Texas 2025 - 89th Regular

Texas Senate Bill SB1318 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	By: Schwertner, Sparks S.B. No. 1318
2		-
3		-
	1	+	By: Schwertner S.B. No. 1318
	2	+	(In the Senate - Filed February 14, 2025;
	3	+	February 28, 2025, read first time and referred to Committee on
	4	+	Health & Human Services; April 7, 2025, reported favorably by the
	5	+	following vote: Yeas 7, Nays 0; April 7, 2025, sent to printer.)
	6	+	Click here to see the committee vote
4	7
5	8
6	9		A BILL TO BE ENTITLED
7	10		AN ACT
8	11		relating to restrictions on covenants not to compete for physicians
9	12		and certain health care practitioners.
10	13		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11		-	SECTION 1. Section 15.50, Business & Commerce Code, is
12		-	amended by amending Subsections (a) and (b) and adding Subsection
13		-	(b-1) to read as follows:
	14	+	SECTION 1. Sections 15.50(a) and (b), Business & Commerce
	15	+	Code, are amended to read as follows:
14	16		(a) Notwithstanding Section 15.05 [of this code,] and
15	17		subject to any applicable provision of Subsection (b) and Section
16	18		15.501, a covenant not to compete is enforceable if it is ancillary
17	19		to or part of an otherwise enforceable agreement at the time the
18	20		agreement is made to the extent that it contains limitations as to
19	21		time, geographical area, and scope of activity to be restrained
20	22		that are reasonable and do not impose a greater restraint than is
21	23		necessary to protect the goodwill or other business interest of the
22	24		promisee.
23	25		(b) A covenant not to compete relating to the practice of
24	26		medicine is enforceable against a person licensed as a physician by
25	27		the Texas Medical Board if such covenant complies with the
26	28		following requirements:
27	29		(1) the covenant must:
28	30		(A) not deny the physician access to a list of the
29	31		physician's [his] patients whom the physician [he] had seen or
30	32		treated within one year of termination of the contract or
31	33		employment;
32	34		(B) provide access to medical records of the
33	35		physician's patients upon authorization of the patient and any
34	36		copies of medical records for a reasonable fee as established by the
35	37		Texas Medical Board under Section 159.008, Occupations Code; and
36	38		(C) provide that any access to a list of patients
37	39		or to patients' medical records after termination of the contract
38	40		or employment shall not require such list or records to be provided
39	41		in a format different than that by which such records are maintained
40	42		except by mutual consent of the parties to the contract;
41	43		(2) the covenant must provide for a buyout [buy out] of
42	44		the covenant by the physician in an amount that is not greater than
43	45		the physician's total annual salary and wages at the time of
44	46		termination of the contract or employment [at a reasonable price
45	47		or, at the option of either party, as determined by a mutually
46	48		agreed upon arbitrator or, in the case of an inability to agree, an
47	49		arbitrator of the court whose decision shall be binding on the
48	50		parties]; [and]
49	51		(3) the covenant must provide that the physician will
50	52		not be prohibited from providing continuing care and treatment to a
51	53		specific patient or patients during the course of an acute illness
52	54		even after the contract or employment has been terminated; and
53	55		(4) the covenant must:
54	56		(A) expire not later than the one-year
55	57		anniversary of the date the contract or employment has been
56	58		terminated; and
57	59		(B) limit the geographical area subject to the
58		-	covenant to no more than a five-mile radius from the location at
59		-	which the physician primarily practiced before contract or
60		-	employment terminated, as specified in the covenant.
61		-	(b-1) For the purposes of Subsection (b), the practice of
62		-	medicine does not include managing or directing medical services in
63		-	an administrative capacity for a medical practice.
	60	+	covenant to no more than a five-mile radius.
64	61		SECTION 2. Subchapter E, Chapter 15, Business & Commerce
65	62		Code, is amended by adding Section 15.501 to read as follows:
66	63		Sec. 15.501. COVENANTS NOT TO COMPETE AGAINST HEALTH CARE
67	64		PRACTITIONERS. (a) In this section, "health care practitioner"
68	65		means:
69	66		(1) a person licensed by the State Board of Dental
70	67		Examiners to practice dentistry in this state;
71	68		(2) a person licensed under Chapter 301, Occupations
72	69		Code, to engage in professional or vocational nursing; or
73	70		(3) a physician assistant licensed under Chapter 204,
74	71		Occupations Code.
75	72		(b) A covenant not to compete against a health care
76	73		practitioner is not enforceable unless the covenant:
77	74		(1) provides for a buyout of the covenant by the health
78	75		care practitioner in an amount that is not greater than the
79	76		practitioner's total annual salary and wages at the time of
80	77		termination of the practitioner's contract or employment;
81	78		(2) expires not later than the one-year anniversary of
82	79		the date the contract or employment has been terminated; and
83	80		(3) limits the geographical area subject to the
84		-	covenant to no more than a five-mile radius from the location at
85		-	which the physician primarily practiced before contract or
86		-	employment terminated, as specified in the covenant.
	81	+	covenant to no more than a five-mile radius.
87	82		SECTION 3. Section 15.52, Business & Commerce Code, is
88	83		amended to read as follows:
89	84		Sec. 15.52. PREEMPTION OF OTHER LAW. The criteria for
90	85		enforceability of a covenant not to compete provided by Sections
91	86		[Section] 15.50 and 15.501 [of this code] and the procedures and
92	87		remedies in an action to enforce a covenant not to compete provided
93	88		by Section 15.51 [of this code] are exclusive and preempt [any]
94	89		other law, including [criteria for enforceability of a covenant not
95	90		to compete or procedures and remedies in an action to enforce a
96	91		covenant not to compete under] common law [or otherwise].
97	92		SECTION 4. The changes in law made by this Act apply only to
98	93		a covenant not to compete entered into or renewed on or after the
99	94		effective date of this Act. A covenant not to compete entered into
100	95		or renewed before the effective date of this Act is governed by the
101	96		law in effect on the date the covenant was entered into or renewed,
102	97		and the former law is continued in effect for that purpose.
103	98		SECTION 5. This Act takes effect September 1, 2025.
	99	+	* * * * *