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, must provide for a buyout option not exceeding the physician's total annual salary at termination, and must allow for continued care of specific patients during acute illnesses. Additionally, the covenants must expire within one year of termination and be limited to a five-mile radius from the physician's primary practice location.

The bill also introduces a new section, 15.501, which outlines similar restrictions for health care practitioners, including dentists, nurses, and physician assistants. These practitioners are also protected by provisions requiring a buyout option, a one-year expiration, geographical limitations, and clear written terms. Furthermore, the bill states that any covenant not to compete is void if the physician is involuntarily discharged without good cause. 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)
House Committee Report: Commerce Code 15.50, Commerce Code 15.52 (Commerce Code 15)
Enrolled: Commerce Code 15.50, Commerce Code 15.52 (Commerce Code 15)