Non-Compete Clause in Texas
Texas enforces non-competes but only if they meet the requirements of the Covenants Not to Compete Act (Texas Business & Commerce Code § 15.50). The clause must be ancillary to an otherwise enforceable agreement, supported by valuable consideration (typically confidential information or specialized training), and reasonable in time, geography, and scope of activity.
Last reviewed against current law: 2026-05-14
How Texas law treats non-compete clause
Texas § 15.50 requires that a non-compete be tied to an otherwise enforceable agreement at the time of execution. The consideration cannot be the employment itself — it must be something like access to confidential information, specialized training, or stock. The Texas Supreme Court's 2011 decision in Marsh USA v. Cook clarified that share-grant consideration can support a non-compete even without simultaneous confidential-information access.
Reformation is permitted: under § 15.51(c), if a court finds a non-compete overbroad, it must reform it to the extent reasonably necessary to protect the employer's legitimate interests and then enforce the reformed clause. This is a sharp contrast with states like Virginia and Wisconsin, where overbroad clauses are struck entirely.
A non-compete that fails the consideration test (e.g., signed mid-employment with nothing new given in exchange) is unenforceable. Physician non-competes have additional statutory protections under § 15.50(b), including a required buy-out option.
Primary sources
- Texas Bus. & Com. Code § 15.50 (Covenants Not to Compete Act)
- Texas Bus. & Com. Code § 15.51 (Procedures and Reformation)
Frequently asked questions — Texas
What is "ancillary" consideration in Texas?▾
It is something of independent value the employer provides at the time of signing — confidential information, customer lists, specialized training, or equity. Continued at-will employment alone is not sufficient consideration to support a Texas non-compete.
Will a Texas court rewrite an overbroad non-compete?▾
Yes. Under § 15.51(c), if the court finds the clause overbroad, it must reform it to the extent reasonably necessary and then enforce the reformed version. This is one of the most employer-friendly reformation regimes in the US.
Are physician non-competes treated differently?▾
Yes — § 15.50(b) requires a buy-out option at a reasonable price (or, failing that, by arbitrator-set price), access to patient records on request, and continuity-of-care obligations.