Texas Non-Compete Laws (2026): Are Non-Competes Enforceable?

Texas enforces non-competes that meet a statutory test. Under the Covenants Not to Compete Act, Texas Business and Commerce Code § 15.50(a), a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement when the agreement is made, and if its limits on time, geographical area and scope of activity are reasonable and no greater than necessary to protect the employer's goodwill or other business interest.

Texas has no general ban and no salary threshold, and a court that finds a covenant too broad rewrites it rather than throwing it out. SB 1318 set new limits for physicians, dentists, nurses and physician assistants, but only for covenants entered into or renewed on or after September 1, 2025. For how Texas compares with other states, see our guide to non-compete laws by state.

Information last verified on 2026-10-08. This article has not been reviewed by a licensed lawyer. The enrolled text of SB 1318 (2025) was read on the Texas Legislature's site; the text of §§ 15.51 and 15.52 is quoted from the official Texas statutes site as retrieved on July 28, 2026.

Jurisdiction scope: This article covers Texas law on non-compete agreements under Business and Commerce Code §§ 15.50, 15.501, 15.51 and 15.52, as amended by SB 1318 (2025), with a short note on the federal FTC rule. It does not cover trade-secret claims (see Texas trade secret laws) or the pay terms of a separation agreement (see Texas severance pay laws).

Are non-competes enforceable in Texas?

Yes, when they meet § 15.50(a). The statute sets two requirements:

1. An otherwise enforceable agreement. The covenant must be "ancillary to or part of an otherwise enforceable agreement at the time the agreement is made."
2. Reasonable limits. It must contain 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."

The text of §§ 15.50 through 15.52 sets no income or job-classification threshold for ordinary employees, no fixed maximum duration for them, and no advance-notice, lawyer-consultation or garden-leave requirement. Reasonableness of time, area and scope is decided case by case.

Texas is not a common-law-only state on this question. Section 15.52 provides that the criteria for enforceability in §§ 15.50 and 15.501 and the procedures and remedies in § 15.51 "are exclusive and preempt other law, including common law."

What the Texas Supreme Court said in Marsh USA v. Cook

In Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011), the employer gave stock options in exchange for a non-compete. The Texas Supreme Court held that the stock options were reasonably related to the employer's interest in protecting its goodwill, so the covenant was not unenforceable on the ground that the consideration did not "give rise" to an interest in restraining competition.

"if the relationship between the otherwise enforceable agreement and the legitimate interest being protected is reasonable, the covenant is not void on that ground." Marsh USA Inc. v. Cook, No. 09-0558 (Tex. Dec. 16, 2011)

The Court did not decide whether the covenant's time, scope and geography were reasonable, and it noted that a trial court may reform an overbroad covenant under § 15.51(c).

What happens if a Texas non-compete is too broad

Texas courts reform rather than void. Under § 15.51(c), if a covenant's limits are unreasonable, "the court shall reform the covenant to the extent necessary to cause the limitations contained in the covenant as to time, geographical area, and scope of activity to be restrained to be reasonable."

Reformation has consequences for both sides under § 15.51:

• The court may not award the employer damages for a breach that happened before the covenant was reformed; relief is limited to an injunction.
• An employee can recover attorney's fees only in a narrow case: the agreement was primarily for personal services, the employer knew when it was signed that the limits were unreasonable, and the employer sought to enforce it to a greater extent than necessary.

Who has to prove reasonableness. If the primary purpose of the agreement was to obtain personal services, "the promisee has the burden of establishing that the covenant meets the criteria specified by Section 15.50," meaning the employer carries the burden. Otherwise, the person who signed the covenant carries it.

Special rules for physicians (§ 15.50(b) to (d))

SB 1318 rewrote the physician rules for covenants entered into or renewed on or after September 1, 2025. Under § 15.50(b) as amended, a covenant relating to the practice of medicine is enforceable against a Texas Medical Board licensee only if it:

• does not deny the physician access to a list of patients the physician saw or treated in the year before termination, and provides access to medical records on the patient's authorization;
• provides a buyout of the covenant at a price not greater than the physician's total annual salary and wages at the time of termination;
• allows continuing care for a patient during an acute illness; and
• expires within one year after the contract or employment ends, is limited to a five-mile radius from the physician's primary practice location, and has its terms clearly and conspicuously stated in writing.

Section 15.50(b-1) excludes managing or directing medical services in an administrative capacity from the "practice of medicine" for these purposes. The code text as retrieved also includes § 15.50(c), which says subsection (b) does not apply to a physician's ownership interest in a licensed hospital or ambulatory surgical center.

Fired without good cause. Under § 15.50(d), "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." Good cause means a reasonable basis for the discharge that is directly related to the physician's conduct, job performance or employment record.

Dentists, nurses and physician assistants (§ 15.501)

SB 1318 added § 15.501, effective for covenants entered into or renewed on or after September 1, 2025. A non-compete is not enforceable against a dentist, a licensed vocational or professional nurse, or a physician assistant unless it:

• provides a buyout at a price not greater than the worker's total annual salary and wages at the time of termination;
• expires within one year after the contract or employment ends;
• is limited to a five-mile radius from the primary practice location; and
• has its terms clearly and conspicuously stated in writing.

Unlike the physician rule, § 15.501 as enacted contains no provision voiding the covenant when the worker is discharged without good cause.

Does it matter if you were fired or quit?

For most Texas workers, the statute does not draw that line. The only termination rule in §§ 15.50 through 15.52 is the physician rule in § 15.50(d): a physician's medical covenant is void if the physician is involuntarily discharged without good cause. The text read for this page contains no equivalent rule for dentists, nurses, physician assistants or other employees.

Older agreements: the September 1, 2025 cutoff

SB 1318 states: "The changes in law made by this Act apply only to a covenant not to compete entered into or renewed on or after the effective date of this Act." The governor signed it on June 20, 2025, and it took effect September 1, 2025. A covenant signed before that date and not renewed since is governed by the law as it stood before SB 1318. For physicians, that earlier version of § 15.50(b) already required access to the patient list and records, continuing care during an acute illness, and a buyout at a reasonable price (or, at either party's option, a price set by an arbitrator), but it had no one-year, five-mile or salary cap and no rule voiding the covenant after a discharge without good cause. Section 15.501, the rule for dentists, nurses and physician assistants, did not exist before SB 1318.

Out-of-state choice-of-law clauses

Sections 15.50 through 15.52 contain no provision on clauses that pick another state's law. In DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990), the Texas Supreme Court applied Texas law rather than the Florida law named in a Texas employee's agreement, after asking whether Texas had the more significant relationship, a materially greater interest, and a fundamental policy that applying Florida law would contravene. The result in a given case depends on those facts.

Questions this page does not answer

Some Texas non-compete questions are outside what our research verified, and we do not state a rule for them:

• Non-solicitation clauses and confidentiality agreements. Whether Texas treats a customer or employee non-solicit as a covenant not to compete under § 15.50 was not verified for this page.
• Other health care statutes. We reviewed §§ 15.50 through 15.52 only, not other codes that may add rules for health care workers.

A lawyer licensed in Texas can tell you how these issues apply to a specific agreement.

Who enforces Texas non-compete law?

Sections 15.50 through 15.52 provide for enforcement through the courts and do not name a state agency that takes non-compete complaints.

Non-competes vs. trade secret protection

Protecting confidential business information is a separate body of law from the non-compete statute. For that, see Texas trade secret laws.

The federal FTC non-compete rule

The FTC's nationwide non-compete rule, published May 7, 2024, never took effect. On August 20, 2024, the U.S. District Court for the Northern District of Texas set it aside in Ryan LLC v. FTC; the FTC voted on September 5, 2025 to drop its appeals and removed the rule from the Code of Federal Regulations on February 12, 2026. The FTC still acts case by case, for example approving a final order on June 22, 2026 under which pest-control company Rollins agreed to stop enforcing non-competes against more than 18,000 employees nationwide. More: the FTC non-compete ban struck down in Ryan v. FTC and our non-compete laws by state guide.

Related

• Non-compete laws by state
• Texas trade secret laws
• Texas severance pay laws
• Texas at-will employment laws
• FTC non-compete ban struck down in Ryan v. FTC

Disclaimer: This article provides general legal information about Texas non-compete law, including Business and Commerce Code §§ 15.50 through 15.52 as amended by SB 1318 (2025), and related federal developments. It is not legal advice and does not create an attorney-client relationship. The information was verified on 2026-10-08. For advice about your own agreement, contact a legal aid office or a lawyer licensed in Texas.

Last updated: 2026-10-08.

Frequently Asked Questions

Are non-competes enforceable in Texas?

Yes, if they meet Bus. & Com. Code § 15.50(a): the covenant must be ancillary to or part of an otherwise enforceable agreement and have reasonable limits on time, geographical area and scope of activity that are no greater than necessary to protect the employer's goodwill or other business interest.

Does Texas have a salary threshold for non-competes?

No. The text of §§ 15.50 through 15.52 sets no income or job-classification threshold for ordinary employees.

How long can a non-compete last in Texas?

For most employees, §§ 15.50 through 15.52 set no fixed maximum; the time limit must be reasonable. For covenants entered into or renewed on or after September 1, 2025, physician, dentist, nurse and physician assistant covenants must expire within one year after the employment ends (§§ 15.50(b), 15.501).

What happens if my Texas non-compete is too broad?

Under § 15.51(c), the court reforms the covenant to make its time, area and scope limits reasonable. The employer cannot recover damages for a breach that happened before reformation; relief is limited to an injunction.

Can a Texas doctor be held to a non-compete after being fired?

Under § 15.50(d), a physician's non-compete relating to the practice of medicine is void and unenforceable if the physician is involuntarily discharged without good cause. This applies to covenants entered into or renewed on or after September 1, 2025.

Can stock options support a non-compete in Texas?

In Marsh USA Inc. v. Cook (Tex. 2011), the Texas Supreme Court held that stock options were reasonably related to the employer's interest in protecting goodwill, so the covenant was not unenforceable on the ground that the consideration did not give rise to an interest in restraining competition.

Did the FTC ban non-competes in Texas?

No federal ban is in force. The U.S. District Court for the Northern District of Texas set the FTC rule aside on August 20, 2024, and the FTC removed it from the Code of Federal Regulations on February 12, 2026.