Occupation limits
Texas Non-Compete Law (2026): Generally enforceable with limits
Texas enforces non-competes by statute rather than grudgingly, and the test has three parts: the covenant must be ancillary to or part of an otherwise enforceable agreement when made, its limits on time, territory, and restricted activity must be reasonable, and it must reach no further than the employer's legitimate business interest requires. If it overshoots, a court does not throw it out; § 15.51(c) directs the court to reform it and then enforce the reformed version. Health care is the one area Texas has tightened, with physicians and, since 2025, dentists, nurses, and physician assistants entitled to a one-year limit, a five-mile radius, and a buyout no larger than a year's pay.
The rule
How Texas treats non-compete agreements
Two details make the health-care rules bite harder than they look. The buyout is no longer negotiable upward; it is capped at the physician's total annual salary and wages at termination, and the alternative of having an arbitrator fix a 'reasonable price' is gone. And a discharge without good cause, meaning without a reasonable basis directly related to the physician's own conduct, voids the covenant outright rather than merely shortening it. Patient-access protections, including the right to a list of patients seen in the prior year, access to records on patient authorization, and the right to keep treating patients through an acute illness, survive unchanged.
If you are an employer
The statutory reformation remedy is a real cushion for imperfect drafting, but it costs you money, because once a court has to reform the covenant you can no longer recover damages for the employee's pre-reformation conduct and are left with an injunction.
If you are a worker
Overbreadth in Texas usually buys you a narrower restriction rather than freedom, so the higher-value arguments are that the covenant was never ancillary to a genuine exchange of confidential information or, if you are a covered health-care practitioner, that you were discharged without good cause.
| Classification | Statutory enforceability with mandatory reformation and a health-care carve-out |
|---|---|
| Pay threshold | No pay threshold |
| Maximum term | No general ceiling; duration is one prong of the statutory reasonableness test and terms of one to two years are the ones most often upheld. Health care is the exception, where physicians, dentists, nurses, and physician assistants cannot be restricted for more than one year after termination. |
| Notice or consideration | None. What Texas demands instead is that the covenant be ancillary to or part of an otherwise enforceable agreement at the time it is made, which usually means a promise to provide confidential information or trade secrets that the employer actually keeps. |
| Primary statute | Tex. Bus. & Com. Code §§ 15.50-15.52, with physician terms at § 15.50(b) and (d), reformation at § 15.51(c), and dentists, nurses, and physician assistants at § 15.501 |
Detail
What has changed, and what is still moving
Legislation 2024–2026
SB 1318, enacted in the 2025 regular session and effective September 1, 2025, amended §§ 15.50 and 15.52 and added § 15.501. It applies to covenants entered into or renewed on or after that date, so it does not automatically rewrite agreements already running.
Bills to watch
No significant restrictive bills pending. HB 4067 (2025) died in a House subcommittee and the legislature does not reconvene in regular session until January 2027.
Leading cases
Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011), is the controlling modern authority, relaxing the ancillary requirement so that consideration reasonably related to a protectable interest, such as a stock option grant, will support a covenant. Alex Sheshunoff Management Services, L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006), had already softened the earlier rule, and Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642 (Tex. 1994), remains the historical anchor even though its strictest holdings no longer stand.
If you have one in hand
What can make a non-compete unenforceable in Texas
- Your occupation is carved out. Statutory enforceability with mandatory reformation and a health-care carve-out
- The scope is wider than the interest behind it. A restriction that reaches beyond the customers, trade secrets or goodwill the employer can actually point to is the most common reason a covenant fails in Texas.
Whether any of these applies turns on the wording of your own agreement, your role and the case law your court follows. This page maps the statutory landscape; it does not replace advice on a specific contract.
FAQ
Texas non-compete questions
Are non-compete agreements enforceable in Texas?
Texas enforces non-competes by statute rather than grudgingly, and the test has three parts: the covenant must be ancillary to or part of an otherwise enforceable agreement when made, its limits on time, territory, and restricted activity must be reasonable, and it must reach no further than the employer's legitimate business interest requires. If it overshoots, a court does not throw it out; § 15.51(c) directs the court to reform it and then enforce the reformed version. Health care is the one area Texas has tightened, with physicians and, since 2025, dentists, nurses, and physician assistants entitled to a one-year limit, a five-mile radius, and a buyout no larger than a year's pay.
How long can a non-compete last in Texas?
No general ceiling; duration is one prong of the statutory reasonableness test and terms of one to two years are the ones most often upheld. Health care is the exception, where physicians, dentists, nurses, and physician assistants cannot be restricted for more than one year after termination.
Is there a minimum salary for non-competes in Texas?
No. Texas sets no income floor, so pay alone does not decide whether a covenant binds you. The test is whether the restriction goes further than the employer's legitimate interest requires in time, geography and scope of work.
What notice or consideration does Texas require?
None. What Texas demands instead is that the covenant be ancillary to or part of an otherwise enforceable agreement at the time it is made, which usually means a promise to provide confidential information or trade secrets that the employer actually keeps.
Sources
How this entry was checked
- Primary source. Tex. Bus. & Com. Code §§ 15.50-15.52, with physician terms at § 15.50(b) and (d), reformation at § 15.51(c), and dentists, nurses, and physician assistants at § 15.501 — the statutory text itself.
- Secondary sources consulted. Tex. Bus. & Com. Code § 15.50 (FindLaw), Jackson Lewis SB 1318 analysis, Bracewell SB 1318 alert, Bass Berry HR Law Talk on the physician buyout cap, LegiScan record for TX HB 4067 (89th Legislature), Texas State Law Library sine die notice for the 89th Regular Session.
Check it against a third party
None of these is ours. If a figure here matters to a decision, verify it:
- Federal Trade Commission — non-compete hub
- Economic Innovation Group — State Noncompete Law Tracker
- Fair Competition Law (Beck Reed Riden) — 50-state legislation tracker
- GAO-23-103785 — Noncompete Agreements (May 2023)
This page is general legal information published by Jurizmo and is not legal advice, does not create an attorney-client relationship, and may not reflect amendments enacted after the review date above. Consult a licensed attorney in the relevant state before acting on any agreement.