Texas Non-Compete Agreement
Texas enforces employee non-compete agreements that are ancillary to an enforceable deal and reasonable in time, area, and scope. Attorney review available.
Introduction
A non-compete agreement is a contract in which an employee agrees not to compete with a business after the job ends, and Texas treats one as valid only when it is ancillary to an otherwise enforceable agreement, the threshold its Business and Commerce Code puts first. Texas enforces employee non-competes, but only within limits set by statute. Under Texas Business and Commerce Code Section 15.50(a), a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made, and to the extent it contains limitations as to time, geographical area, and scope of activity that are reasonable and impose no greater restraint than is necessary to protect the goodwill or other business interest of the employer. Sections 15.50 through 15.52 are the exclusive framework and preempt common law. The ancillary requirement is the piece Texas employees miss most: courts in Texas generally hold that continued at-will employment by itself is not enough, and the employer must give something that gives rise to the interest the covenant protects, such as access to confidential information, specialized training, or trade secrets. Texas is a mandatory reformation state: if a restraint is too broad, a court shall narrow it and enforce it as reformed rather than throwing it out, though the employer cannot recover damages for a breach that happened before reformation. There is no salary or income threshold in Texas. Physicians and, since September 1, 2025, dentists, nurses, and physician assistants have their own statutory carve-outs. This page explains Texas's rules and offers a template scoped to them. It is a state-law overview, not a promise that any given clause will hold up.
Key Things to Know
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A non-compete restricts a former employee from competing with the business after the job ends. Texas enforces a reasonable one under Business and Commerce Code Section 15.50 and, rather than voiding an overbroad covenant, requires a court to reform it to reasonable limits.
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Texas enforces non-competes under Business and Commerce Code Section 15.50(a): a covenant is valid if it is ancillary to or part of an otherwise enforceable agreement at the time it is made and is reasonable in time, geographical area, and scope of activity, no broader than necessary to protect the employer's goodwill or other business interest. Sections 15.50 to 15.52 are exclusive and preempt common law.
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Texas has no salary or income threshold for a non-compete. An employee at any pay level can be bound if the covenant is ancillary and reasonable. Do not rely on another state's wage floor when the worker is in Texas.
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The restraint must be reasonable in time, geographical area, and scope of activity (Section 15.50(a)). The statute sets no fixed maximum for ordinary employees; reasonableness is fact-specific. Courts in Texas generally uphold restraints of roughly one to three years tied to where the employee worked or the employer competes, and scrutinize industry-wide or open-ended bans.
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The covenant must be ancillary to an otherwise enforceable agreement. Courts in Texas generally hold that continued at-will employment alone is not sufficient consideration; the employer should give something that gives rise to the protected interest, such as confidential information, specialized training, or trade secrets (as in Sheshunoff and Mann Frankfort).
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Texas is a mandatory reformation (not strict blue-pencil) state. Under Section 15.51(c) a court shall reform an unreasonable covenant to make it reasonable and enforce it as reformed, but may not award the employer damages for a breach before reformation and limits relief to injunctive relief. Physicians and other health care practitioners have carve-outs (Sections 15.50(b) and 15.501).
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Because a non-compete must be reasonable and ancillary, many Texas employers also use a confidentiality or non-disclosure agreement under the Texas Uniform Trade Secrets Act (Civil Practice and Remedies Code Section 134A.001 et seq.) to protect trade secrets and customer data, which can also supply the consideration a Texas non-compete needs.
Key decisions before you file
Before you file a Non-Compete Agreement in Texas, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.
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Texas Requirements for Non-Compete Agreement
In Texas a reasonable employee non-compete is enforceable. Business and Commerce Code Section 15.50(a) makes a covenant not to compete enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time it is made and is reasonable in time, geographical area, and scope of activity, no greater than necessary to protect the employer's goodwill or other business interest. This is the statutory standard for the whole state.
The covenant must be ancillary to or part of an otherwise enforceable agreement at the time it is made (Section 15.50(a)). Courts in Texas generally hold that continued at-will employment alone is not sufficient consideration; the employer must give something that gives rise to the protected interest, such as confidential information, specialized training, or trade secrets. This is the requirement Texas non-competes most often fail.
The restraint must be reasonable in time, geographical area, and scope of activity and no greater than necessary to protect the employer's business interest (Section 15.50(a)). Texas sets no fixed maximum for ordinary employees; reasonableness is fact-specific. Courts in Texas generally uphold post-employment restraints of about one to three years tied to where the employee worked or the employer competes, and scrutinize industry-wide or open-ended bans.
Texas has no salary or income threshold that makes a non-compete valid. Section 15.50 turns on whether the covenant is ancillary and reasonable, not on the employee's pay, so an employee at any level can be bound. Do not substitute another state's wage floor for a Texas worker. The physician and health care buyout caps are tied to annual salary but are buyout limits, not an enforceability wage threshold.
Texas is a mandatory reformation (not strict blue-pencil) state. Under Section 15.51(c), if a covenant is ancillary to an otherwise enforceable agreement but its limits are unreasonable, the court shall reform it to make it reasonable and enforce it as reformed, rather than voiding it. The employer may not recover damages for a breach occurring before reformation, and relief for that period is limited to injunctive relief.
Section 15.52 makes the enforceability criteria in Sections 15.50 and 15.501 and the procedures and remedies in Section 15.51 exclusive, and they preempt other law, including common law. In Texas the analysis starts and ends with the statute: a covenant that satisfies Section 15.50 and survives any reformation under Section 15.51 is the measure of enforceability, not older common-law reasonableness tests.
Physician non-competes must allow patient-list and records access, cap any buyout at the physician's total annual salary and wages, permit continuing care in an acute illness, and, effective September 1, 2025, expire within one year and stay within a five-mile radius (Section 15.50(b)); a physician covenant is void if the physician is discharged without good cause (Section 15.50(d)). Section 15.501 extends similar buyout, one-year, and five-mile limits to dentists, nurses, and physician assistants.
Because a non-compete must be reasonable and ancillary, many Texas employers also use a confidentiality or non-disclosure agreement under the Texas Uniform Trade Secrets Act (Civil Practice and Remedies Code Section 134A.001 et seq.). It protects trade secrets and customer data without a court testing the reasonableness of a non-compete, and giving an employee access to confidential information can also supply the consideration a Texas non-compete needs.
Frequently Asked Questions
Yes. Texas Business and Commerce Code Section 15.50(a) makes a covenant not to compete enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made and contains limits on time, geographical area, and scope of activity that are reasonable and no greater than necessary to protect the employer's goodwill or other business interest. Sections 15.50 through 15.52 are the exclusive standard and preempt common law. A covenant that meets those criteria is enforceable in Texas.
Texas does not set a fixed maximum. Section 15.50(a) requires the duration to be reasonable and no greater than necessary to protect the employer's legitimate business interest, judged on the facts of each case. Courts in Texas generally uphold post-employment restraints of about one to three years, with two years being common, and are more skeptical of longer terms unless the interest clearly justifies it. A term tied to a genuine business interest and to the area where the employee actually worked is more likely to hold up in Texas.
Two things under Section 15.50(a). First, the covenant must be ancillary to or part of an otherwise enforceable agreement at the time it is made, meaning it is tied to a broader deal and supported by consideration that gives rise to the employer's interest, such as confidential information, specialized training, or trade secrets. Second, its limits on time, geographical area, and scope of activity must be reasonable and no broader than necessary. Courts in Texas generally hold that continued at-will employment, standing alone, is not enough.
No. Texas has no wage or income threshold that decides whether a non-compete is valid. Section 15.50 turns on whether the covenant is ancillary to an otherwise enforceable agreement and reasonable in time, area, and scope, not on how much the employee earns, so employees at any pay level can be bound. Do not substitute another state's salary figure when the worker is in Texas. Separately, the physician and health care carve-outs use a buyout capped at annual salary, which is a buyout cap, not an enforceability wage floor.
Yes. Texas is a mandatory reformation state. Under Section 15.51(c), if a covenant is ancillary to an otherwise enforceable agreement but its limits on time, geographical area, or scope are unreasonable, the court shall reform it to the extent necessary to make it reasonable and enforce it as reformed, rather than voiding it. Two catches for employers: the court may not award damages for a breach that occurred before reformation, and relief for that period is limited to an injunction, which is why careful drafting still matters in Texas.
Only within special limits. Section 15.50(b) allows a physician non-compete but requires access to a patient list and records, a buyout no greater than the physician's total annual salary and wages, continuing care for patients in an acute illness, and, as amended effective September 1, 2025, expiration within one year and a geographic limit of no more than a five-mile radius. Under Section 15.50(d) a physician non-compete is void if the physician is involuntarily discharged without good cause. Section 15.501 extends similar buyout, one-year, and five-mile limits to dentists, nurses, and physician assistants in Texas.
They pair the non-compete with, or rely on, a confidentiality or non-disclosure agreement and the Texas Uniform Trade Secrets Act (Civil Practice and Remedies Code Section 134A.001 et seq.), which lets a business protect and sue over the misappropriation of trade secrets without a court testing the reasonableness of a non-compete. In Texas, giving an employee access to confidential information can also supply the consideration that makes a non-compete ancillary to an otherwise enforceable agreement, so the two tools often work together.
No. In 2024 the Federal Trade Commission issued a rule that would have banned most non-competes nationwide, but a federal court in Texas set it aside before it took effect, so it is not currently in force, and its status has remained unsettled. Either way, Texas's own statutes, Sections 15.50 through 15.52, independently govern and make reasonable, ancillary non-competes enforceable in Texas, so the federal rule's fate does not change Texas law today.