Texas non-compete enforceability
A Texas 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," and only to the extent its limits on time, geography, and scope of activity "are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee." Tex. Bus. & Com. Code § 15.50(a)1
- Threshold nexus — Courts first find an otherwise enforceable agreement, then ask whether the covenant is ancillary to it. Consideration "reasonably related to an interest worthy of protection, such as trade secrets, confidential information or goodwill, satisfies the statutory nexus." Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011)2
- Overbroad covenants are reformed, not voided — If the covenant is ancillary but unreasonable, "the court shall reform the covenant" and enforce it as reformed, but no damages for pre-reformation breach; relief is limited to an injunction. Tex. Bus. & Com. Code § 15.51(c)1
- Burden and fee-shifting — In personal-services agreements the employer (promisee) must prove the § 15.50 criteria; the employee can recover defense costs and fees if the employer knew the limits were unreasonable and sought to enforce them beyond what was necessary. Tex. Bus. & Com. Code § 15.51(b)–(c)1
- The statute is exclusive — The criteria in §§ 15.50 and 15.501 and the remedies in § 15.51 "are exclusive and preempt other law, including common law." Tex. Bus. & Com. Code § 15.521
- Physicians (amended 2025) — A physician covenant must allow a buyout "not greater than the physician's total annual salary and wages," expire within one year after termination, cover no more than "a five-mile radius" from the primary practice location, be "clearly and conspicuously stated in writing," and preserve patient-list, records, and acute-care access. It is void if the physician is involuntarily discharged "without good cause." Purely administrative roles are excluded. Tex. Bus. & Com. Code § 15.50(b)–(d)1
- Dentists, nurses, physician assistants — New § 15.501 imposes the same buyout, one-year, five-mile, and written-terms limits. Tex. Bus. & Com. Code § 15.5011
Practice notes
- The 2025 health-care limits apply only to covenants entered into or renewed on or after September 1, 2025; older covenants stay under prior law. Tex. S.B. 1318, 89th Leg., R.S. (2025), §§ 4–53
- There is no federal ban: the FTC's Non-Compete Clause Rule was set aside, and on September 5, 2025 the FTC voted 3–1 to dismiss its appeals and accede to the vacatur. FTC press release (Sept. 5, 2025)4