR part 910) from the Code of Federal Regulations. 91 Fed. Reg. (Feb. 12, 2026), FR Doc. 2026-02866

Before you sign, or before you assume you are bound

1. Find every restrictive clause: non-compete, non-solicitation, no-hire and confidentiality are separate promises with separate rules.
2. Note how long each lasts and what area or customers it covers.
3. Check which state’s law the agreement picks and where disputes must be heard.
4. Compare your pay and your job with the Texas rules above.

Check your state with the non-compete checker.

Common questions

Are non-competes enforceable in Texas?

Texas enforces a covenant not to compete if it is ancillary to or part of an otherwise enforceable agreement and its time, geographic and activity limits are reasonable and no greater than necessary to protect the goodwill or other business interest of the promisee. (Tex. Bus. & Com. Code § 15.50(a)).

Does Texas have special non-compete rules for health care workers or other professions?

A physician covenant must, among other conditions, allow the physician to buy out the covenant for no more than the physician's total annual salary and wages at termination. (Tex. Bus. & Com. Code § 15.50(b)(2)).