Healthcare employers in Texas may soon need to overhaul their employment agreements. A new bill—Senate Bill 1318 (SB 1318)—is making its way through the state legislature, and if passed, it will impose significant restrictions on non-compete clauses for a broad range of healthcare professionals, including physicians, dentists, nurses, and physician assistants.
With a potential effective date of September 1, 2025, now is the time for employers to take stock of their current agreements and prepare for what’s coming.
What Does SB 1318 Change?
SB 1318 proposes a series of amendments to the Texas Covenants Not to Compete Act, targeting how restrictive covenants apply in healthcare settings. Unlike current law, which affects non-competes for physicians, this bill would extend protections to additional healthcare roles—significantly narrowing what employers can restrict.
Who Is Affected?
The bill would cover:
- Physicians
- Dentists
- Nurses
- Physician Assistants
In short, anyone falling under the umbrella of “health care practitioner” would be protected by these new rules. Organizations that employ or contract with these professionals will need to comply.
What Are the Key Restrictions?
- Shorter Time Limits
Non-competes would be capped at one year post-employment. - Narrower Geographic Scope
The geographic restriction would be limited to a five-mile radius from the practitioner’s primary practice location. - Patient Access Limitations
While physicians currently benefit from laws that support ongoing treatment and access to patient information, the bill does not extend these provisions to dentists, nurses, or physician assistants—a potential oversight that may be revisited in future versions. - Mandatory Buyout Option
Each non-compete must include a buyout clause. The cost cannot exceed the individual’s total annual salary and wages at the time of termination.
Why It Matters for Employers
Even though the law would apply only to new or renewed agreements, its passage would mark a fundamental shift in enforceability standards.
More importantly, the existence of different standards for new hires and current staff could create inconsistency, morale issues, or legal risk—particularly if challenged in court.
What Should Employers Do Now?
Even though SB 1318 hasn’t passed yet, it’s gaining momentum. Here’s how healthcare employers can prepare:
- Review existing non-compete agreements to understand what might soon be noncompliant.
- Audit your workforce: Identify which employees fall under the healthcare practitioner category.
- Update templates and onboarding documents in anticipation of potential law changes.
- Revisit buyout clauses to ensure they are clear, reasonable, and compliant with the proposed cost caps.
- Watch for updates: The bill has passed the Senate and a House committee. A full House vote is expected soon.
Final Thoughts
While non-compete agreements have long been a tool for protecting business interests in healthcare, SB 1318 reflects a broader shift toward practitioner mobility and patient access. Employers who stay ahead of the curve will be better positioned to adapt—minimizing legal exposure and maintaining strong provider relationships.
If you haven’t already, now is the time to start reviewing and revising your agreements. Once the bill is law, compliance won’t be optional—it will be essential.