A new Texas law, Senate Bill 1318 (SB 1318), is set to change the landscape for physician and health care provider contracts across the state. Signed by Governor Greg Abbott, the legislation takes effect September 1, 2025, and introduces stricter rules for how noncompete agreements can be applied in the medical field.
What the Law Does
SB 1318 narrows the circumstances under which noncompete clauses can be enforced against Texas health care providers. The law aims to balance two key priorities: protecting patient access to care while still allowing practices and organizations to safeguard their business interests.
Under the new rules, employers will face additional restrictions on preventing providers from practicing after leaving a position. The law also places a stronger emphasis on ensuring continuity of care, limiting the use of contract terms that could create gaps in patient treatment when a provider changes jobs.
Impact on Providers and Practices
For physicians, nurse practitioners, and other licensed providers, the bill is designed to increase professional mobility and reduce barriers to changing employers or starting new practices. For health care organizations, however, SB 1318 may require a rethinking of existing contracts to ensure compliance.
Non-competes only apply:
- Within 5-mile radius of primary practice location
- Within 1 year from the date of termination
- With an enforceable buyout clause, no more than total annual salary and wages
Many legal experts note that noncompete agreements have historically been used to protect investments in training, recruitment, and patient relationships. SB 1318 shifts the balance, ensuring patients have greater freedom to continue care with their chosen providers while still allowing some contract protections under specific conditions.
Preparing for September 2025
Texas health care organizations are encouraged to review their current employment agreements well ahead of the September 1, 2025, effective date. Contract provisions that don’t align with the new requirements may need to be revised to avoid potential legal challenges.
Attorneys specializing in health care law recommend practices take proactive steps, such as:
- Reviewing and updating noncompete language in existing contracts.
- Ensuring provisions support patient choice and continuity of care.
- Seeking legal guidance to align with SB 1318’s requirements.
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