On September 1, 2025, SB 1318 became law in Texas — and it fundamentally changed the enforceability of non-compete agreements for healthcare providers. For years, physicians, dentists, nurses, and physician assistants in The Woodlands and Montgomery County have signed employment contracts containing broad non-compete clauses that restricted where they could practice after leaving an employer. Many of those clauses would now be unenforceable under the new law.
At Griffin & Cain, Attorneys at Law, our business law team works with healthcare professionals across Montgomery County who are evaluating their employment agreements, preparing to transition to a new practice, or defending against enforcement of a non-compete. If you have a non-compete in your employment contract, call us at (936) 441-2999 to find out whether SB 1318 changes your options.
What SB 1318 Changed
Before SB 1318, Texas Business & Commerce Code §15.50 already imposed some limits on physician non-competes — primarily a buyout provision allowing physicians to buy out of a non-compete at a reasonable price. SB 1318 expanded these protections dramatically and extended them beyond physicians to include dentists, nurses, and physician assistants.
Under the new law, non-compete agreements for covered healthcare providers are subject to hard caps. The maximum duration is one year from the date of termination. The maximum geographic scope is five miles from the provider's primary practice location. The buyout amount is capped at the provider's annual compensation under the contract. And critically, the non-compete is automatically void if the provider is terminated without good cause by the employer.
These restrictions apply regardless of what the contract says. If your employment agreement contains a two-year non-compete with a 25-mile radius, SB 1318 overrides the contractual terms and reduces the restriction to one year and five miles. You do not need to renegotiate your contract for the new limits to apply — they are statutory.
Who Is Covered Under SB 1318?
The law applies to physicians (MDs and DOs), dentists, registered nurses and advanced practice registered nurses, and physician assistants. The coverage is broader than the prior physician-only protections under §15.50, reflecting the reality that nurses, PAs, and dentists increasingly sign non-compete agreements that restrict their post-employment practice options.
The law does not cover all healthcare workers. Physical therapists, pharmacists, chiropractors, hospital administrators, and non-clinical healthcare employees are not specifically covered by SB 1318's enhanced protections. These professionals remain subject to the general Texas non-compete framework under §15.50, which requires only that the restriction be "reasonable in time, area, and scope."
The "Terminated Without Good Cause" Provision
This is the most significant provision in SB 1318 for many healthcare providers. If your employer fires you without good cause — a layoff, a reorganization, a personality conflict with management, or a business decision to reduce headcount — your non-compete is automatically void. You can walk out the door and open a practice across the street on the following Monday.
"Good cause" is not defined exhaustively in the statute, but it generally refers to termination based on the provider's own misconduct — unprofessional conduct, patient safety violations, substance abuse, fraud, or material breach of the employment agreement. If the termination is based on the employer's business needs rather than the provider's performance or behavior, the non-compete does not survive.
This provision shifts significant leverage to healthcare employees. Employers who want to enforce a non-compete must now carefully document the reasons for termination, because a dispute over whether the termination was "with good cause" will determine whether the non-compete is enforceable at all. If the employer cannot prove good cause, the restriction is void — and the employer may be liable for damages if they attempted to enforce a void restriction.
Why This Matters in The Woodlands and Montgomery County
The Woodlands is one of the densest healthcare employment corridors in the greater Houston region. Texas Children's Hospital, Houston Methodist The Woodlands, CHI St. Luke's Health, Memorial Hermann The Woodlands, and dozens of private practice groups, dental offices, and specialty clinics employ thousands of physicians, dentists, nurses, and PAs within the community.
Many of these providers signed employment agreements years ago — when non-compete clauses routinely included two-year terms, 15-25 mile radii, and no buyout provisions. Under SB 1318, those provisions are now capped at one year and five miles. For a physician in The Woodlands with a patient base concentrated within a few miles of their office, this means they can now change employers and continue practicing in the same community without triggering a valid non-compete — as long as the move happens more than five miles away or after one year.
For dental practices in particular, the five-mile cap is transformative. Many dentists who leave a group practice want to open a solo office nearby — within the same zip code, the same shopping center corridor, or the same neighborhood where their patients live. A 25-mile non-compete effectively forced them out of the community. A five-mile cap keeps them in range.
What About the FTC Non-Compete Rule?
In September 2025, the Federal Trade Commission formally abandoned its proposed nationwide ban on non-compete agreements. The FTC had issued a final rule in April 2024 that would have banned nearly all non-competes for all workers in all industries, but the rule was blocked by federal courts and the incoming administration withdrew it.
The FTC's retreat makes state-level laws like SB 1318 the primary protection for workers subject to non-competes. Texas's framework is now more favorable to healthcare providers than it was under the prior regime, but it is important to understand that SB 1318 is a sector-specific law — it does not apply to non-healthcare workers, who remain subject to the general reasonableness standard.
Steps to Take If You Have a Healthcare Non-Compete
If you are a physician, dentist, nurse, or PA with a non-compete clause in your employment contract, here is what you should do now.
Obtain a copy of your current employment agreement and any amendments. Read the non-compete provision carefully — note the duration, geographic scope, and any buyout language. Compare those terms to SB 1318's statutory caps: one year maximum, five miles maximum, annual salary buyout maximum. If your contract exceeds any of these limits, the excess is unenforceable.
If you are considering a transition — leaving your current employer to join another practice or start your own — consult with a business attorney before giving notice. Your attorney can evaluate whether your specific non-compete is enforceable under SB 1318, whether a "good cause" termination argument applies, whether the five-mile radius covers your intended new location, and whether the buyout provision gives you a clean exit path.
If your employer threatens to enforce a non-compete that exceeds SB 1318's limits, or if you were terminated without good cause and your employer is still asserting the non-compete, you may have a claim for damages and injunctive relief. An attorney who understands both Texas employment law and healthcare practice dynamics can advise you on the strength of your position.
Talk to a Business Attorney at Griffin & Cain
Griffin & Cain advises healthcare professionals and small businesses across Montgomery County on employment agreements, non-compete enforceability, and practice transitions. Whether you are reviewing a contract before signing, planning a departure from your current employer, or defending against non-compete enforcement, we can help.
Call (936) 441-2999 to schedule a consultation. We serve professionals in The Woodlands, Conroe, Magnolia, Willis, and throughout Montgomery County from our office in Conroe.
