A Crash Course on Texas Non-Compete Agreements

Throughout Texas, businesses require employees to sign non-compete agreements, but that doesn’t stop people from having questions about non-competes. So, what is the legality of these agreements? And when and how can they be enforced if you do suspect violations? Well, if you have these or similar questions, look no further; this article was written just for you!

Are Non-Compete Agreements Legal in Texas?

Yes. Businesses incorporated in the State of Texas can use non-compete agreements. While they are technically legal, there are certain criteria that has to be met for a non-compete to be enforceable, including showing that the agreement was written in a way that did not restrict the employee any more than necessary to protect the business’s interests, that the agreement was reasonable in geographic and temporal scope, and that the agreement was reasonable in the restrictions it places on former employees’ actions. While these tests are important to not when seeking to enforce non-compete agreements, Texas courts tend not to favor the agreements, and many simply don’t hold up in litigation for many different reasons; unreasonable scope, time or restrictions just to name a few. Simply because a non-compete was in place doesn’t always mean it will offer businesses the protections they think they will receive, and it doesn’t always mean that employees are restricted in the ways they think they are.

What is “Reasonable”?

In regard to geographic limitations, courts will consider a few key facts:

1) Where did the employee work and have contact with customers and business partners?

2) Where did the business conduct its operations?

3) How did the business carry out its tasks?

The courts’ ultimate goal here is to determine if the agreement adequately protects the business’s interests without overly restricting the employee post-employment. With this goal in mind, courts typically limit the geographic scope to the area where the employee specifically worked, rather than where the employer conducted business.

The same type of analysis can be applied to temporal and activity-based restrictions that are written into the agreement.

Pro-tip: Use precise language, because overly broad terms specifically related to activity or time restrictions can potentially render a non-compete unenforceable.

What if a Non-Compete is Disputed?

The success of a non-compete case for all parties involved hinges on the wording of the agreement and:

- The employee’s work tasks

- The tasks performed for the new employer

- Trade secrets or other business interests that the business seeks to protect

- The impact that premature disclosure of protected interests may cause

So, in the event that a non-compete is disputed, make sure you cover all the bases that could be the difference between winning and losing.

Are You Prepared for Legal Action?

In the event that you are dealing with a legal issue related to a non-compete agreement, be you employer or employee, you need to be prepared to fervently advocate for your position. It might be worrying to think about, but that’s where good legal assistance can come to the rescue. If you want to learn more about what a business litigation advocate can do for you, you may want to discuss your situation with an attorney. While there’s a lot of options when it comes to your representation, not all legal teams are created equally; that’s why you do your homework and find the best advocate for you.