What started out two sessions ago as an attempt to ban noncompete agreements altogether ended with a legislative solution the Texas Medical Association helped craft in support of its overarching efforts to promote physician autonomy and reconcile the diverging priorities of employer and employee physicians that animate noncompete agreements.
Already, Senate Bill 1318 by Sen. Charles Schwertner, MD (R-Georgetown), has caught the attention of the American Medical Association as a template for other states.
With physician representation “on both sides of the issue,” TMA advocated for additional balanced provisions in the law, said immediate past Council on Legislation chair Tilden Childs, MD, who testified on the topic during the 2023 and 2025 legislative sessions.
TMA pushed for amendments incorporated into the final bill that reflect association policy codified by its House of Delegates in 2024. SB 1318 amends Texas’ physician-specific provisions in the law regarding covenants not to compete to, among other things:
- Specify that the covenant must expire not later than the one-year anniversary of the date the contract or employment has been terminated;
- Limit the geographical area subject to the covenant to no more than a 5-mile radius from the location at which the physician primarily practiced before the contract or employment terminated;
- Specify that the buyout requirement must be in an amount that is not greater than the physician’s total annual salary and wages at the time of the termination of the contract or employment;
- Have terms and conditions clearly and conspicuously stated in writing; and
- Provide that a noncompete agreement related to the practice of medicine is unenforceable if a physician is involuntarily discharged from a contract or employment without good cause (i.e., without a reasonable basis for discharge that is directly related to a physician’s conduct on the job or otherwise, job performance, and contract or employment record).
“TMA was helpful in striking a proper balance and being supportive, recognizing that this was an issue that we needed to address,” said Rep. Greg Bonnen, MD (R-Friendswood), who, with Rep. Suleman Lalani, MD (D-Sugar Land), championed the House counterpart to SB 1318. “We wanted to do it in a way that was fair to all sides.”
Excessively restrictive noncompete agreements “in a rural community [could] require a physician to actually leave the community, and obviously that would result in less access to care in areas that are already underserved. So, by limiting it to 5 miles [and] a year, that made it much more manageable,” Representative Bonnen said. “We want physicians to be able to be mobile and to continue to work in their communities.”
The changes enacted with SB 1318 apply only to noncompete agreements entered into or renewed on or after the Sept. 1 effective date. Those entered into or renewed before Sept. 1 are governed by the law in effect at the time. Continue to read Texas Medicine Today for legislative updates and related TMA resources in development, and visit TMA's state advocacy webpage.
Editor's note: This story was updated to reflect legislative developments post-publication in Texas Medicine.
Jessica Ridge
Reporter, Division of Communications and Marketing
(512) 370-1395