Effective September 1, 2025, the Texas Legislature imposed additional restrictions for enforceable noncompetition agreements with physicians entered on or after that date. For agreements entered after September 1, 2025, in addition to the other longstanding restrictions, the agreements must not:
- Include a buy-out that is greater than the total annual salary and wages of the physician at the time of termination.
- Last longer than the one-year anniversary of the date the contract or employment is terminated.
- Be greater geographically than a five-mile radius from the location at which the physician primarily practiced before termination.
- Be clearly and conspicuously stated in writing.
Importantly, the new law also provides that a noncompete relating to the practice of law with a physician licensed by the Texas Medical Board is void and unenforceable against a physician who is involuntarily terminated without “good cause”. “Good cause” means a reasonable basis for discharge that is directly related to the physician’s conduct on the job or otherwise, job performance, and contract or employment record.