The bill, S.B. No. 1318, aims to amend the Business & Commerce Code regarding covenants not to compete for physicians and certain health care practitioners in Texas. Key provisions include that such covenants must be ancillary to an enforceable agreement and must not deny physicians access to their patients' lists or medical records. Additionally, the bill stipulates that the covenants must allow for a buyout option for the physician, which cannot exceed their total annual salary at the time of contract termination. The bill also introduces new requirements, such as limiting the geographical area of the covenant to a five-mile radius and ensuring that the covenant expires no later than one year after the termination of the contract.

Furthermore, the bill expands the definition of health care practitioners to include licensed dentists, nurses, and physician assistants, establishing similar restrictions on covenants not to compete for these professionals. The enforceability of such covenants is contingent upon specific criteria, including a buyout provision and geographical limitations. The bill also clarifies that the new criteria for enforceability will preempt any other laws or common law regarding covenants not to compete. The changes will apply only to covenants entered into or renewed after the effective date of the Act, which is set for September 1, 2025.

Statutes affected:
Introduced: Commerce Code 15.50, Commerce Code 15.52 (Commerce Code 15)