How to Draft an Enforceable Non-Compete Agreement in Texas

In June 2025, the Texas legislature passed a law that changes the requirements for non-compete agreements in the health care sector. While this only applies to one industry in the Lone Star State, it highlights the importance of workers knowing what a non-compete agreement can (and cannot) include.

The new law, which goes into effect September 1, 2025, applies to physicians, dentists, nurses, and physician assistants. It doesn't cover physicians currently serving in managerial or administrative roles.

For healthcare workers, non-compete agreements must now:

• Be written in clear language
• Be unenforceable if a physician was involuntarily terminated without cause
• Include a buyout clause

These agreements cannot be for longer than one year and are limited to a five-mile radius.

While other states have banned non-compete agreements, Texas continues to allow them with limitations.

General Non-compete Requirements

As the recent law change for healthcare workers shows, some industries or professions may have specific requirements for non-compete agreements. In general, Texas requires that non-compete agreements not be overly broad.

In Texas, all non-compete agreements must be reasonable in terms of time, geographical area, and scope of activity. For example, an agreement that lasts for one year will generally be allowed, but an agreement for five years will not.

Similarly, an agreement that restricts someone from working for a competitor in the Houston area is more likely to be upheld than one that bans someone from working in the same industry anywhere in Texas.

In addition, non-compete agreements must be “ancillary to or part of an otherwise enforceable agreement” and include consideration. Consideration is a legal term for saying that both sides have to give something up for the agreement to be enforceable.

For example, a worker signs a non-compete agreement ahead of receiving specialized training. Here, the company provides the worker with training in exchange for the worker agreeing not to work for any competitors in the Dallas area for six months after leaving the company.

Hire a Skilled Lawyer Who Knows Texas

If you have questions about non-compete agreements, the attorneys at Manfred Law can help. Call us at 713-547-5460 or contact us online to schedule your consultation.