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Non-compete agreements under fire as some states consider ban

Many Houston residents have gone through a tough time in the past five years. The economy took a nosedive, and only recently has it started to show signs of stabilizing. that has resulted in many hardships for families all across Texas; some of whom went through a tumultuous period where they were laid off or simply could not find employment, no matter how hard they tried.

In most, if not all, instances where an employee is laid off, the company will have the employee sign a non-compete agreement. This contract can contain all sorts of language that achieves myriad goals for the company. The contract can prohibit the employee from sharing information with a new employer; it can make it difficult for the employee to attain a new job in the first place; and, in many cases, the contract does not have to abide by many standards.

That does not mean a company can put anything they want in a non-compete contract; but, it is something to keep in mind. Here in Texas, a non-compete agreement can be deemed invalid if your former employer did not include the non-compete as part of a greater agreement that included benefits for you as well. In addition, the company must have a justifiable reason to make you sign a non-compete that prohibits you from working for another company in the same industry.

Probably as a result of the complicated nature of non-competes, some states are considering legislation that limits their scope. The numbers are far from exact, but some studies have shown that there is an economic boost when non-competes are either limited or outright banned. Without non-competes muddling the employment landscape, unemployed individuals can be liberated and find work more easily.

Source: Reuters, "Analysis: Unleashing job hoppers could give economy a bounce," Reynolds Holding, April 25, 2013

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