When people think of non-compete agreements in Texas, they usually picture contracts that say “you can’t work for a competitor.” But employers often use something subtler—and sometimes just as powerful—to limit employee mobility: training repayment agreements, often called TRAPs (Training Repayment Agreement Provisions).
In Garcia v. Dallas County Hospital District (Parkland Hospital), decided by the Dallas Court of Appeals in October 2025, the court addressed whether a $20,000 repayment clause in a nurse’s employment agreement was an unlawful restraint of trade or an illegal penalty. The court’s answer matters because it shows how Texas courts may enforce agreements that function like non-competes—without calling them non-competes.
The basic facts (no legal jargon)
Diana Garcia worked as a nurse at Parkland Hospital. As part of a residency and training program, she signed an employment agreement requiring her to stay employed for a set period. The contract included a clause saying that if her employment ended before February 2019, she would owe $20,000 to Parkland.
Garcia left her job early and did not pay the $20,000. Parkland sued for breach of contract. Garcia argued that the clause was unenforceable because it:
- Acted like a non-compete and restrained her ability to change jobs, and
- Was an illegal penalty, not a fair estimate of damages.
The trial court ruled for Parkland. The Dallas Court of Appeals affirmed.
Why this case matters for non-compete and non-solicitation law in Dallas
Texas law treats non-compete and non-solicitation agreements differently from ordinary contract provisions. Non-competes must meet strict requirements under the Texas Business & Commerce Code, including limits on time, geography, and scope.
But the Parkland agreement did not say Garcia couldn’t work for a competitor. It didn’t restrict her from soliciting patients, coworkers, or customers. Instead, it imposed a financial consequence for leaving early, regardless of where she worked next.
That distinction drove the court’s analysis.
The court’s key holding: this was not a non-compete
The Dallas Court of Appeals held that the agreement was not a covenant not to compete because it did not limit competitive activity. The repayment obligation applied whether Garcia:
- Took a nursing job elsewhere,
- Changed careers, or
- Left the workforce entirely.
In plain English this means that a clause that penalizes leaving a job is not automatically a non-compete under Texas law.
This is critical for employees and employers alike. Many agreements that feel like non-competes may be analyzed instead as damages provisions, which are subject to different rules and are often easier to enforce.
What about “restraint of trade” arguments?
Garcia argued that even if the clause wasn’t technically a non-compete, it was still an unlawful restraint of trade under Texas law because it limited her professional mobility.
The court rejected that argument because Texas restraint-of-trade law—outside the non-compete context—follows an antitrust-style analysis. To invalidate a contract on that basis, a party generally must show that it harms competition in a relevant market, not just that it makes one employee’s exit more expensive.
Garcia did not present evidence that the agreement harmed competition in the nursing labor market. As a result, her restraint-of-trade defense failed.
Was the $20,000 an illegal penalty?
Texas allows liquidated damages clauses when:
- Actual damages are difficult to estimate at the time of contracting, and
- The amount is a reasonable forecast of compensation—not a punishment.
Garcia argued the clause was a “one-size-fits-all” penalty because it required $20,000 whether she left early or late in the contract term. The court disagreed. It concluded that:
- Training and staffing costs could be difficult to estimate in advance, and
- It was not obvious from the contract itself that Parkland’s damages would necessarily decrease over time.
Because the clause was not facially unreasonable, and because the relevant analysis focuses on what was knowable when the contract was signed, the court enforced it.
Attorneys’ fees: why the employer recovered them
Garcia also argued that Parkland could not recover attorneys’ fees because Texas non-compete law has “exclusive remedies.” The court rejected this argument for a simple reason: the agreement was not a non-compete. Ordinary breach-of-contract fee rules applied, and Parkland recovered its fees.
Other Courts have found repayment agreements unenforceable
This case sets the law in Dallas. It is not binding, however, outside of the Dallas Court of Appeals’ jurisdiction. Other Texas courts have held similar provisions to be unlawful restraints of trade. Thus, it is looking like we are heading for another split among appellate courts on non-compete issues.
Practical takeaways from a Dallas non-compete lawyer
- Not every agreement that limits job mobility is a non-compete under Texas law.
- Training repayment and clawback clauses can be enforceable—even if they discourage quitting.
- Challenging these agreements often requires a contract damages analysis, not just non-compete law
- You can STILL fight these agreements in Texas, and even in Dallas, as the enforcement often depends on the language used in a particular TRAP
For anyone signing an employment agreement
If you see a clause that says you must pay money if you leave, don’t assume it’s unenforceable just because Texas restricts non-competes. These provisions are increasingly litigated—and often enforced. You can still fight these agreements, but it will require some finesse.
Need help with a non-compete or non-solicitation issue in Dallas?
Whether you’re dealing with a non-compete agreement, non-solicitation clause, or a training repayment provision that feels like a non-compete, the details matter. Texas courts draw sharp distinctions based on contract language, timing, and evidence.
If you’re searching for a Dallas non-compete lawyer to review an agreement or defend a claim, it’s worth getting advice before you sign—or before you pay.
Leiza Dolghih is the founder of Dolghih Law Group PLLC. She is board certified in labor and employment law and has 20+ years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at leiza@dlg-legal.com or (214) 531-2403.