{ "type": "practice-guide", "canonical": "https://openagreements.org/practice-guides/non-compete/us/texas", "links": [ { "rel": "self", "href": "https://openagreements.org/practice-guides/non-compete/us/texas.json", "type": "application/json" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/texas", "type": "text/html" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/texas/markdown", "type": "text/markdown" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/texas/json", "type": "application/json" } ], "data": { "topic": "non-compete", "state": "texas", "frontmatter": { "title": "Non-Competes in Texas", "description": "A question-by-question summary of Texas non-compete law under the Covenants Not to Compete Act, Tex. Bus. & Com. Code §§ 15.50–15.52, including the ancillary-agreement requirement, the reasonably-related-consideration requirement, the reasonable time-geography-scope test, mandatory reformation of overbroad covenants, the pre-reformation damages bar, the attorney's-fee preemption question, the physician and SB 1318 health-care-practitioner limits, choice-of-law and forum rules, tolling, and trade-secret alternatives.", "state": "Texas", "lastReviewed": "2026-06-03", "license": "CC BY 4.0", "authors": [ "steven-obiajulu" ], "summary": { "enforceability": "reasonable", "bottomLine": "Texas enforces non-competes that are ancillary to an otherwise enforceable agreement and reasonable in time, geography, and scope, with overbroad covenants reformed rather than voided.", "keyLaw": "Tex. Bus. & Com. Code § 15.50 (Covenants Not to Compete Act)", "exceptions": "Physician buyout/1-yr limits & good-cause rule (§ 15.50(b),(d)); dentist/nurse/PA buyout limits (§ 15.501)", "courtNarrowing": "rewrite", "appliesToContractors": "unclear", "extendedForBreach": "Unsettled — any extension must satisfy § 15.50(a) reasonableness", "maxLength": "No statutory limit (1 year for covered physicians/health-care)", "noticeRequirement": "None", "incomeThreshold": "None", "saleOfBusiness": "Same § 15.50 test, but § 15.51(b) flips the burden to the seller when the purpose is not personal services", "customerNonSolicit": "Reasonableness test applies if it functions as restraint", "employeeNonSolicit": "Covenant not to compete under § 15.50 per Marsh; minority of panels disagree" }, "about": [ "Texas non-compete agreements", "Texas Covenants Not to Compete Act", "Tex. Bus. & Com. Code Section 15.50", "Texas non-compete reasonableness and reformation", "Texas physician non-compete buyout limits", "Texas SB 1318 health care practitioner non-competes", "Texas Uniform Trade Secrets Act" ], "translations": [ { "language": "中文", "status": "planned" }, { "language": "Español", "status": "planned" }, { "language": "Português", "status": "planned" }, { "language": "Deutsch", "status": "planned" } ], "relatedForm": { "slug": "openagreements-restrictive-covenant-texas" } }, "questions": [ { "slug": "employee-non-compete-enforceability", "label": "Are employee non-competes enforceable?", "heading": "Are employee non-compete agreements enforceable in Texas?", "answerText": "Yes, within statutory limits. Texas is a reasonableness state: a non-compete is enforceable when it is ancillary to or part of an otherwise enforceable agreement and is limited as to time, geographic area, and scope of activity in a way that is reasonable and no broader than necessary to protect the employer's goodwill or other business interest.", "sources": [ { "id": "bc-1550a-test", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(a).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.50(a) supports that a non-compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement and contains reasonable limits as to time, geographic area, and scope of activity that are no greater than necessary to protect the promisee's goodwill or business interest.", "verbatimQuote": "a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1550a-test" } ] }, { "slug": "governing-framework", "label": "What statute governs, and does it displace common law?", "heading": "What framework governs Texas non-competes, and does it displace the common law?", "answerText": "The Covenants Not to Compete Act governs, and it is exclusive. The criteria in §§ 15.50 and 15.501 and the procedures and remedies in § 15.51 preempt other law, including the common law, so a Texas non-compete dispute is decided under the statute rather than under judge-made rules.", "sources": [ { "id": "bc-1552-preempt", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.52", "citation": "Tex. Bus. & Com. Code § 15.52.", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.52 supports that the criteria of §§ 15.50 and 15.501 and the procedures and remedies of § 15.51 are exclusive and preempt other law, including common law.", "verbatimQuote": "The criteria for enforceability of a covenant not to compete provided by Sections 15.50 and 15.501 and the procedures and remedies in an action to enforce a covenant not to compete provided by Section 15.51 are exclusive and preempt other law, including common law.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1552-preempt" } ] }, { "slug": "consideration", "label": "What consideration supports a covenant?", "heading": "What consideration must support a Texas non-compete?", "answerText": "Consideration that is reasonably related to a business interest the Act protects. Since Marsh USA Inc. v. Cook, the consideration supporting the covenant need only be reasonably related to an interest worthy of protection, such as goodwill, and it need not itself give rise to the employer's interest. The older, stricter framing in Light v. Centel has been relaxed.", "sources": [ { "id": "marsh-reasonably-related", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Marsh USA Inc. v. Cook", "citation": "Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011).", "url": "https://www.courtlistener.com/opinion/2541088/marsh-usa-inc-v-cook/", "deepLink": "https://www.courtlistener.com/opinion/2541088/marsh-usa-inc-v-cook/#:~:text=We%20hold%20that%2C%20under%20the,recognizes%20as%20worthy%20of%20protection.", "proposition": "Marsh USA v. Cook supports that the consideration for a Texas non-compete need only be reasonably related to a business interest the Act protects, such as goodwill, with stock options qualifying.", "verbatimQuote": "We hold that, under the terms of the Covenants Not to Compete Act (Act), the consideration for the noncompete agreement (stock options) is reasonably related to the company's interest in protecting its goodwill, a business interest the Act recognizes as worthy of protection.", "date": "2011-12-16", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-marsh-reasonably-related" }, { "id": "light-ancillary", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Light v. Centel Cellular Co. of Texas", "citation": "Light v. Centel Cellular Co. of Tex., 883 S.W.2d 642 (Tex. 1994).", "url": "https://www.courtlistener.com/opinion/1525150/light-v-centel-cellular-co-of-texas/", "deepLink": "https://www.courtlistener.com/opinion/1525150/light-v-centel-cellular-co-of-texas/#:~:text=Although%20Light%20and%20United%20did,of%20that%20otherwise%20enforceable%20agreement.", "proposition": "Light v. Centel supports the strict early reading of the ancillary requirement, holding the covenant there was not ancillary to the parties' otherwise enforceable agreement; this framing was later relaxed by Marsh.", "verbatimQuote": "Although Light and United did have an otherwise enforceable agreement between them, the covenant was not ancillary to or a part of that otherwise enforceable agreement.", "date": "1994-06-02", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-light-ancillary" } ] }, { "slug": "at-will-enforceability", "label": "When does an at-will covenant become enforceable?", "heading": "When does an at-will employee's non-compete become enforceable?", "answerText": "When the employer performs its side of the bargain. An at-will covenant that looks illusory at signing becomes enforceable once the employer actually delivers the promised consideration, such as confidential information. And where the job by its nature requires confidential information, the employer's promise to provide it can be implied.", "sources": [ { "id": "sheshunoff-performance", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Alex Sheshunoff Management Services, L.P. v. Johnson", "citation": "Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006).", "url": "https://www.courtlistener.com/opinion/894789/alex-sheshunoff-management-services-lp-v-johnson/", "deepLink": "https://www.courtlistener.com/opinion/894789/alex-sheshunoff-management-services-lp-v-johnson/#:~:text=The%20fact%20that%20the%20employer,created%20a%20binding%20unilateral%20contract.", "proposition": "Sheshunoff supports that an at-will covenant that is illusory at signing becomes enforceable once the employer performs by providing the promised consideration, creating a binding unilateral contract.", "verbatimQuote": "The fact that the employer was not bound to perform because he could have fired the employee is irrelevant; if he has performed, he has accepted the employee's offer and created a binding unilateral contract.", "date": "2006-10-20", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-sheshunoff-performance" }, { "id": "mann-frankfort-implied", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding", "citation": "Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009).", "url": "https://www.courtlistener.com/opinion/895104/mann-frankfort-stein-lipp-advisors-inc-v-fielding/", "deepLink": "https://www.courtlistener.com/opinion/895104/mann-frankfort-stein-lipp-advisors-inc-v-fielding/#:~:text=When%20the%20nature%20of%20the,confidential%20information%20will%20be%20provided.", "proposition": "Mann Frankfort supports that where the nature of the work requires confidential information, the employer's promise to provide it can be implied, supplying the consideration that makes the covenant enforceable.", "verbatimQuote": "When the nature of the work the employee is hired to perform requires confidential information to be provided for the work to be performed by the employee, the employer impliedly promises confidential information will be provided.", "date": "2009-04-17", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-mann-frankfort-implied" } ] }, { "slug": "duration-limits", "label": "What scope, time, and geography are reasonable?", "heading": "What time, geography, and scope limits are reasonable in Texas?", "answerText": "Limits tailored to the employer's actual protectable interest, no broader than necessary. The Act requires reasonable limits on time, geographic area, and scope of activity, and a restraint greater than needed to protect goodwill or another business interest is unreasonable. There are no fixed numeric ceilings outside the health-care provisions; reasonableness is fact-specific.", "sources": [ { "id": "q5-bc-1550a-scope", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(a).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.50(a) supports that a covenant's time, geographic, and scope limits must be reasonable and no greater than necessary to protect the promisee's goodwill or other business interest.", "verbatimQuote": "a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-q5-bc-1550a-scope" } ] }, { "slug": "court-narrowing", "label": "Will a court rewrite an overbroad covenant?", "heading": "Will a Texas court reform an overbroad non-compete instead of voiding it?", "answerText": "Yes, reformation is mandatory. If a covenant is ancillary to an otherwise enforceable agreement but its limits are unreasonable, the court shall reform it to the minimum reasonable restraint and enforce it as reformed. A federal court applying Texas law has said reformation should be considered even at the preliminary-injunction stage.", "sources": [ { "id": "bc-1551c-reform", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.51", "citation": "Tex. Bus. & Com. Code § 15.51(c).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.51(c) supports that a court shall reform an overbroad but ancillary covenant to the minimum reasonable restraint and enforce it as reformed, may not award damages for a breach before reformation, and limits relief to injunctive relief.", "verbatimQuote": "the court shall reform the covenant to the extent necessary to cause the limitations contained in the covenant as to time, geographical area, and scope of activity to be restrained to be reasonable and to impose a restraint that is not greater than necessary to protect the goodwill or other business interest of the promisee and enforce the covenant as reformed, except that the court may not award the promisee damages for a breach of the covenant before its reformation and the relief granted to the promisee shall be limited to injunctive relief.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1551c-reform" }, { "id": "calhoun-pi-reform", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Calhoun v. Jack Doheny Companies, Inc.", "citation": "Calhoun v. Jack Doheny Cos., 969 F.3d 232 (5th Cir. 2020) (later withdrawn as moot).", "url": "https://www.courtlistener.com/opinion/4773823/donald-calhoun-v-jack-doheny-companies-inc/", "deepLink": "https://www.courtlistener.com/opinion/4773823/donald-calhoun-v-jack-doheny-companies-inc/#:~:text=As%20we%20shall%20show%2C%20it,deciding%20the%20preliminary%20injunction%20motion.", "proposition": "Calhoun supports that a court should consider reformation of an overbroad Texas covenant as part of deciding a preliminary-injunction motion. The Fifth Circuit later withdrew this opinion as moot after the parties settled, so it is persuasive rather than binding.", "verbatimQuote": "As we shall show, it should have considered reformation of the agreement in the process of deciding the preliminary injunction motion.", "date": "2020-08-07", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-calhoun-pi-reform" } ] }, { "slug": "remedies-burden", "label": "What remedies apply, and who bears the burden?", "heading": "What remedies apply, and who bears the burden of proof?", "answerText": "Damages and injunctive relief, but with limits, and the burden depends on the contract's purpose. A court may award the employer damages, injunctive relief, or both, yet no damages are available for a breach before an overbroad covenant is reformed. In a personal-services contract, the employer bears the burden of proving the covenant meets the § 15.50 criteria.", "sources": [ { "id": "bc-1551a-remedies", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.51", "citation": "Tex. Bus. & Com. Code § 15.51(a).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.51(a) supports that a court may award the promisee damages, injunctive relief, or both for a breach of a covenant not to compete by the promisor.", "verbatimQuote": "a court may award the promisee under a covenant not to compete damages, injunctive relief, or both damages and injunctive relief for a breach by the promisor of the covenant.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1551a-remedies" }, { "id": "bc-1551b-burden-flip", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.51", "citation": "Tex. Bus. & Com. Code § 15.51(b).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.51(b) supports that when the agreement has a primary purpose other than personal services, the promisor bears the burden of establishing that the covenant does not meet the § 15.50 criteria.", "verbatimQuote": "If the agreement has a different primary purpose, the promisor has the burden of establishing that the covenant does not meet those criteria.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1551b-burden-flip" }, { "id": "q7-bc-1551c-damages", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.51", "citation": "Tex. Bus. & Com. Code § 15.51(c).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.51(c) supports that an employer may not recover damages for a breach occurring before an overbroad covenant is reformed and is limited to injunctive relief in that situation.", "verbatimQuote": "the court may not award the promisee damages for a breach of the covenant before its reformation and the relief granted to the promisee shall be limited to injunctive relief.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-q7-bc-1551c-damages" }, { "id": "bc-1551b-burden", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.51", "citation": "Tex. Bus. & Com. Code § 15.51(b).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.51(b) supports that when the agreement's primary purpose is to obligate the worker to render personal services, the employer bears the burden of establishing the covenant meets the § 15.50 criteria.", "verbatimQuote": "If the primary purpose of the agreement to which the covenant is ancillary is to obligate the promisor to render personal services, for a term or at will, the promisee has the burden of establishing that the covenant meets the criteria specified by Section 15.50 of this code.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1551b-burden" } ] }, { "slug": "attorneys-fees", "label": "Can the winner recover attorney's fees?", "heading": "Can a party recover attorney's fees in a Texas non-compete dispute?", "answerText": "Partly, and only one way. The Act has no general prevailing-party fee rule, but § 15.51(c) lets a court award the employee defense costs and attorney's fees where the employer knew the covenant was overbroad and tried to over-enforce it. Whether the general contract-fee statute can supply fees for enforcing a covenant despite § 15.52's exclusivity is unresolved on the authorities here, and a parallel trade-secret claim has its own fee path.", "sources": [ { "id": "bc-1551c-fee-shift", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.51", "citation": "Tex. Bus. & Com. Code § 15.51(c).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.51(c) supports that, in a personal-services covenant case, the court may award the promisor (the employee) its costs and reasonable attorney's fees where the employee proves the employer knew at execution the covenant was overbroad and nonetheless sought to enforce it beyond what was necessary.", "verbatimQuote": "the court may award the promisor the costs, including reasonable attorney's fees, actually and reasonably incurred by the promisor in defending the action to enforce the covenant.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1551c-fee-shift" }, { "id": "q8-bc-1552-preempt", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.52", "citation": "Tex. Bus. & Com. Code § 15.52.", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.52 supports that the Act's criteria and remedies are exclusive and preempt other law, which is the source of the unresolved question whether general contract attorney's-fee statutes reach a non-compete claim.", "verbatimQuote": "The criteria for enforceability of a covenant not to compete provided by Sections 15.50 and 15.501 and the procedures and remedies in an action to enforce a covenant not to compete provided by Section 15.51 are exclusive and preempt other law, including common law.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-q8-bc-1552-preempt" }, { "id": "tutsa-fees", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Civ. Prac. & Rem. Code § 134A.005", "citation": "Tex. Civ. Prac. & Rem. Code § 134A.005.", "url": "https://statutes.capitol.texas.gov/Docs/CP/htm/CP.134A.htm", "proposition": "Tex. Civ. Prac. & Rem. Code § 134A.005 supports that, under the Texas Uniform Trade Secrets Act, a court may award reasonable attorney's fees to the prevailing party in defined circumstances, including willful and malicious misappropriation.", "verbatimQuote": "The court may award reasonable attorney's fees to the prevailing party if: (1) a claim of misappropriation is made in bad faith; (2) a motion to terminate an injunction is made or resisted in bad faith; or (3) willful and malicious misappropriation exists.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-tutsa-fees" } ] }, { "slug": "physician-noncompetes", "label": "What rules apply to physicians?", "heading": "What special rules apply to Texas physician non-competes?", "answerText": "Several statutory conditions, plus a 2025 good-cause rule. A physician covenant is enforceable only if it meets § 15.50(b)'s conditions, including a buyout capped at the physician's total annual salary and wages. As amended by SB 1318, a physician covenant is void if the physician is involuntarily discharged without good cause.", "sources": [ { "id": "bc-1550b-buyout", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(b)(2).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.50(b) supports that a physician non-compete must provide for a buyout in an amount no greater than the physician's total annual salary and wages at the time of termination.", "verbatimQuote": "the covenant must provide for a buyout of the covenant by the physician in an amount that is not greater than the physician's total annual salary and wages at the time of termination of the contract or employment;", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1550b-buyout" }, { "id": "bc-1550d-goodcause", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(d).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.50(d), as amended by SB 1318 (2025), supports that a physician non-compete is void and unenforceable if the physician is involuntarily discharged without good cause, and defines good cause as a reasonable basis for discharge directly related to the physician's conduct, job performance, or employment record.", "verbatimQuote": "a covenant not to compete relating to the practice of medicine is void and unenforceable against a person licensed as a physician by the Texas Medical Board if the physician is involuntarily discharged from contract or employment without good cause. For purposes of this subsection, \"good cause\" means a reasonable basis for discharge of a physician from contract or employment that is directly related to the physician's conduct, including the physician's conduct on the job or otherwise, job performance, and contract or employment record.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1550d-goodcause" }, { "id": "bc-1550b4-limits", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(b)(4).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.50(b)(4) supports that a physician covenant must expire no later than one year after termination, limit the geography to a five-mile radius from the physician's primary practice location, and have terms clearly and conspicuously stated in writing.", "verbatimQuote": "(A) expire not later than the one-year anniversary of the date the contract or employment has been terminated; (B) limit the geographical area subject to the covenant to no more than a five-mile radius from the location at which the physician primarily practiced before the contract or employment terminated; and (C) have terms and conditions clearly and conspicuously stated in writing.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1550b4-limits" }, { "id": "bc-1550c-ownership", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(c).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.50(c) supports that the physician non-compete requirements of § 15.50(b) do not apply to a physician's business ownership interest in a licensed hospital or licensed ambulatory surgical center.", "verbatimQuote": "Subsection (b) does not apply to a physician's business ownership interest in a licensed hospital or licensed ambulatory surgical center.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1550c-ownership" }, { "id": "bc-1550b1-admin", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(b-1).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.50(b-1) supports that, for the physician non-compete rules, the practice of medicine does not include managing or directing medical services in an administrative capacity.", "verbatimQuote": "the practice of medicine does not include managing or directing medical services in an administrative capacity for a medical practice or other health care provider.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-1550b1-admin" } ] }, { "slug": "health-care-practitioners", "label": "What did SB 1318 change for dentists, nurses, and PAs?", "heading": "What does SB 1318 require for dentists, nurses, and physician assistants?", "answerText": "A new statutory cap, effective September 1, 2025. Section 15.501, added by SB 1318, makes a non-compete unenforceable against a dentist, professional or vocational nurse, or physician assistant unless it provides a salary-capped buyout, expires within one year, is limited to a five-mile radius, and is clearly and conspicuously in writing.", "sources": [ { "id": "bc-15501a-def", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.501", "citation": "Tex. Bus. & Com. Code § 15.501(a).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.501(a) supports that the health care practitioners covered by the section are licensed dentists, persons licensed to engage in professional or vocational nursing, and licensed physician assistants.", "verbatimQuote": "(1) a person licensed by the State Board of Dental Examiners to practice dentistry in this state; (2) a person licensed under Chapter 301 , Occupations Code, to engage in professional or vocational nursing; or (3) a physician assistant licensed under Chapter 204 , Occupations Code.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-15501a-def" }, { "id": "bc-15501-hcp", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.501", "citation": "Tex. Bus. & Com. Code § 15.501(b).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.501, added by SB 1318 (2025), supports that a non-compete is unenforceable against a dentist, nurse, or physician assistant unless it provides a salary-capped buyout, expires within one year, is limited to a five-mile radius, and is clearly and conspicuously stated in writing.", "verbatimQuote": "A covenant not to compete relating to the practice of dentistry or nursing, or practice as a physician assistant, as applicable, is not enforceable against a health care practitioner unless the covenant: (1) provides for a buyout of the covenant by the health care practitioner in an amount that is not greater than the practitioner's total annual salary and wages at the time of termination of the practitioner's contract or employment; (2) expires not later than the one-year anniversary of the date the contract or employment has been terminated; (3) limits the geographical area subject to the covenant to no more than a five-mile radius from the location at which the health care practitioner primarily practiced before the contract or employment terminated; and (4) has terms and conditions that are clearly and conspicuously stated in writing.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-bc-15501-hcp" } ] }, { "slug": "choice-of-law-forum", "label": "Can an out-of-state law or forum clause control?", "heading": "Can a choice-of-law or forum-selection clause change the outcome in Texas?", "answerText": "Sometimes for forum, rarely to escape Texas policy. Texas courts will enforce a mandatory forum-selection clause through mandamus. But Texas treats enforcement of non-competes as a matter of fundamental policy, and in DeSantis v. Wackenhut the court applied Texas law, not the contractually chosen law, and found the covenant unenforceable.", "sources": [ { "id": "autonation-forum", "authorityType": "case-law", "tier": "primary-source-backed", "title": "In re AutoNation, Inc.", "citation": "In re AutoNation, Inc., 228 S.W.3d 663 (Tex. 2007).", "url": "https://www.courtlistener.com/opinion/894883/in-re-autonation-inc/", "deepLink": "https://www.courtlistener.com/opinion/894883/in-re-autonation-inc/#:~:text=AutoNation%20now%20seeks%20mandamus%20relief,and%20we%20conditionally%20grant%20it.", "proposition": "In re AutoNation supports that Texas courts will enforce a mandatory forum-selection clause in a non-compete dispute through mandamus relief.", "verbatimQuote": "AutoNation now seeks mandamus relief to enforce the mandatory forum-selection clause, and we conditionally grant it.", "date": "2007-06-29", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-autonation-forum" }, { "id": "desantis-texas-law", "authorityType": "case-law", "tier": "primary-source-backed", "title": "DeSantis v. Wackenhut Corp.", "citation": "DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990).", "url": "https://www.courtlistener.com/opinion/2376061/desantis-v-wackenhut-corp/", "deepLink": "https://www.courtlistener.com/opinion/2376061/desantis-v-wackenhut-corp/#:~:text=We%20hold%20that%20Texas%20law%2C,the%20noncompetition%20agreement%20is%20unenforceable.", "proposition": "DeSantis v. Wackenhut supports that Texas treats non-compete enforcement as fundamental policy and will apply Texas law rather than the contractually chosen law where the chosen law would offend that policy.", "verbatimQuote": "We hold that Texas law, not Florida law, applies in this case, and that under Texas law, the noncompetition agreement is unenforceable.", "date": "1990-06-06", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-desantis-texas-law" }, { "id": "cardoni-conflicts", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Cardoni v. Prosperity Bank", "citation": "Cardoni v. Prosperity Bank, 805 F.3d 573 (5th Cir. 2015).", "url": "https://www.courtlistener.com/opinion/3150844/chris-cardoni-v-prosperity-bank/", "deepLink": "https://www.courtlistener.com/opinion/3150844/chris-cardoni-v-prosperity-bank/#:~:text=Texas%20generally%20allows%20them%20so,limited%20both%20geographically%20and%20temporally.", "proposition": "Cardoni v. Prosperity Bank supports that, in a Texas conflicts-law analysis, the Fifth Circuit described Texas as generally allowing geographically and temporally limited non-competes, while ultimately giving effect to Oklahoma's contrary fundamental policy for the covenants at issue.", "verbatimQuote": "Texas generally allows them so long as they are limited both geographically and temporally.", "date": "2015-10-29", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-cardoni-conflicts" } ] }, { "slug": "extended-for-breach", "label": "Does breach or litigation extend the period?", "heading": "Does a tolling clause extend a Texas non-compete during breach or litigation?", "answerText": "Texas law does not clearly bless contractual tolling. No Texas statute or Texas Supreme Court decision squarely authorizes extending a non-compete's clock for the time an employee spent breaching or litigating, and any such extension still has to satisfy the Act's reasonableness limit. The more dependable protection against ongoing violations is injunctive relief, which the Act expressly authorizes.", "sources": [ { "id": "q12-bc-1550a-reasonable", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(a).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.50(a) supports that any non-compete restraint, including one extended by a tolling clause, must be reasonable as to time and no greater than necessary to protect the promisee's business interest.", "verbatimQuote": "a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-q12-bc-1550a-reasonable" }, { "id": "q12-bc-1551a-injunction", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.51", "citation": "Tex. Bus. & Com. Code § 15.51(a).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.51(a) supports that a court may grant injunctive relief for breach of an enforceable covenant, the more dependable protection against ongoing violations than a contractual tolling clause.", "verbatimQuote": "a court may award the promisee under a covenant not to compete damages, injunctive relief, or both damages and injunctive relief for a breach by the promisor of the covenant.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-q12-bc-1551a-injunction" } ] }, { "slug": "non-solicitation-sale-of-business", "label": "How are non-solicits and sale covenants treated?", "heading": "How does Texas treat employee non-solicitation and sale-of-business covenants?", "answerText": "The Texas Supreme Court has said that covenants restricting a former employee's solicitation of the employer's customers and employees are restraints of trade governed by the Covenants Not to Compete Act, so an employee non-solicit is judged under the same reasonable time/area/scope test as a non-compete.", "sources": [ { "id": "tx-ns-marsh", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Marsh USA Inc. v. Cook", "citation": "Marsh USA Inc. v. Cook, 354 S.W.3d 764, 768 (Tex. 2011).", "url": "https://www.courtlistener.com/opinion/2541088/marsh-usa-inc-v-cook/", "deepLink": "https://www.courtlistener.com/opinion/2541088/marsh-usa-inc-v-cook/#:~:text=Covenants%20that%20place%20limits%20on,are%20governed%20by%20the%20Act.", "proposition": "Marsh USA states that covenants restricting a former employee's solicitation of the employer's customers and employees are restraints of trade governed by the Covenants Not to Compete Act.", "verbatimQuote": "Covenants that place limits on former employees' professional mobility or restrict their solicitation of the former employers' customers and employees are restraints on trade and are governed by the Act.", "date": "2011-06-24", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-tx-ns-marsh" }, { "id": "tx-ns-1550a", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(a).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Section 15.50(a) makes a covenant enforceable to the extent it contains reasonable time, area, and scope limits no greater than necessary to protect the promisee's goodwill or business interest.", "verbatimQuote": "a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-tx-ns-1550a" }, { "id": "tx-sob-1551b-burden", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.51", "citation": "Tex. Bus. & Com. Code § 15.51(b).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Section 15.51(b) places the burden on the promisee to prove reasonableness when the agreement's primary purpose is to obligate the worker to render personal services.", "verbatimQuote": "If the primary purpose of the agreement to which the covenant is ancillary is to obligate the promisor to render personal services, for a term or at will, the promisee has the burden of establishing that the covenant meets the criteria specified by Section 15.50 of this code.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-tx-sob-1551b-burden" }, { "id": "tx-sob-1551b-flip", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.51", "citation": "Tex. Bus. & Com. Code § 15.51(b).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Section 15.51(b) shifts the burden to the promisor to prove the covenant unreasonable when the agreement has a primary purpose other than personal services.", "verbatimQuote": "If the agreement has a different primary purpose, the promisor has the burden of establishing that the covenant does not meet those criteria.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-tx-sob-1551b-flip" } ] }, { "slug": "trade-secrets", "label": "Are trade-secret and NDA tools available?", "heading": "Are trade-secret and confidentiality protections available in Texas?", "answerText": "Yes. The Texas Uniform Trade Secrets Act lets a court enjoin actual or threatened misappropriation, independent of any covenant. A confidentiality agreement is also available, but it cannot be drafted so broadly that it functions as a disguised non-compete and triggers the Act's reasonableness test.", "sources": [ { "id": "tutsa-injunction", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Civ. Prac. & Rem. Code § 134A.003", "citation": "Tex. Civ. Prac. & Rem. Code § 134A.003.", "url": "https://statutes.capitol.texas.gov/Docs/CP/htm/CP.134A.htm", "proposition": "Tex. Civ. Prac. & Rem. Code § 134A.003 supports that, under the Texas Uniform Trade Secrets Act, actual or threatened misappropriation may be enjoined, but the order may not prohibit using general knowledge, skill, and experience acquired during employment.", "verbatimQuote": "Actual or threatened misappropriation may be enjoined if the order does not prohibit a person from using general knowledge, skill, and experience that person acquired during employment.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-tutsa-injunction" }, { "id": "tutsa-damages", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Civ. Prac. & Rem. Code § 134A.004", "citation": "Tex. Civ. Prac. & Rem. Code § 134A.004(a).", "url": "https://statutes.capitol.texas.gov/Docs/CP/htm/CP.134A.htm", "proposition": "Tex. Civ. Prac. & Rem. Code § 134A.004 supports that, in addition to or in lieu of injunctive relief, a claimant is entitled to recover damages for trade-secret misappropriation.", "verbatimQuote": "In addition to or in lieu of injunctive relief, a claimant is entitled to recover damages for misappropriation.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-tutsa-damages" }, { "id": "tutsa-contract-remedies", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Civ. Prac. & Rem. Code § 134A.007", "citation": "Tex. Civ. Prac. & Rem. Code § 134A.007(b).", "url": "https://statutes.capitol.texas.gov/Docs/CP/htm/CP.134A.htm", "proposition": "Tex. Civ. Prac. & Rem. Code § 134A.007(b) supports that the Texas Uniform Trade Secrets Act does not displace contractual remedies, whether or not based on trade-secret misappropriation, so confidentiality agreements remain available as contract tools.", "verbatimQuote": "This chapter does not affect: (1) contractual remedies, whether or not based upon misappropriation of a trade secret", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-tutsa-contract-remedies" }, { "id": "q13-bc-1550a-disguised", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Tex. Bus. & Com. Code § 15.50", "citation": "Tex. Bus. & Com. Code § 15.50(a).", "url": "https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm", "proposition": "Tex. Bus. & Com. Code § 15.50(a) supports that a confidentiality clause broad enough to function as a non-compete would be judged under the Act's ancillary-and-reasonableness test rather than escaping it.", "verbatimQuote": "a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/texas#src-q13-bc-1550a-disguised" } ] } ] } }