Are Non-Compete Agreements Enforceable in Texas in 2026?

Reviewing an agreement before signing. Photo: Karola G via Pexels.

If you signed a non-compete in Texas — or you are an employer who relies on them — you have probably heard the federal government tried to ban them. Here is the bottom line for 2026: that ban never took effect, and non-competes remain enforceable in Texas. But “enforceable” comes with real conditions, and a poorly drafted agreement can be worth nothing. Here is what actually governs non-competes in Texas today.

What Happened to the Federal Ban?

In April 2024, the Federal Trade Commission finalized a rule that would have banned most non-compete agreements across the country. The rule was scheduled to take effect on September 4, 2024, but a Texas federal court set it aside in Ryan, LLC v. FTC on August 20, 2024, concluding that the FTC lacked authority to promulgate the rule. The FTC appealed, and in September 2025 it took steps to dismiss its appeal and accede to vacatur of the rule. The FTC’s nationwide rule is not in effect and is not enforceable.

The practical result: there is no federal ban. Whether a non-compete is enforceable now depends almost entirely on state law, which varies dramatically — from California, which bans them outright, to Texas, which enforces them within limits. One important caveat: the FTC can still pursue individual enforcement actions against agreements it considers abusive, so “no nationwide ban” does not mean “anything goes.”

The Texas Rule: Enforceable, Within Limits

Texas is an enforcement-friendly state — by some estimates, more than half of Texas employees are subject to a non-compete. But “enforcement-friendly” is not “anything goes.” Under Texas Business and Commerce Code § 15.50, a non-compete is enforceable only if it meets three core requirements:

• It is ancillary to an otherwise enforceable agreement. The non-compete cannot stand alone — it must be tied to a legitimate underlying agreement, typically an employment relationship in which the employer provides something like confidential information or specialized training.
• It is supported by consideration. The employer must actually give the employee something of value in exchange — commonly access to trade secrets, confidential information, or specialized training. If the employer never delivers that, Texas courts often void the agreement.
• It is reasonable in time, geography, and scope. The restriction must be no broader than necessary to protect the employer’s legitimate business interest. An agreement that bars someone from an entire industry, across the whole state, for years, is far more likely to be struck down than a narrow, well-tailored one.

How Texas Courts Actually Treat Them

This is where many people are surprised. Even though Texas enforces non-competes, its courts apply strict scrutiny and regularly refuse to enforce agreements that overreach. A few realities worth knowing:

• Courts can reform an overbroad agreement. Rather than simply voiding a non-compete that goes too far, a Texas court may rewrite it to make it reasonable. Notably, if a court has to reform the agreement, the employer generally cannot recover its attorney’s fees — a real incentive for employers to draft narrowly in the first place.
• Lower-wage workers get extra skepticism. Courts are particularly wary of non-competes imposed on employees who had no access to genuinely sensitive information.
• No consideration, no enforcement. If the employer never actually provided the confidential information or training the agreement promised, the non-compete frequently fails.

The takeaway for employers: an aggressive, overbroad non-compete is often worse than a narrow one, because it invites a court to rewrite it and strips away your fee recovery. For employees: a signed non-compete is not automatically valid — but it is also not automatically void. The specific terms and your situation control.

2025 Update: Special Rules for Health Care Non-Competes

Texas changed the rules for certain health care non-competes in 2025. Senate Bill 1318 took effect September 1, 2025. By its own terms it applies only to a covenant not to compete entered into or renewed on or after that date; a covenant made or renewed before then is governed by the law in effect when it was made.

The statute does not treat every clinician alike. It sets requirements for physicians in one provision and for a separately defined group of health care practitioners in another, and the two lists are not the same.

Four requirements shared across the covered professions

Physicians licensed by the Texas Medical Board are covered by Business and Commerce Code § 15.50. A separate provision, § 15.501, covers dentists licensed by the State Board of Dental Examiners, people licensed to engage in professional or vocational nursing, and licensed physician assistants. Under both provisions, a covered covenant must:

• expire no later than the one-year anniversary of the date the contract or employment terminated;
• limit the geographic area to no more than a five-mile radius from the location where the person primarily practiced before termination;
• provide for a buyout in an amount not greater than the person’s total annual salary and wages at the time of termination; and
• state its terms and conditions clearly and conspicuously in writing.

Additional protections that apply only to physicians

Physicians are covered by more than the four items above. Under § 15.50, a covenant relating to the practice of medicine must also preserve the physician’s access to a list of patients seen or treated within one year of termination, provide access to patient medical records on the patient’s authorization, and allow the physician to continue treating a specific patient through an acute illness after the employment ends.

Two further provisions are physician-specific. A covenant relating to the practice of medicine is void and unenforceable against a Texas Medical Board–licensed physician who is involuntarily discharged without good cause, which the statute defines as a reasonable basis for discharge directly related to the physician’s conduct, job performance, or employment record. And for purposes of that subsection, the practice of medicine does not include managing or directing medical services in an administrative capacity.

Those additional protections appear in § 15.50 and not in § 15.501. A dentist, nurse, or physician assistant is covered by the one-year, five-mile, buyout-cap and conspicuousness requirements, but not by the patient-list, medical-records, acute-illness, or discharge-without-good-cause provisions.

For a health care non-compete in Texas, the date matters as much as the terms. The 2025 rules reach agreements entered into or renewed on or after September 1, 2025; older agreements are measured against the prior law.

The California Contrast — Why Location Is Everything

Texas’s approach looks especially generous next to California, which bans employee non-competes almost entirely and has even made it unlawful for an employer to ask a worker to sign one. For businesses operating across state lines — say, a company with employees in both Texas and California — this gap is a trap. The same agreement that is enforceable for your Texas staff may be not just void but actively unlawful for your California staff. Multi-state employers cannot rely on a single national template; the agreement has to match the law of each state where workers actually are.

What to Do Now

If you are a Texas employer: audit your existing agreements. Confirm they are tied to real consideration and narrowly tailored. Consider whether trade-secret protections and well-drafted non-solicitation clauses would serve you better than an aggressive non-compete a court might gut.

If you are an employee or considering a new role: do not assume your non-compete is either fully enforceable or completely worthless. Whether it holds up depends on the specific language, the consideration you received, and how reasonable the restrictions are. Before you sign — or before you leave to join a competitor — it is worth having the agreement reviewed by a Texas business attorney. Our contracts practice and employment law practice help both employers and employees navigate exactly these questions.

Frequently Asked Questions

This article is for general informational purposes only and is not legal advice, and may not reflect the most recent legal developments. Non-compete enforceability depends on the specific language of your agreement and your individual circumstances — consult a qualified Texas attorney before acting. Reading this article does not create an attorney-client relationship.