S.B. No. 1318 amends the Business & Commerce Code to impose new restrictions on covenants not to compete for physicians and certain health care practitioners in Texas. The bill specifies that such covenants are enforceable only if they are ancillary to an enforceable agreement and contain reasonable limitations regarding time, geographical area, and scope of activity. For physicians, the bill mandates that covenants must not deny access to patient lists or medical records, provide a buyout option not exceeding the physician's total annual salary at termination, and allow for continued care of specific patients during acute illnesses. Additionally, the covenants must expire within one year of contract termination and limit geographical restrictions to a five-mile radius from the physician's primary practice location.

The bill also introduces a new section, 15.501, which outlines similar requirements for covenants not to compete against health care practitioners, including dentists, nurses, and physician assistants. These covenants must also include a buyout provision, expiration terms, and geographical limitations. Furthermore, the bill clarifies that the enforceability criteria established in Sections 15.50 and 15.501 preempt any other laws, including 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)
Senate Committee Report: Commerce Code 15.50, Commerce Code 15.52 (Commerce Code 15)
Engrossed: Commerce Code 15.50, Commerce Code 15.52 (Commerce Code 15)