Texas § BC.15.50 - CRITERIA FOR ENFORCEABILITY OF COVENANTS NOT TO COMPETE

§ BC.15.50. CRITERIA FOR ENFORCEABILITY OF COVENANTS NOT TO COMPETE

CRITERIA FOR ENFORCEABILITY OF COVENANTS NOT TO COMPETE. (a) Notwithstanding Section 15.05 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 patients whom the physician 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 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; (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. (c) Subsection (b) does not apply to a physician's business ownership interest in a licensed hospital or licensed ambulatory surgical center. (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. Added by Acts 1989, 71st Leg., ch. 1193, Sec. 1, eff. Aug. 28, 1989. Amended by Acts 1993, 73rd Leg., ch. 965, Sec. 1, eff. Sept. 1, 1993; Acts 1999, 76th Leg., ch. 1574, Sec. 1, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 1420, Sec. 14.729, eff. Sept. 1, 2001. Amended by: Acts 2009, 81st Leg., R.S., Ch. 971 (H.B. 3623 ), Sec. 1, eff. September 1, 2009. Acts 2025, 89th Leg., R.S., Ch. 816 (S.B. 1318 ), Sec. 1, eff. September 1, 2025.