No – and a ban is not on the horizon.
The Federal Trade Commission attempted to ban most non-compete agreements nationwide in 2024. That effort was struck down by a federal court, and in September 2025 the FTC formally abandoned its appeal and dropped the case entirely. Non-compete agreements remain governed by state law.
In Texas, no blanket ban exists and none is expected. A bill introduced in the previous legislative session – Texas House Bill 4067, modeled on the now-defunct FTC rule – did not advance past its assigned committee. And, so far, the Texas legislature's 90th Regular Session – scheduled to convene in January 2027 – has not advanced any legislation to prohibit non-compete agreements broadly.
The Texas Senate has outlined a policy roadmap for the 2027 session that focuses on electric grid reliability, property tax relief, data center growth, education policy, healthcare costs, and fraud prevention – not non-compete restrictions. Texas continues to favor targeted reform over sweeping prohibition.
What has changed is that Texas lawmakers significantly tightened the rules for non-compete agreements with healthcare practitioners in 2025. For employers outside the healthcare sector, however, the enforceability of non-compete agreements – governed by the Texas Covenants Not to Compete Act – remains largely as it has been for decades.
What Is the Current Status of Non-Compete Agreements in Texas?
Non-compete agreements remain legal and enforceable in Texas as long as they meet certain requirements under state law.
To be enforceable in Texas, a non-compete must:
- Be ancillary to or part of an otherwise enforceable agreement – typically an employment agreement or business sale agreement
- Be supported by adequate consideration – something of real value the employer provides in exchange for the restriction, such as access to confidential information or specialized training
- Be reasonable in time period – typically one to two years; restrictions of five years or more often fail
- Be reasonable in geographic scope – limited to where the employer actually does business and where the employee worked
- Be reasonable in scope of activity – no broader than necessary to protect the employer's legitimate business interests
Ready to learn more about the enforceability of non-compete agreements in Texas? Explore our in-depth guide to non-compete agreements in Texas.
What the FTC's Pivot Means for Texas Employers
Although the FTC abandoned its nationwide ban, it did not abandon the issue. The agency has shifted to a case-by-case enforcement model, targeting companies it believes are using non-competes in ways that harm workers or restrain competition unfairly.
The FTC has pursued a series of targeted enforcement actions since abandoning the nationwide ban – ordering the nation's largest pet cremation company to void non-competes covering nearly 1,800 workers, ordering a pest control parent company to stop enforcing non-competes against more than 18,000 employees, and sending warning letters to dozens of large employers in the healthcare industry.
The enforcement pattern is consistent: the FTC is targeting blanket non-competes applied to lower-wage workers with no meaningful access to trade secrets or confidential information, especially when employees received no additional consideration for signing and had little opportunity to negotiate. Texas employers that fit this pattern are vulnerable to both state court challenge and federal enforcement attention.
NLRB’s Stance on Non-Compete Agreements
On June 26, 2026, the National Labor Relations Board (NLRB) released an advice memorandum confirming that non-compete agreements do not, as a general matter, violate employees' rights under the National Labor Relations Act. The memo recommended dismissing unfair labor practice charges against an employer that maintained and enforced a six-month non-compete, concluding the agreement's provisions were lawful under current guidance.
This represents a significant reversal from the previous administration's position. In May 2023, the NLRB's then-General Counsel argued that most non-compete agreements violate the Act because they chill employees' ability to organize, threaten to resign collectively, or seek employment with competitors. That position was rescinded in February 2025.
It is worth noting that advice memoranda are prosecutorial guidance – they direct regional offices on whether to pursue charges, and they reflect the current administration's enforcement priorities rather than binding law. They can and do change with administrations.
For now, however, the risk of employers facing federal prosecution over unfair labor practices is low.
How Texas Tightened the Rules for Healthcare Non-Competes
While general non-compete law in Texas is unchanged, the rules for physicians, dentists, nurses, and physician assistants changed significantly when Texas Senate Bill 1318 took effect September 1, 2025.
For agreements entered into or renewed on or after that date, non-competes with covered healthcare practitioners must:
- Restrict practice only within a five-mile radius of where the practitioner primarily practiced
- Cap the restriction period at one year from the date of termination
- Include a defined buyout provision that cannot exceed the practitioner's total annual salary and wages at the time of termination
- State all terms clearly and conspicuously in writing
- Allow access to records for patients treated within the year prior to separation
- Permit continued care for patients with acute conditions after departure
Additionally, a physician non-compete is automatically void and unenforceable if the physician is involuntarily discharged without good cause. Agreements signed before September 1, 2025, remain governed by prior law unless renewed or modified.
For a full overview of the new non-compete requirements for healthcare providers, see our guide to Texas physician non-compete agreements.
Do Non-Competes Hold Up in Texas Courts?
Texas courts enforce non-compete agreements, but they apply strict scrutiny and will not enforce agreements that are overbroad or lack the required legal foundation.
Common reasons Texas courts strike down non-compete agreements include:
- No adequate consideration. If the employer did not actually provide confidential information, specialized training, or other qualifying consideration, courts will void the agreement. At-will employment, a pay raise, and bonuses are typically not sufficient on their own.
- Overbroad geographic scope. Restrictions covering all of Texas, the entire United States, or a geographic area where the employer does not actually operate are routinely struck down or narrowed.
- Industry-wide activity bans. Prohibiting an employee from working in an entire industry rather than limiting specific competitive activity that threatens the employer's legitimate interests.
Courts are particularly skeptical of non-competes for lower-wage workers and employees with no meaningful access to trade secrets or confidential information. Those agreements face the greatest risk of challenge.
The Reformation Rule: Texas Courts Rewrite, Not Void Overbroad Agreements
When a court finds a non-compete valid but its restrictions unreasonable, Texas law requires the court to rewrite the agreement to make it reasonable rather than throw it out entirely. This is called reformation.
Reformation comes with a cost: An employer whose overbroad agreement is reformed cannot recover damages for breaches that occurred before the court rewrote the provisions, and recovery is limited to injunctive relief only. Additionally, if the court finds the employer knowingly included unreasonable restrictions and sought to enforce them anyway, the employee may recover attorney's fees.
This is why a well-drafted agreement matters. A non-compete agreement that is broader than necessary does not provide greater protection – instead, it may reduce the remedies available if enforcement becomes necessary.
Bottom Line: Non-Compete Agreements Are Legal and Enforceable in Texas – If Drafted Correctly
Texas remains more employer-friendly than states that ban non-competes entirely. Courts here recognize that employers have legitimate interests worth protecting, and they will enforce agreements that are reasonable in scope, time, and geography, supported by adequate consideration, and tied to a legitimate business interest.
Questions about non-compete agreements in Texas? Call (713) 783-3110 or contact us online to speak with a Houston non-compete attorney.