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What makes a non-compete agreement enforceable in Texas?

Non-compete agreements can put a lot of strain on employees. Imagine you’ve spent your entire career building experience and skills in your chosen field. When you decide to leave your job, you suddenly discover that your employment contract prevents you from working for a competitor for a full year. During this time, you could lose your professional status and relevant industry knowledge—forcing you to start again at square one.

Non-compete agreements may seem unfair to employees. Unfortunately, in the state of Texas—and most other states—they are legal. However, whether or not a court enforces a non-compete is another matter.

In Texas, a non-compete agreement is only valid if the following criteria are met:

  • Restrictions on the employee’s time, geographic scope and tasks are reasonable.
  • The agreement is supported by valid consideration of the employee.

Below are some examples of non-compete agreements that courts will typically not enforce:

Terms are too broad

Employers cannot unreasonably restrict their former employees’ career trajectory in the following ways:

  • Job responsibilities: A non-compete agreement may prevent a security officer at one company from moving to a similar position at a competitor’s company. However, it cannot prevent such an employee from pursuing work in an unrelated field at the competitor’s company.
  • Geography: A non-compete agreement may prevent an employee in Houston from working for a competitor in Houston. However, it cannot prevent the employee from seeking similar employment in New York, for example.
  • Duration: An employer may not put indefinite limits on a former employee’s professional path. The agreement must state that restrictions only apply for a limited, reasonable amount of time. This amount of time may be longer for higher-level executives with access to more important information. Typically, a “reasonable amount of time” will not exceed two years.

Adequate employee consideration

Not all employees can be subject to non-compete agreements. Employers can only impose such restrictions on employees if they have access to valuable company information or other assets—which the company needs to protect. These may include:

  • Trade secrets
  • Specialized training
  • Client information
  • Client relationships
  • Other confidential information which, if shared, could jeopardize the company

While non-compete agreements are legal in Texas, the courts regularly reject such agreements that are unduly restrictive. If you believe your non-compete agreement is unfairly and unlawfully impeding your professional growth, it’s worth consulting with an employment attorney about your case.

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