On June 20, 2025, Texas Governor Greg Abbott signed Senate Bill 1318 into law, bringing significant changes to non-compete agreements for physicians and certain other healthcare professionals in the State of Texas. The new rules take effect September 1, 2025 and apply to agreements entered into or renewed on or after that date.

For physicians, SB 1318 imposes clear limits: non-compete clauses may last no longer than one year and cannot extend beyond a five-mile radius from your primary practice location. Any required buyout must be capped at an amount equal to your total annual salary, replacing the vague “reasonable price” standard. Importantly, if you are terminated without “good cause”—defined as reasonable grounds related to conduct, performance, or a contract breach—the non-compete is void. The law also requires all terms to be stated clearly and conspicuously in writing, preventing key restrictions from being hidden in fine print. While clinical physicians benefit from these changes, administrative physician-executives remain subject to the broader “reasonableness” standard.

SB 1318 also extends similar protections to dentists, nurses (both professional and vocational), and physician assistants, ensuring they too receive the one-year, five-mile, salary-capped, and written-clarity protections. Existing patient-access provisions remain in place, allowing physicians to access patient lists, medical records, and continue care for acute cases after departure.

For physicians in the State of Texas, this law offers greater career mobility, more negotiating leverage, and added protection against overly broad restrictions. If you have an employment offer or contract renewal coming up after September 1, 2025, it’s important to review the non-compete terms carefully. A compliant agreement can protect your career while avoiding costly disputes.

Need clarity on how SB 1318 affects your contract? We can review your agreement and explain whether your non-compete meets the new requirements—or if you can negotiate stronger terms. Schedule your physician contract review today to protect your future.