Content Highlights
Did you know Texas just passed a law that provides physicians more protection in their non-compete agreements? Combined with new FTC scrutiny, the tide is shifting toward physician protection.
Did Continue reading to learn how both Texas lawmakers and the FTC are reshaping non-compete agreements for physicians.
What is Changing For Physicians’ Non-Competes in Texas?
The Texas legislature passed Senate Bill 1318 adding more protection for physicians’ non-compete agreements. The new statute caps the time limit to one year, limits the area to a five-mile radius, requires a buyout no greater than the physician’s annual salary, and voids the non-complete if the physician is terminated without good cause. Nurses, dentists, and physician assistants are also included in the new protections.
Here is a summary of the Texas requirements:
| Practitioner | Maximum Term | Geographic Limit | Buyout Requirement | Special Protections |
| Physicians | 1 year | 5 miles | Cannot exceed annual salary | Non-compete void if terminated without good cause; must allow continuing care during acute illness. |
| Dentists | 1 year | 5 miles | Cannot exceed annual salary | Same as above (except acute illness clause) |
| Nurses | 1 year | 5 miles | Cannot exceed annual salary | Same as above |
| Physician Assistants | 1 year | 5 miles | Cannot exceed annual salary | Same as above |
How Do Federal Regulations Affect Physician’s Non-Competes?
The FTC (Federal Trade Commission) recently has shifted to case-by-case enforcement of non-competes under Section 5 of the FTC Act. Healthcare was the first focus. The FTC has already sent warning letters to hospitals and staffing firms, putting employers on notice that overbroad non-competes may be considered “unfair and anticompetitive.”
According to the FTC, unfair non-compete restrictions:
- Limit worker mobility.
- Restrict patient access to care, especially in rural areas.
- Can be used without proper justification.
How Will These New Laws Affect Your Medical Practice?
For physicians and other healthcare professionals, these updates mean more leverage and less risk. Under Texas law:
- Non-competes cannot last more than one year.
- The restricted area is limited to five miles from your main practice site.
- A buyout cannot exceed your annual salary.
- If you are terminated without good cause, the non-compete is void.
- Departing physicians cannot be prevented from providing treatment during an acute illness.
At the same time, the FTC’s enforcement playbook signals that employers nationwide are on notice. Even if your agreement technically complies with state law, federal regulators may still challenge it if it is overly broad.
Now is the time to review your contract. Look closely at
- the duration or how long the non-compete restrictions will last,
- the geographic scope of the locations where you a prohibited from practicing, and
- the buyout clause in your non-compete.
If you are a healthcare professional in Texas, your agreement must meet the new statutory limits.
If you work in another state, you should be aware that the FTC is closely watching the healthcare sector. A warning letter does not mean wrongdoing, but it is a sign that scrutiny is coming.
Conclusion
At Gardner Employment Law, we work with physicians and healthcare professionals facing career transitions, contract negotiations, and severance disputes. These new laws change the playing field for non-competes, and they could directly impact your mobility, your compensation, and your ability to continue treating patients.
Before signing or challenging a restrictive covenant, let us help you understand your rights under the new Texas law and the FTC’s enforcement approach.