Texas Non-Compete Agreements

Under the Covenants Not to Compete Act (Tex. Bus. & Com. Code § 15.50–15.52), a non-compete is enforceable if it is ancillary to an otherwise enforceable agreement and reasonable in time, geographic area, and scope of activity. Unlike some states, Texas courts reform (rewrite) an overbroad covenant rather than void it.

In Marsh USA Inc. v. Cook (Tex. 2011), the Texas Supreme Court confirmed that consideration like stock options or access to confidential informationcan support a non-compete — easing the older "give rise to" requirement. Tie the covenant to a legitimate business interest (confidential information, goodwill, specialized training).

Effective Sept 1, 2025, SB 1318 limits non-competes with physicians and other health-care practitioners (dentists, nurses, PAs): capped at 1 year and a 5-mile radius, with the buyout capped at the worker's annual salary, and a physician covenant is void if the physician is discharged without good cause.

Keep duration and geography narrow, tie the restriction to a protectable interest, and treat health-care covenants under the SB 1318 framework. Even though Texas reforms overbroad covenants, a tightly drafted one is far easier to enforce.