Texas 2023 - 88th Regular

Texas Senate Bill SB1534 Compare Versions

Version 1 (Old)

Version 2 (New)

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1	1	By: Schwertner S.B. No. 1534
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to restrictions on covenants not to compete for physicians
7	7	and certain other health care practitioners.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 15.50, Business & Commerce Code, is
10	10	amended by amending Subsections (a) and (b) and adding Subsection
11	11	(d) to read as follows:
12	12	(a) Notwithstanding Section 15.05 [of this code,] and
13	13	subject to any applicable provision of Subsection (b) and Section
14	14	15.501, a covenant not to compete is enforceable if it is ancillary
15	15	to or part of an otherwise enforceable agreement at the time the
16	16	agreement is made to the extent that it contains limitations as to
17	17	time, geographical area, and scope of activity to be restrained
18	18	that are reasonable and do not impose a greater restraint than is
19	19	necessary to protect the goodwill or other business interest of the
20	20	promisee.
21	21	(b) A covenant not to compete relating to the practice of
22	22	medicine is enforceable against a person licensed as a physician by
23	23	the Texas Medical Board if such covenant complies with the
24	24	following requirements:
25	25	(1) the covenant must:
26	26	(A) not deny the physician access to a list of the
27	27	physician's [his] patients whom the physician [he] had seen or
28	28	treated within one year of termination of the contract or
29	29	employment;
30	30	(B) provide access to medical records of the
31	31	physician's patients upon authorization of the patient and any
32	32	copies of medical records for a reasonable fee as established by the
33	33	Texas Medical Board under Section 159.008, Occupations Code; and
34	34	(C) provide that any access to a list of patients
35	35	or to patients' medical records after termination of the contract
36	36	or employment shall not require such list or records to be provided
37	37	in a format different than that by which such records are maintained
38	38	except by mutual consent of the parties to the contract;
39	39	(2) the covenant must provide for a buyout [buy out] of
40	40	the covenant by the physician in an amount that is not greater than
41	41	the physician's total annual salary and wages at the time of
42	42	termination of the contract or employment [at a reasonable price
43	43	or, at the option of either party, as determined by a mutually
44	44	agreed upon arbitrator or, in the case of an inability to agree, an
45	45	arbitrator of the court whose decision shall be binding on the
46	46	parties]; [and]
47	47	(3) the covenant must provide that the physician will
48	48	not be prohibited from providing continuing care and treatment to a
49	49	specific patient or patients during the course of an acute illness
50	50	even after the contract or employment has been terminated; and
51	51	(4) the covenant must:
52	52	(A) expire not later than the one year
53	53	anniversary of the date the contract or employment terminated; and
54	54	(B) limit the geographical area subject to the
55	55	covenant to no more than:
56	56	(i) a five-mile radius, if more than half of
57	57	the area subject to the covenant is located in a county with a
58	58	population of 50,000 or more; or
59	59	(ii) a 10-mile radius, if more than half of
60	60	the area subject to the covenant is located in a county with a
61	61	population of less than 50,000.
62	62	(d) Notwithstanding any other law, a covenant not to compete
63	63	relating to the practice of medicine is void and unenforceable
64	64	against a person licensed as a physician by the Texas Medical Board
65	65	if the physician is discharged without good cause. For purposes of
66	66	this subsection, "good cause" means a reasonable basis for
67	67	discharge of a physician from employment that is directly related
68	68	to the physician's conduct, including the physician's conduct on
69	69	the job or otherwise, job performance, and employment record.
70	70	SECTION 2. Subchapter E, Chapter 15, Business & Commerce
71	71	Code, is amended by adding Section 15.501 to read as follows:
72	72	Sec. 15.501. COVENANTS NOT TO COMPETE AGAINST HEALTH CARE
73	73	PRACTITIONERS. (a) In this section, "health care practitioner"
74	74	means:
75	75	(1) a person licensed by the State Board of Dental
76	76	Examiners to practice dentistry in this state;
77	77	(2) a person licensed under Chapter 301, Occupations
78	78	Code, to engage in professional or vocational nursing; or
79	79	(3) a physician assistant licensed under Chapter 204,
80	80	Occupations Code.
81	81	(b) A covenant not to compete against a health care
82	82	practitioner is not enforceable unless the covenant:
83	83	(1) provides for a buyout of the covenant by the health
84	84	care practitioner in an amount that is not greater than the
85	85	practitioner's total annual salary and wages at the time of
86	86	termination of the practitioner's contract or employment;
87	87	(2) expires not later than the one year anniversary of
88	88	the contract or employment terminated; and
89	89	(3) limits the geographical area subject to the
90	90	covenant to no more than:
91	91	(A) a five-mile radius, if more than half of the
92	92	area subject to the covenant is located in a county with a
93	93	population of 50,000 or more; or
94	94	(B) a 10-mile radius, if more than half of the
95	95	area subject to the covenant is located in a county with a
96	96	population of less than 50,000.
97	97	(c) Notwithstanding any other law, a covenant not to compete
98	98	is void and unenforceable against a health care practitioner if the
99	99	health care practitioner is discharged without good cause. For
100	100	purposes of this subsection, "good cause" means a reasonable basis
101	101	for discharge of a health care practitioner from employment that is
102	102	directly related to the health care practitioner's conduct,
103	103	including the health care practitioner's conduct on the job or
104	104	otherwise, job performance, and employment record.
105	105	SECTION 3. Section 15.52, Business & Commerce Code, is
106	106	amended to read as follows:
107	107	Sec. 15.52. PREEMPTION OF OTHER LAW. The criteria for
108	108	enforceability of a covenant not to compete provided by Sections
109	109	[Section] 15.50 and 15.501 [of this code] and the procedures and
110	110	remedies in an action to enforce a covenant not to compete provided
111	111	by Section 15.51 [of this code] are exclusive and preempt [any]
112	112	other law, including [criteria for enforceability of a covenant not
113	113	to compete or procedures and remedies in an action to enforce a
114	114	covenant not to compete under] common law [or otherwise].
115	115	SECTION 4. The changes in law made by this Act apply only to
116	116	a covenant not to compete entered into or renewed on or after the
117	117	effective date of this Act. A covenant not to compete entered into
118	118	or renewed before the effective date of this Act is governed by the
119	119	law in effect on the date the covenant was entered into or renewed,
120	120	and the former law is continued in effect for that purpose.
121	121	SECTION 5. This Act takes effect September 1, 2023.