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A BILL TO BE ENTITLED
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AN ACT
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relating to restrictions on covenants not to compete for physicians |
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and certain health care practitioners. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 15.50(a) and (b), Business & Commerce |
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Code, are amended to read as follows: |
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(a) Notwithstanding Section 15.05 [of this code,] and |
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subject to any applicable provision of Subsection (b) and Section |
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15.501, a covenant not to compete is enforceable if it is ancillary |
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to or part of an otherwise enforceable agreement at the time the |
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agreement is made to the extent that it contains limitations as to |
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time, geographical area, and scope of activity to be restrained |
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that are reasonable and do not impose a greater restraint than is |
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necessary to protect the goodwill or other business interest of the |
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promisee. |
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(b) A covenant not to compete relating to the practice of |
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medicine is enforceable against a person licensed as a physician by |
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the Texas Medical Board if such covenant complies with the |
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following requirements: |
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(1) the covenant must: |
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(A) not deny the physician access to a list of the |
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physician's [his] patients whom the physician [he] had seen or |
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treated within one year of termination of the contract or |
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employment; |
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(B) provide access to medical records of the |
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physician's patients upon authorization of the patient and any |
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copies of medical records for a reasonable fee as established by the |
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Texas Medical Board under Section 159.008, Occupations Code; and |
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(C) provide that any access to a list of patients |
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or to patients' medical records after termination of the contract |
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or employment shall not require such list or records to be provided |
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in a format different than that by which such records are maintained |
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except by mutual consent of the parties to the contract; |
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(2) the covenant must provide for a buyout [buy out] of |
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the covenant by the physician in an amount that is not greater than |
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the physician's total annual salary and wages at the time of |
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termination of the contract or employment [at a reasonable price |
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or, at the option of either party, as determined by a mutually |
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agreed upon arbitrator or, in the case of an inability to agree, an |
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arbitrator of the court whose decision shall be binding on the |
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parties]; [and] |
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(3) the covenant must provide that the physician will |
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not be prohibited from providing continuing care and treatment to a |
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specific patient or patients during the course of an acute illness |
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even after the contract or employment has been terminated; and |
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(4) the covenant must: |
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(A) expire not later than the one-year |
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anniversary of the date the contract or employment has been |
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terminated; and |
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(B) limit the geographical area subject to the |
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covenant to no more than a five-mile radius. |
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SECTION 2. Subchapter E, Chapter 15, Business & Commerce |
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Code, is amended by adding Section 15.501 to read as follows: |
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Sec. 15.501. COVENANTS NOT TO COMPETE AGAINST HEALTH CARE |
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PRACTITIONERS. (a) In this section, "health care practitioner" |
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means: |
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(1) a person licensed by the State Board of Dental |
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Examiners to practice dentistry in this state; |
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(2) a person licensed under Chapter 301, Occupations |
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Code, to engage in professional or vocational nursing; or |
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(3) a physician assistant licensed under Chapter 204, |
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Occupations Code. |
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(b) A covenant not to compete against a health care |
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practitioner is not enforceable unless the covenant: |
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(1) provides for a buyout of the covenant by the health |
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care practitioner in an amount that is not greater than the |
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practitioner's total annual salary and wages at the time of |
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termination of the practitioner's contract or employment; |
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(2) expires not later than the one-year anniversary of |
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the date the contract or employment has been terminated; and |
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(3) limits the geographical area subject to the |
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covenant to no more than a five-mile radius. |
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SECTION 3. Section 15.52, Business & Commerce Code, is |
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amended to read as follows: |
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Sec. 15.52. PREEMPTION OF OTHER LAW. The criteria for |
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enforceability of a covenant not to compete provided by Sections |
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[Section] 15.50 and 15.501 [of this code] and the procedures and |
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remedies in an action to enforce a covenant not to compete provided |
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by Section 15.51 [of this code] are exclusive and preempt [any] |
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other law, including [criteria for enforceability of a covenant not |
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to compete or procedures and remedies in an action to enforce a |
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covenant not to compete under] common law [or otherwise]. |
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SECTION 4. The changes in law made by this Act apply only to |
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a covenant not to compete entered into or renewed on or after the |
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effective date of this Act. A covenant not to compete entered into |
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or renewed before the effective date of this Act is governed by the |
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law in effect on the date the covenant was entered into or renewed, |
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and the former law is continued in effect for that purpose. |
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SECTION 5. This Act takes effect September 1, 2025. |