S.B. No. 1318         AN ACT   relating to restrictions on covenants not to compete for physicians   and certain health care practitioners.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 15.50, Business & Commerce Code, is   amended by amending Subsections (a) and (b) and adding Subsections   (b-1) and (d) to read as follows:          (a)  Notwithstanding Section 15.05 [of this code,] and   subject to any applicable provision of Subsection (b) and Section   15.501, 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.          (b)  A covenant not to compete relating to the practice of   medicine is enforceable against a person licensed as a physician by   the Texas Medical Board if such covenant complies with the   following requirements:                (1)  the covenant must:                      (A)  not deny the physician access to a list of the   physician's [his] patients whom the physician [he] had seen or   treated within one year of termination of the contract or   employment;                      (B)  provide access to medical records of the   physician's patients upon authorization of the patient and any   copies of medical records for a reasonable fee as established by the   Texas Medical Board under Section 159.008, Occupations Code; and                      (C)  provide that any access to a list of patients   or to patients' medical records after termination of the contract   or employment shall not require such list or records to be provided   in a format different than that by which such records are maintained   except by mutual consent of the parties to the contract;                (2)  the covenant must provide for a buyout [buy out] 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 [at a reasonable price   or, at the option of either party, as determined by a mutually   agreed upon arbitrator or, in the case of an inability to agree, an   arbitrator of the court whose decision shall be binding on the   parties]; [and]                (3)  the covenant must provide that the physician will   not be prohibited from providing continuing care and treatment to a   specific patient or patients during the course of an acute illness   even after the contract or employment has been terminated; and                (4)  the covenant must:                      (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.          (b-1)  For the purposes of Subsection (b), 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.          (d)  Notwithstanding any other law, 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.          SECTION 2.  Subchapter E, Chapter 15, Business & Commerce   Code, is amended by adding Section 15.501 to read as follows:          Sec. 15.501.  COVENANTS NOT TO COMPETE AGAINST HEALTH CARE   PRACTITIONERS. (a) In this section, "health care practitioner"   means:                (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.          (b)  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.          SECTION 3.  Section 15.52, Business & Commerce Code, is   amended to read as follows:          Sec. 15.52.  PREEMPTION OF OTHER LAW. The criteria for   enforceability of a covenant not to compete provided by Sections   [Section] 15.50 and 15.501 [of this code] and the procedures and   remedies in an action to enforce a covenant not to compete provided   by Section 15.51 [of this code] are exclusive and preempt [any]   other law, including [criteria for enforceability of a covenant not   to compete or procedures and remedies in an action to enforce a   covenant not to compete under] common law [or otherwise].          SECTION 4.  The changes in law made by this Act apply only to   a covenant not to compete entered into or renewed on or after the   effective date of this Act. A covenant not to compete entered into   or renewed before the effective date of this Act is governed by the   law in effect on the date the covenant was entered into or renewed,   and the former law is continued in effect for that purpose.          SECTION 5.  This Act takes effect September 1, 2025.               ______________________________ ______________________________      President of the Senate Speaker of the House                 I hereby certify that S.B. No. 1318 passed the Senate on   April 10, 2025, by the following vote: Yeas 30, Nays 0; and that   the Senate concurred in House amendment on May 28, 2025, by the   following vote: Yeas 31, Nays 0.       ______________________________   Secretary of the Senate                I hereby certify that S.B. No. 1318 passed the House, with   amendment, on May 23, 2025, by the following vote: Yeas 126,   Nays 12, two present not voting.       ______________________________   Chief Clerk of the House            Approved:     ______________________________                Date       ______________________________              Governor