A noncompete can decide where you live, whether you can open a practice, and whether your patients can follow you. It deserves the same attention as salary. Here is where the law stands and how to handle the clause in an offer.
There is no federal ban on noncompete agreements. The FTC states that its noncompete rule "is not in effect and it is not enforceable." What a PMHNP can be held to now depends on state law, and several states have moved in the clinician's favor. Colorado removed advanced practice nurses from the exception that allowed noncompetes for highly paid workers. Texas capped the buyout, duration, and radius for nurses. Washington has passed a law prohibiting noncompetition agreements that takes effect June 30, 2027. Everywhere else, the clause is something to negotiate before you sign.
The Federal Rule Is Gone
In 2024 the Federal Trade Commission issued a rule that would have banned most noncompetes nationwide. A federal district court halted it on August 20, 2024, before it took effect. The FTC appealed, and on September 5, 2025 it took steps to dismiss that appeal. The agency's own page now says the rule is not in effect and not enforceable, and the rule was removed from the Code of Federal Regulations in February 2026.
The practical result: do not rely on anything you read in 2024 about a national ban. State law controls.
States That Changed the Rules for Clinicians
| State | Law | Effective | What it does |
|---|---|---|---|
| Colorado | SB25-083 | August 6, 2025 | Removes the highly compensated worker exception for noncompetes that restrict the practice of medicine, advanced practice registered nursing, or dentistry |
| Texas | SB 1318 | September 1, 2025 | Caps the buyout, limits duration to one year, limits the radius to five miles |
| Washington | HB 1155 | June 30, 2027 | Prohibits noncompetition agreements and clarifies nonsolicitation agreements |
Colorado
Colorado already voided most noncompetes but allowed them for highly compensated workers when the covenant protects trade secrets and is no broader than reasonably necessary. SB25-083, signed June 3, 2025, excludes from that exception any covenant that restricts the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry in the state. For a PMHNP in Colorado, that closes the door employers most often used. The law applies to covenants entered into or renewed on or after August 6, 2025, so an older agreement may still be governed by the earlier rules until it renews.
The same law protects communication with patients. It prohibits agreements that stop a departing clinician from telling patients they were treating about the clinician's continuing practice, new professional contact information, and the patient's right to choose a provider.
Texas
Texas kept noncompetes but put hard limits on them. Under SB 1318, a covenant with a covered health care practitioner must:
- Provide a buyout "in an amount that is not greater than the practitioner's total annual salary and wages"
- Expire no later than one year after the contract or employment ends
- Limit the restricted area to no more than a five-mile radius from the location where the practitioner primarily practiced
The law covers physicians, dentists, nurses licensed under the Nursing Practice Act, and physician assistants. It applies to covenants "entered into or renewed on or after" September 1, 2025, so an older contract may still be governed by the earlier rules until it renews.
Washington
Washington enacted HB 1155 in March 2026. Its title is "Prohibiting noncompetition agreements and clarifying nonsolicitation agreements," and it takes effect June 30, 2027. If you are signing in Washington now, read the bill text for how it treats existing agreements, and ask how the employer intends to handle the clause once that date arrives.
This list is not complete. Other states restrict noncompetes for physicians or for health care workers more broadly, and more bills are introduced every session. Check your own state before you assume the clause is or is not enforceable.
A Noncompete Is Not the Only Restriction
Offers usually bundle several clauses. Read each one separately.
- Noncompete. Limits where and for whom you can work after you leave.
- Non-solicitation of patients. Limits how you can contact patients, even where a noncompete is void.
- Non-solicitation of employees. Limits recruiting former colleagues.
- Repayment clauses. Require you to repay sign-on bonuses, licensing costs, or training costs if you leave early. These can restrain you as effectively as a noncompete.
- Notice periods. A 90 or 120 day notice requirement delays your start elsewhere.
Telehealth adds a question that older contract language did not anticipate. A radius measured from an office means little when you see patients across a state by video. Ask how the restriction applies to remote work and get the answer in the contract.
What to Negotiate
Start by asking for the clause to be removed. Employers agree more often than candidates expect, particularly in markets where psychiatric prescribers are hard to recruit. If they will not, narrow it.
- Duration. Twelve months or less.
- Geography. A small radius measured from the single site where you worked, not from every company location.
- Scope. Limited to the service line you actually provided. A noncompete should not keep an outpatient clinician out of inpatient or academic work.
- Telehealth carve-out. State plainly that remote practice for patients outside the restricted area is permitted.
- Termination without cause. If the employer ends the relationship, the restriction should not apply.
- Buyout. A defined, reasonable amount that lets you or a new employer buy your way out.
- Patient notice. The right to tell your patients where you are going.
Negotiate these at the offer stage, when you have the most leverage. Our salary negotiation guide covers how to raise contract terms alongside pay, and the offer analyzer shows where the pay itself stands against live postings.
Before You Sign
- Ask for the full contract, not a summary, and read the restrictive covenants and repayment clauses first.
- Find out which state's law governs the contract. A clause choosing another state's law can change the answer.
- If you plan to open a practice someday, say so. It is easier to carve out a future private practice now than to fight about it later. Our private practice guide covers the planning.
- Have a health care attorney in your state review it. The fee is small next to a year of restricted income.
Sources
- Federal Trade Commission, Noncompete Rule status: https://www.ftc.gov/legal-library/browse/rules/noncompete-rule
- Colorado General Assembly, SB25-083, Limitations on Restrictive Employment Agreements: https://leg.colorado.gov/bills/sb25-083
- Texas Legislature, SB 1318, enrolled text: https://capitol.texas.gov/tlodocs/89R/billtext/html/SB01318F.htm
- Washington State Legislature, HB 1155: https://app.leg.wa.gov/billsummary?BillNumber=1155&Year=2025