Texas non compete law restricts non competes by statute: texas enforces a non compete under its Covenants Not to Compete Act if it is ancillary to or part of an otherwise enforceable agreement when made and its time, area and scope limits are reasonable and no greater than needed to protect the employer’s goodwill or other business interest; the Act’s rules and remedies are exclusive and preempt the common law.
This guide gives the exact Texas non compete law rule with the date we verified it, the threshold and carve-outs where they exist, what a court does with an overbroad term, and what to do if you signed one. Rules verified against the statute on 2026-10-08; confirm the current rule with Texas Workforce Commission, Labor Law Section or an attorney before you rely on it.
Texas Non Compete Law at a Glance
| Status | Restricted by statute |
| Income threshold | No earnings threshold |
| Statute | Tex. Bus. & Com. Code 15.50 to 15.52 |
| Notice / consideration | The employer must actually give something in return — confidential information or specialized training provided in reliance on the promise is the usual consideration for an at-will employee |
| Carve-outs | Physicians: the covenant must offer a buyout (capped at the physician’s annual pay), run no longer than one year and reach no more than five miles, and is void… |
| Overbroad terms | reform — a court must reform an overbroad covenant to reasonable limits and enforce it as reformed, but may award only injunctive relief, no damages, for conduct before the reformation (15.51) |
| In effect since | Act in force since 1989 (amended 1993); physician limits expanded and health-care practitioners added by SB 1318, effective September 1, 2025 |
In This Texas Non Compete Law Guide:
Is a Non Compete Enforceable Under Texas Non Compete Law?
Texas enforces a non compete under its Covenants Not to Compete Act if it is ancillary to or part of an otherwise enforceable agreement when made and its time, area and scope limits are reasonable and no greater than needed to protect the employer’s goodwill or other business interest; the Act’s rules and remedies are exclusive and preempt the common law. The statute is Tex. Bus. & Com.
Code 15.50 to 15.52. The carve-outs matter: physicians: the covenant must offer a buyout (capped at the physician’s annual pay), run no longer than one year and reach no more than five miles, and is void if the physician was fired without good cause; since September 1, 2025 the same limits apply to dentists, nurses and physician assistants (15.501).
Texas Non Compete Law at a Glance
Rules verified against the statute on 2026-10-08; confirm the current rule with Texas Workforce Commission, Labor Law Section or an attorney before you rely on it. The statute row is where to check it yourself.
| Status | Restricted by statute |
| What the rule says | Texas enforces a non compete under its Covenants Not to Compete Act if it is ancillary to or part of an otherwise enforceable agreement when made and its time, area and scope limits are reasonable and no greater than needed to protect the employer’s goodwill or other business interest; the Act’s rules and remedies are exclusive and preempt the common law. |
| Income threshold | No earnings threshold |
| Statute | Tex. Bus. & Com. Code 15.50 to 15.52 |
| Notice or consideration rule | The employer must actually give something in return — confidential information or specialized training provided in reliance on the promise is the usual consideration for an at-will employee |
| Carve-outs | Physicians: the covenant must offer a buyout (capped at the physician’s annual pay), run no longer than one year and reach no more than five miles, and is void if the physician was fired without good cause; since September 1, 2025 the same limits apply to dentists, nurses and physician assistants (15.501) |
| What a court does with an overbroad term | reform — a court must reform an overbroad covenant to reasonable limits and enforce it as reformed, but may award only injunctive relief, no damages, for conduct before the reformation (15.51) |
| In effect since | Act in force since 1989 (amended 1993); physician limits expanded and health-care practitioners added by SB 1318, effective September 1, 2025 |
The Reasonableness Test Under Texas Non Compete Law
A Texas court first checks that the non compete is tied to a separate, enforceable agreement, such as the employer giving you confidential information or specialized training. It then asks whether the limits on time, geographic area and type of work are reasonable and no broader than needed to protect the employer’s goodwill or confidential information.
Courts also consider whether the restriction places more hardship on you than the employer’s interest justifies. If a covenant is too broad, a Texas court generally must narrow it to a reasonable scope rather than throw it out completely.
Texas courts have commonly upheld restrictions of about 1 to 2 years that cover only the territory where the worker actually worked, or only the customers the worker dealt with. Courts have often struck down or narrowed restrictions that bar a worker from an entire industry, cover areas the worker never served, or run for many years.
With an overbroad term the court will reform — a court must reform an overbroad covenant to reasonable limits and enforce it as reformed, but may award only injunctive relief, no damages, for conduct before the reformation (15.51).
Texas Non Compete Law If You Were Fired or Laid Off
For most workers, the Texas statute does not treat being fired or laid off differently from quitting, so a valid non compete can still apply either way. Some courts weigh the circumstances of the separation when deciding whether to grant an injunction. For physicians, reports on the 2025 health-care amendments say the covenant can be voided if the physician was fired without good cause; confirm this with a Texas attorney.
What the Employer Must Give Under Texas Non Compete Law
The employer must actually give something in return — confidential information or specialized training provided in reliance on the promise is the usual consideration for an at-will employee Continued at-will employment alone is generally not enough in Texas. The employer usually must actually provide something tied to its protectable interest, such as confidential information, trade secrets, specialized training or, in some cases, stock options.
A promise to share confidential information becomes binding consideration only once the employer actually shares it.
Non Solicit and Non Disclosure Agreements Under Texas Non Compete Law
Texas courts generally treat a customer non-solicitation clause as a restraint on competition, so it must meet the same reasonableness rules as a non compete. However, because it is narrower, it is often easier to enforce. A non-disclosure agreement that only protects truly confidential information is generally not treated as a non compete, and Texas courts usually enforce it more readily.
If You Already Signed One: Texas Non Compete Law in Practice
Get a copy of the agreement you signed and read the exact length, area, type of work covered and any customer or coworker restrictions. Compare those terms with your new job’s duties, location and customers, and check whether you actually received confidential information or training in exchange for signing.
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You can ask your former employer in writing for a release or waiver, and you may want a Texas employment attorney to review the agreement before you accept the offer.
A Texas employer can ask a court for an injunction ordering the worker to stop the competing work, and it can seek money damages for losses caused by a breach of a valid covenant. If a court had to narrow an overbroad covenant, the employer generally cannot recover damages for conduct before the narrowing.
The worker may recover attorney’s fees if the employer knew the covenant was unreasonable and tried to enforce it anyway.
The Federal Rule and Texas Non Compete Law
The Federal Trade Commission adopted a nationwide non compete ban in 2024, but a federal court blocked it before it took effect and the FTC later withdrew its defense; as of October 2026 there is no federal ban in force, so Texas non compete law controls. In 2025, Texas passed SB 1318, effective September 1, 2025, for health-care non competes entered into or renewed on or after that date.
It covers physicians, dentists, nurses and physician assistants, and it caps the buyout at the worker’s total annual salary and wages, limits the restriction to 1 year after the job ends, and limits the area to 5 miles from the main practice location.
A 2025 bill to broadly ban non competes (HB 4067) did not pass, and the federal FTC ban was set aside in 2024; the FTC dropped its appeal in September 2025.
Other Texas Non Compete Law Rules to Know
Texas requires a court to narrow an overbroad non compete instead of voiding it, but the employer generally cannot collect damages for anything that happened before the court narrowed it. Physician non competes must include a buyout option and must let the physician keep access to patient lists and records when a patient authorizes the request.
Think your employer owes you money or broke the law?
A non compete is a contract question, and the answer turns on your own agreement’s words. Your state bar runs a lawyer-referral service that connects you with an employment attorney for a short, low-cost first consultation — find it through the American Bar Association referral directory. Free legal aid may also help if your income qualifies.
Texas — the bottom line
- Texas non compete law is a statute with its own limits — the first thing to check is which side of the line your agreement falls on.
- Under Texas non compete law, an overbroad term is reform — a court must reform an overbroad covenant to reasonable limits and enforce it as reformed, but may award only injunctive relief, no damages, for conduct before the reformation (15.51) — the words of your own agreement decide more than the headline rule.
- Texas non compete law does not stop you from taking a new job in a different field or outside the restricted area — read the scope before you turn an offer down.
Frequently Asked Questions
Are non competes enforceable in Texas?
Sometimes. Texas enforces a non compete under its Covenants Not to Compete Act if it is ancillary to or part of an otherwise enforceable agreement when made and its time, area and scope limits are reasonable and no greater than needed to protect the employer’s goodwill or other business interest; the Act’s rules and remedies are exclusive and preempt the common law.
Is there an income threshold under Texas non compete law?
No. Texas has no earnings threshold; enforcement turns on whether the agreement is reasonable.
What does a Texas court do with an overbroad non compete?
Reform — a court must reform an overbroad covenant to reasonable limits and enforce it as reformed, but may award only injunctive relief, no damages, for conduct before the reformation (15.51).
Can my employer enforce a non compete in Texas after firing me?
For most workers, the Texas statute does not treat being fired or laid off differently from quitting, so a valid non compete can still apply either way. Some courts weigh the circumstances of the separation when deciding whether to grant an injunction.
I signed a non compete in Texas and have a new offer — what should I do?
Get a copy of the agreement you signed and read the exact length, area, type of work covered and any customer or coworker restrictions. Compare those terms with your new job’s duties, location and customers, and check whether you actually received confidential information or training in exchange for signing.
Official Texas Sources & Resources
- Texas Workforce Commission, Labor Law Section: https://www.twc.texas.gov/programs/wage-and-hour
- Texas non compete statute (Tex. Bus. & Com. Code 15.50 to 15.52): https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm
- Verified source: https://capitol.texas.gov/tlodocs/89R/billtext/html/SB01318F.HTM
- Verified source: https://statutes.capitol.texas.gov/GetStatute.aspx?Code=BC&Value=15.50
- U.S. Department of Labor, Wage and Hour Division — state payday requirements: dol.gov
- Federal Trade Commission — the non compete rule (status): ftc.gov
- Texas bar lawyer referral: https://www.texasbar.com/lris/
This Texas non compete law guide was last verified against official Texas sources in October 2026. Rules change — confirm the current figure with the state agency or a licensed attorney.
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Disclaimer: This guide is general information, not legal or financial advice. My Unemployment Rights is an independent educational resource, not a government agency and not a law firm. Final-paycheck deadlines, penalties and non compete rules change — every figure here carries the date we verified it. Confirm the current rule with your state labor department or a licensed attorney before you act.