Texas Education Freedom Accounts: Which Families and Schools are Eligible for Participation?

3 minute read

Beginning in the 2026-27 school year, the Texas Comptroller will provide funds to eligible students for tuition, tutoring, homeschool educational expenses, and other approved education expenses. The application window for use of these funds for a family for the 2026-2027 school year started this week on February 4, and closes March 17, 2026.

What does the law generally provide?

In 2025, the Texas Legislature passed Senate Bill 2 (SB 2) to create the Texas Education Freedom Accounts (TEFA) program. SB 2’s stated purpose is to (1) provide additional educational options to assist families in this state in exercising the right to direct the educational needs of their children; and (2) achieve a general diffusion of knowledge. In a practical sense, this new law might  give parents financial assistance for a wide array of  educational environments—public school, private school, or homeschool—for their children. However, opponents of this funding are concerned this legislation will delete funds available or public schools across the state of Texas.  Furthermore, schools have to be willing to accept the funds and have sole discretion whether to do so.

What is required for a private school to be eligible for funds?

For those private schools wishing to participate, TEFA’s sweeping changes to Texas education raise questions about whether certain private schools will qualify. One example challenging the criteria is found in a request to the Attorney General, RQ-0625-KP, in which the Comptroller asked the Attorney General to interpret the “other relevant laws” language of Section 29.358 of SB 2 (“Preapproved Providers and Vendors”):

An education service provider or vendor of educational products that receives approval under this section may participate in the program until the earliest of the date on which the provider or vendor: (1) no longer meets the requirements under this section; or (2) violates this subchapter or other relevant law.

The Comptroller asked whether a private school may be disqualified from TEFA if it, or its providers or vendors, fails to comply with “other relevant laws” including those surrounding (1) affiliation with foreign terrorist organizations or transnational criminal organization; or (2) ownership, control, or influence by individuals or entities associated with a foreign adversary.

In Opinion No. KP-0509, issued January 24, 2026, the Attorney General explained the Comptroller—not the Attorney General—has the exclusive duty to establish and administer TEFA. The Comptroller alone must resolve the factual questions posed in its own request. However, SB 2 grants the Comptroller broad authority to find the facts necessary to lawfully administer TEFA. The Comptroller may hire third parties, request information from providers or vendors to verify eligibility, and work with auditors to ensure compliance. Texas Education Code §§ 29.352(a)(2), 29.358(d), 29.363(a).

For private schools seeking to participate in TEFA, SB 2 requires compliance with any laws the Comptroller deems “relevant.” Thus, the Comptroller first must establish processes that allow TEFA to operate lawfully, balancing scrutiny of each hopeful provider and vendor with timely approval to those who qualify; then, a hopeful private school must ensure compliance, including with its providers and vendors.  A private school may look to the Texas Administrative Code for further guidance on provider and vendor approval. See 34 Tex. Admin. Code §§ 16.401-16.410. 

What is required for a student and parent to be eligible for funds?

Among other requirements, a parent must prove the child is (1) a citizen or national of the United States or lawfully admitted in the United States; and (2) eligible to attend or enroll in a public school district or open-enrollment charter school. A participating parent must agree to spend funds only on allowable expenses, to refrain from selling items purchased with program money, and notify the program when their child is no longer eligible. Texas Education Code §§ 29.355, 29.357.

You can find a list of schools seeking to participate here:  https://finder.educationfreedom.texas.gov/.

Conclusion

In conclusion, we are in a new educational landscape with Texas Education Freedom Accounts anticipated to be the most economically impactful program of its kind across the country. Only time will tell what impact the program will have on public schools.  As for private schools, they must apply and meet eligibility criteria to participate. Families must follow the program procedures and meet the qualifications on citizenship and school eligibility.  

Parents with questions about Texas Education Freedom Accounts can visit https://educationfreedom.texas.gov/ for more information.  Schools with questions should feel free to give us a call to see if we can assist navigating this new landscape.

Carrington Coleman Joins MSI Global Alliance

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Carrington, Coleman, Sloman & Blumenthal L.L.P. has been appointed as a member of the MSI Global Alliance, a prominent international association of independent law and accounting firms.

MSI Global Alliance brings together more than 250 member firms across 100+ countries, providing a platform for cross-border collaboration while preserving each firm’s independence. Carrington Coleman’s membership enhances the firm’s ability to coordinate with trusted legal and accounting professionals around the world.

For clients with multi-jurisdictional needs in the U.S. or cross-border opportunities, this membership bolsters access to local insight and coordinated support without sacrificing the personalized service for which the firm is known.

Carrington Coleman’s participation in MSI Global Alliance reinforces the firm’s commitment to practical, business-focused legal counsel and reliable client service.

Read the official announcement from MSI Global Alliance.
Link to MSI press release

Carrington Coleman Bolsters Corporate, M&A, Taxation Practices with Addition of Veteran Dallas Attorneys

2 minute read

Move enhances Dallas firm’s transactional, M&A, and bankruptcy capabilities

DALLAS – Three veteran corporate and M&A attorneys have joined the Dallas law firm Carrington, Coleman, Sloman & Blumenthal LLP. Brandon Hurwitz, David Campbell, and Val Cronin come to Carrington Coleman from the Dallas office of Underwood Perkins. Joining them at the firm is Christopher Pride who has worked alongside the group since 2024.

“It is not often you have the ability to add this much experience and expertise to your firm all in one day,” said Carrington Coleman Managing Partner Monica Latin. “Their addition complements and will also expand our existing capabilities in areas of growing importance to our clients.”

Mr. Hurwitz joins Carrington Coleman as a partner. He has an active transactional practice, focusing on business, corporate, and real estate clients. He counsels clients in a wide range of commercial and M&A matters as well as in the acquisition, disposition, development, and leasing of commercial real estate. He served as a director and CEO of Underwood Perkins.

Mr. Campbell’s practice focuses on bankruptcy, creditor rights, and real estate title litigation. His real estate, energy, and technology clients include institutional lenders, pension funds, developers, asset managers, contractors, bankruptcy debtors, and trustees. A frequent speaker and author on bankruptcy topics, he has held several leadership roles within the American Bar Association’s Real Property, Trust and Estate (RPTE) section. He joins the firm as senior counsel.

Mr. Cronin is a trusted family business advisor, providing counsel on M&A, taxation, asset protection, and estate planning matters designed to position clients for growth while minimizing tax exposure. He is a Certified Public Accountant. He joins Carrington Coleman as senior counsel.

Mr. Pride’s practice includes estate planning and a wide range of transactional matters such as business formation, contract drafting, and real estate. He joins the firm as an associate.

“We are so excited about joining Carrington Coleman,” said Mr. Hurwitz. “Seldom do you have the opportunity to join one of Dallas’ most respected firms and practice alongside such an accomplished group of attorneys.”

Brent Rubin Appointed Chair of Dallas City Plan Commission

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Brent Rubin has been appointed Chair of the Dallas City Plan Commission (CPC) by Mayor Eric Johnson.

Mr. Rubin has served on the CPC since November 2019. The CPC handles planning and zoning matters in the City of Dallas. Previously, he served as the CPC’s Vice Chair and chaired the Comprehensive Land Use Plan Committee, the citizen committee that oversaw the two-plus year process to rewrite the City’s ForwardDallas comprehensive plan, which was approved by the Dallas City Council in September 2024. ForwardDallas sets concrete and measurable goals for addressing critical issues facing the City, like the shortage of affordable housing, spurring transit-oriented development, and rectifying environmental injustices. The City is currently in the zoning reform process, updating its Development Code to create a set of rules that are straightforward, clear, and ready to address the City’s future opportunities and challenges.

“I’m grateful to Mayor Johnson for trusting me with this role,” said Mr. Rubin. “The CPC plays a critical role in ensuring that Dallas follows a forward-thinking path in development, so the city can thrive both economically and in terms of the quality of life of its citizens and can rise to meet the challenges of a fast-changing world. I look forward to leading the CPC at this exciting time.”

Mr. Rubin is deeply committed to his legal practice as well as serving his community. He practices trial and appellate litigation, trying and arguing cases in courts across the country, including the Supreme Court of Texas. He has been honored on D Magazine’s “Best Lawyers in Dallas” list.

The Mandate: Wait for it…

2 minute read

In re Madison

Supreme Court of Texas, No. 24-1073 (October 31, 2025)

Per Curiam Opinion (linked here)

“When a party appeals the denial of a motion to dismiss under the Texas Citizens Participation Act, all trial court proceedings are stayed by operation of law, and the statutory stay remains in effect until the appeal has been resolved”—more specifically, until the Court of Appeals “signals that the appeal is resolved” by issuing its mandate. Parties must wait until the mandate issues before resuming proceedings in the trial court—a lesson learned the hard way here. 

Madison sued an HOA and a law firm. The law firm filed a motion to dismiss under the TCPA, which the trial court denied. But the law firm appealed that denial pursuant to TCPRC § 51.014(a)(12), and the Court of Appeals reversed, rendered judgment for the firm, and remanded. After the appeals court denied her motion for rehearing and for reconsideration en banc, Madison timely sought review in the Texas Supreme Court. Even before Madison filed her petition for review, however, the law firm moved for an award of attorney fees under the TCPA, relying on the appeals court’s judgment, and the trial court granted that motion.

The court of appeals declined to set aside the attorney-fees order on mandamus, but the Supreme Court disagreed. Under TCPRC § 51.014(b), the appeal of an order denying a motion to dismiss under the TCPA “stays all … proceedings in the trial court pending resolution of that appeal.” The Supreme Court explained that an appellate court’s judgment “takes effect” and the appeal is resolved “when the mandate is issued” (quoting Tex. R. App. P. 18.6)—not upon issuance of the appeals court’s opinion and judgment. “When the appellate mandate issues, the automatic stay [under TCPRC § 15.014(b)] expires,” not before. And under Tex. R. App. P. 18.1, a court of appeals cannot issue its mandate until after the Supreme Court has completed or denied a review that has been timely requested or the time to seek such review has expired.

Here, the law firm moved for its fees under the TCPRC, and the trial court granted that motion before the appeals court issued its mandate—even before it could have issued its mandate, since Madison timely sought Supreme Court review of the appeals court’s decision on the merits, and the Supreme Court had not yet ruled. As a result, “the court of appeals’ judgment was not final and had not yet taken effect, so the automatic stay remained operative, and the trial court had no authority to act.” The Supreme Court held, therefore, that “[e]ntertaining and granting the motion for attorney’s fees before the court of appeals’ mandate had issued—indeed, before the court of appeals was authorized to issue its mandate—was an abuse of discretion,” and so the Court granted Madison’s mandamus petition.

Carrington Coleman Elects LaCrecia Perkins to Partner

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Carrington Coleman is pleased to announce that LaCrecia Perkins has been elected Partner, effective January 1, 2026.

Since joining the firm, LaCrecia has built a reputation for thoughtful advocacy, strong judgment, and a deep commitment to client service. Her election to Partner reflects her legal skill, leadership within the firm, and the trust she has earned from clients and colleagues alike.

LaCrecia is a real estate and business litigator whose practice focuses on complex disputes involving property and property-interest owners, investors, lenders, and developers. Her experience includes high-stakes litigation arising from purchase and sale agreements, commercial leases, commission and listing agreements, and property management contracts.

She also regularly represents clients in real estate finance disputes, including litigation related to construction loan agreements, promissory notes, deeds of trust, personal guarantees, and disputes involving property rights. LaCrecia’s work is marked by a practical, strategic approach to resolving complex matters while protecting her clients’ long-term business interests.

“LaCrecia’s election to Partner reflects not only her exceptional legal ability, but also the leadership and collaborative mindset she brings to the firm,” said Carrington Coleman. “We are proud to recognize this milestone and look forward to her continued contributions as a member of the firm’s partnership.”

Please join us in congratulating LaCrecia on this well-earned achievement.

Before Filing an Appeal, Remember Your Fundamentals

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LRH Real Estate, LLC v. Dallas County

Dallas Court of Appeals, No. 05-25-00771-CV (October 17, 2025)

Chief Justice Koch (Order, linked here) 

Rashad Haiddar, a non-attorney acting pro se, filed an appeal and an appellants’ brief on behalf of himself, LRH Real Estate, LLC, and Autochoice Garland TX, LLC. But neither Haiddar, individually, nor Autochoice was a party to the judgment from which Haiddar appealed. In an order striking appellants’ brief and threatening dismissal of the appeal, the Dallas Court of Appeals reminded the parties and practitioners of two fundamental rules:

  • “Generally, only parties of record who have been personally aggrieved by the trial court’s judgment have standing to appeal the judgment,” citing State v. Naylor, 466 S.W.3d 783, 787 (Tex. 2015); and
  • “[A]ny aggrieved corporate party must be represented by counsel,” citing Kunstoplast of Am., Inc. v. Formosa Plastics Corp., 937 S.W.2d 455, 456 (Tex. 1996) (per curiam).

The Court warned that the appeal would be dismissed unless (a) the corporate parties, LRH Real Estate and Autochoice, retained an attorney to represent them in the appeal, and (b) Haiddar and Autochoice demonstrated that, contrary to the general rule, they do somehow have standing to pursue the appeal of a judgment to which they were not parties.

Irrevocable Trust Administration in Texas: Keeping the Irrevocable Trust on Track—What Every Trustee Needs to Know

4 minute read

Why Should You Care About Trust Administration?

You’ve been appointed as trustee of an irrevocable trust. No big deal, right? Think again. It’s a high-stakes game and understanding how to properly manage an irrevocable trust is crucial. Good administration protects everyone’s interests, keeps you out of legal trouble, and helps the trust do what it was designed to do.

Let’s break down the essentials—no legal jargon, just what you need to know.

1. Follow the Trust’s Distribution Terms—No Shortcuts!

  • Understand the Distribution Language: The trust agreement is your primary authority. It spells out exactly when, how, and to whom distributions must be made. Carefully review the distribution provisions—some trusts require mandatory payments at certain ages or for specific purposes (like health, education, maintenance, or support), while others give the trustee discretion within defined limits.
  • Strictly Follow the Instructions: You must honor the distribution terms as written in the trust agreement, unless they conflict with Texas law. Deviating from these terms can expose you to legal liability. These aren’t guidelines; they are rules.
  • Document Every Distribution: Keep detailed records of each distribution, including the amount, date, recipient, and the specific reason or provision in the trust that authorizes it. This documentation is essential for demonstrating compliance and protecting yourself if questions or disputes arise.
  • Communicate with Beneficiaries: Open and regular communication about how and why distributions are made helps manage expectations and minimize misunderstandings. There may be exception but communication is usually key.

Bottom line: The distribution language in the trust agreement is not optional—trustees must follow it exactly. If you’re ever unsure, seek professional guidance to avoid costly mistakes.

2. Don’t Forget Taxes—The IRS Is Watching

  • Grantor vs. Non-Grantor Trusts: Some irrevocable trusts are treated as “grantor trusts” for tax purposes, meaning the person who created the trust (the grantor) is responsible for paying income taxes on the trust’s income, even though the assets are held in the trust. In contrast, “non-grantor trusts” are separate tax entities and must pay their own income taxes, with the trustee handling the filings and payments. The terms of the trust agreement and how the trust is structured determine which rules apply.
  • Non-Grantor Trusts File Their Own Tax Returns: Most irrevocable trusts must file a federal tax return (IRS Form 1041) if they have any taxable income, $600+ in gross income, or a nonresident alien beneficiary.
  • No Texas State Income Tax: Good news—Texas doesn’t require a separate state return for trusts.
  • Trustee’s Job: For non-grantor trusts, the trustee is responsible for filing returns, reporting income and deductions, and sending out Schedule K-1 forms to beneficiaries. For grantor trusts, the grantor reports the trust’s income on their personal tax return.
  • Pro Tip: Work with a tax professional and keep organized records all year. It makes tax time much less stressful.

3. Crummey Notices—Yes, You Need to Send Them

  • What’s a Crummey Notice? If the trust is used for making annual exclusion gifts, you likely need to send beneficiaries a written notice (a “Crummey notice”) letting them know they can withdraw new contributions within a certain timeframe.
  • Why Bother? Sending this notice is what allows annual exclusion gifts to qualify for the annual gift tax exclusion. Miss it, and you could waste valuable exemption and lose valuable tax benefits.
  • Best Practices: Send notices promptly, keep copies, and get written acknowledgments when possible. There’s no official Texas form—just make sure your communication follows the provisions of the trust agreement and is clear and dated.

4. Successor Trustees—Who’s Next in Line?

  • Check the Trust Agreement: It should say who takes over if the current trustee can’t serve. Sometimes it’s a named person; other times, there’s a process (like a vote or court appointment).
  • Exercising Appointment Powers: If you have the authority to appoint a successor trustee—whether as a trustee, beneficiary, or other party—review the trust agreement for the specific process. This may involve providing written notice, obtaining consents, or following a set procedure outlined in the trust. Make sure to document every step, including the acceptance of the new trustee and any required notifications to financial institutions or other parties. Have the successor in place before something happens.
  • Follow the Rules: Texas law usually honors the trust’s instructions for appointing successor trustees. If the trust is silent or the named individuals are unavailable, state law provides default rules, often involving court intervention.
  • Keep Everyone in the Loop: Notify beneficiaries about any changes in trusteeship and update records with banks or other institutions promptly. Clear communication helps ensure a smooth transition and avoids confusion.

5. Stay Proactive—Plan for the Future

  • Review Regularly: Laws and family situations change. Revisit the trust every so often to make sure it still fits the goals and objectives of the trust.
  • Strategic Moves: Even though irrevocable trusts are often thought of as “set in stone,” there can still be opportunities for strategic planning. Trusts can sometimes enter into transactions such as sales and asset swaps. With careful planning and professional guidance, you may be able to adapt the trust to meet evolving needs and maximize benefits for the beneficiaries.
  • Stay Informed: Keep in touch with your estate planner, financial advisor, and tax pro to stay ahead of any changes.

6. General Fiduciary Duties – Know Your Obligations

  • Duties Owed to Beneficiaries: A Trustee is in a fiduciary relationship with the Trust beneficiaries. As such, the Trustee must always act in good faith and in the best interest of the beneficiaries. Some of these fiduciary duties include:
    • Duty of Loyalty: Be careful to avoid self-dealing and conflicts of interest between yourself and the Trust beneficiaries. Take caution when entering, in your individual capacity, any transaction involving the trust assets or beneficiaries. Even if such transaction is permitted by the terms of the Trust Agreement, it must be properly structured and disclosed. Contact your legal and financial advisors to avoid potential issues.
    • Duty of Prudence: Manage Trust assets with care. Stay informed about the Trust assets and seek professional advice where needed.
    • Duty of Impartiality: Don’t play favorites! Treat all beneficiaries fairly, and consider the rights and needs of each beneficiary, according to the terms of the Trust Agreement.
    • Duty to Segregate: Never comingle Trust assets with personal assets. Keep the trust property separate and safeguard against loss or waste. Expenses related to a Trust asset should be paid from the appropriate Trust.
  • Breach of Duty: A Trustee who breaches their fiduciary duties may be removed and may be personally liable to the beneficiaries for any losses incurred as a result of the breach.
  • Ask for Help: Don’t guess! When in doubt, contact your professional advisors for guidance.

Final Thoughts

Administering an irrevocable trust isn’t just about paperwork—it’s about protecting the family’s future. By following the trust’s terms, staying on top of taxes, sending required notices, and planning ahead, you’ll keep things running smoothly and avoid costly mistakes.

Questions?

Don’t go it alone. If you’re unsure about any part of trust administration, reach out to a qualified professional for guidance tailored to your situation.

This alert is for informational purposes only and does not constitute legal advice.

BONDie & Clyde: Superseding a Non-Monetary Judgment

2 minute read

In re Bonnie Elizabeth Parker

Dallas Court of Appeals, No. 05-24-00809-CV (August 27, 2025)

Chief Justice Koch (Opinion, linked here), and Justices Goldstein and Garcia

In memory and in lore, Bonnie Parker and Clyde Barrow are inseparable. In fact, however, Bonnie was interred at Crown Hill Memorial Park, while Clyde rests in a Western Heights Cemetery plot several miles away. Invoking Texas Health & Safety Code § 711.004, Bonnie’s niece sought to reunite the two by having Bonnie’s remains removed from Crown Heights and reinterred next to Clyde at Western Heights. But § 711.004(a) allows for disinterment only “with the written consent of the cemetery organization operating the cemetery,” and Crown Hill refused. Subsection 711.004(c), however, provides nevertheless that, when the consents required by subsection 711.004(a) cannot be obtained, remains “may be removed by permission of a county court of the county in which the cemetery is located.” So, off to county court went Bonnie’s niece, where she obtained a permanent injunction ordering Crown Hill to enter into arrangements for Bonnie’s disinterment within 10 days after the judgment.

Crown Hill appealed. When the trial court refused to stay its judgment pending appeal, Crown Hill sought emergency relief in the Dallas Court of Appeals, and that Court obliged.

Treating Crown Hill’s filing as a motion for review under TRAP 24.4, the appeals court held that when a judgment is for something other than money or an interest in property, the trial court ordinarily “must set the amount and type of security that the judgment debtor must post” and allow the appellant to supersede, per TRAP 24.2(a)(3). Here, the Court said, the “appeal will become moot if Crown Hill is not permitted to suspend enforcement of the judgment.” By contrast, allowing Bonnie’s remains to remain at Crown Hill where they have been since 1945 “perfectly preserves the status quo and the parties’ rights pending appeal.” So, the Court reversed the trial court’s order denying a stay, set the amount of Crown Hill’s bond at $0, and suspended enforcement of the trial court’s judgment pending disposition of the appeal—leaving Bonnie and Clyde apart, at least for a little while longer.

Texas Enacts Significant New Restrictions on Non-Compete Agreements for Physicians and Health Care Practitioners

4 minute read

Effective September 1, 2025, Texas Senate Bill 1318 (SB 1318) will substantially alter the landscape for non-compete agreements involving physicians and other health care practitioners. This new law amends the Texas Business & Commerce Code to impose strict requirements on the enforceability of restrictive covenants in the health care sector. Employers, practice groups, and health care organizations should review and update their employment and contractor agreements to ensure compliance with these sweeping changes.

Key Provisions of SB 1318

1.   Scope of Application

New and Renewed Contracts. SB 1318 applies to non-compete agreements entered into or renewed on or after September 1, 2025. This will likely mean that old provisions in contracts that auto-renew will become non-compliant when they renew.

More Health Care Providers. The law covers not only physicians licensed by the Texas Medical Board, but also extends similar restrictions to dentists, professional and vocational nurses, and physician assistants. This marks a significant expansion from prior law, which focused primarily on physicians. Interestingly, it does not apply to other providers like podiatrists, chiropractors, or mental health providers.

2.   Duration and Geographic Limitations

  • One-Year Maximum Duration: Any non-compete agreement with a covered health care practitioner may not restrict practice for more than one year following the termination of employment or contractual relationship.
  • Five-Mile Geographic Restriction: The restricted area may not exceed a five-mile radius from the location where the practitioner “primarily practiced” prior to termination. For practitioners working at multiple sites, it is critical to clearly define the “primary practice location” in the agreement to avoid ambiguity and potential disputes.

3.   Buyout Requirement and Cap

  • Mandatory Buyout Provision: All covered non-compete agreements must include a buyout clause, allowing the practitioner to be released from the restriction by paying a specified amount.
  • Buyout Cap: The buyout amount cannot exceed the practitioner’s total annual salary and wages as of the date of separation. This replaces the prior “reasonable price” standard and eliminates the option for arbitration to determine the buyout amount. Employers must ensure that the buyout figure is clearly stated and does not surpass this statutory cap.

4.   Written Clearly and Conspicuously

  • The law requires that all terms and conditions of the non-compete be set forth “clearly and conspicuously” in writing. Vague or ambiguous language may render the agreement unenforceable.

5.   Good Cause Required for Enforcement

  1. If a physician is involuntarily discharged without “good cause,” any non-compete restriction is void and unenforceable. “Good cause” is defined as a reasonable basis for discharge directly related to the physician’s conduct, job performance, or employment record. Employers should maintain thorough documentation of performance and disciplinary issues to support any assertion of good cause.

6.   Additional Patient Access Protections

  • The law preserves existing requirements that non-compete agreements must not deny physicians access to patient lists or medical records and must allow for the continuation of care for patients with acute illnesses.

7.   Preemption of Other Laws

  • SB 1318 expressly preempts any conflicting common law or statutory provisions regarding the enforceability of non-compete agreements for covered practitioners.

Practical Implications and Recommended Actions

1.   Immediate Review

We recommend clients immediately audit their current agreements, particularly focusing on contracts that auto-renew after September 1st. Agreements entered into or renewed on or after September 1, 2025, must comply with the new requirements. Non-compliant provisions will not be enforceable.

2.   Define Primary Practice Location

For practitioners who work at multiple sites or remotely, it is essential to specify the “primary practice location” in the agreement to ensure the enforceability of the five-mile restriction.

3.   Update Termination Protocols

Employers should establish clear protocols for documenting the reasons for any involuntary termination, particularly to demonstrate “good cause” if enforcement of a non-compete is anticipated.

4.   Communicate Changes to Stakeholders

Inform current and prospective employees, as well as human resources and legal teams, about these changes to ensure consistent application and understanding across the organization.

5.   Monitor Existing Agreements

While SB 1318 applies prospectively, courts may look to the new statutory standards when evaluating the reasonableness of pre-existing agreements. Employers should give careful consideration before enforcing older agreements with broader than necessary restrictions.

Consequences for Employers and Practitioners

For employers, failure to comply with SB 1318 may result in non-compete agreements being declared void and unenforceable. This means that an employer may lose the ability to restrict former employees from competing within the defined time and geographic scope, potentially impacting patient retention, business goodwill, and competitive advantage. Additionally, attempting to enforce a non-compliant agreement could expose the employer to legal challenges, increased litigation costs, and reputational harm within the health care community. Employers may also face difficulties in recruiting and retaining talent if their agreements are perceived as overly restrictive or not in line with current law.

For health care practitioners, non-compliance with the new statutory requirements may create uncertainty regarding their post-employment rights and obligations. Employers may now be motivated to allege wrongdoing by the provider to support a determination of “good cause”. Providers subject to overly broad or non-compliant provisions may feel compelled to limit their professional opportunities unnecessarily or may become involved in costly legal disputes to challenge unenforceable provisions.

Given these significant consequences, we recommend that all health care employers and practice groups act now to review and update their agreements and internal procedures. Ensuring compliance with SB 1318 will help protect your organization’s interests, minimize legal risk, and foster a fair and competitive environment for health care professionals.

Conclusion

SB 1318 represents a significant shift in Texas law, reflecting a broader national trend toward limiting restrictive covenants. Non-compliance can have immediate consequences for both employers and health care providers.

For further guidance or assistance in revising your non-compete agreements to comply with SB 1318, please contact our office. Our team is available to provide tailored advice and support to ensure your organization remains compliant and protected.