Starting a new job or a new career is the beginning of an exciting new chapter in your life. Often, the first step in starting that adventure requires you to sign a new employment agreement. Many employment contracts in Texas include a specific provision, known as a non-competition agreement, which prohibits you from competing with your employer after your employment ends. While Texas law as a whole promotes healthy business competition, the law does allow for non-competes to be enforced; however, they must meet specific requirements.
A restrictive covenant
A non-competition agreement, often referred to as a “non-compete”, is a restrictive covenant in your contract which prohibits you from competing with your current employer after your employment has ended. These agreements are designed to prevent you from leaving your current job and directly competing with your current employer.
To be enforceable in Texas, a non-compete must:
- Be ancillary to or part of an otherwise enforceable agreement;
- Be contain limitations as to time, geographic area, and scope of the activity to be restrained; and,
- Be reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.
See Texas Business and Commerce Code § 15.50.
In addition to the foregoing, the non-compete must also not place an unreasonable burden on the employee’s ability to work in their field, and the employer must show that if a Court were not to enforce the agreement, their business would be harmed.
Enforcing a non-compete
When it comes to enforcing non-compete agreements, Texas and Bell County Courts have broadly interpreted these agreements in favor of the employers. This is especially true when an employee was provided certain confidential and proprietary information during the course of their employment.
There are no hard-and-fast rules Courts must follow when interpreting a non-compete agreement. Indeed, the ultimate question of enforceability is a fact-specific inquiry a court must undertake. Some of the most important factors a Court will consider include, but are not limited to:
- The duration of the employee’s tenure with employer;
- The geographic area where the employer and employee conducted their business; and,
- The scope of the employee’s work while employed by employer.
Generally, under Texas law, if a contract fails to conform to statute, they are unenforceable. This is not the case with non-competes. Under the Business and Commerce Code, if the covenant not to compete is not reasonable and imposes a greater restraint than necessary, “the court shall reform the covenant to the extent necessary” to make the limitations reasonable. See Texas Business and Commerce Code § 15.51(c) (emphasis added). Simply stated – if you have a non-compete, it will generally be enforced by Texas Courts.
Get help from a lawyer
No matter if you are an employer seeking to draft an enforceable non-competition agreement or you are an employee who has questions regarding their non-compete, it is important to engage a lawyer early in the process. From the employer side, it is important to have a non-compete which is reasonable and enforceable. Similarly, from the employee side, it is important to understand the full scope of the non-compete and its practical impact on your life prior to signing your employment agreement.
The experienced lawyers at the Ted Smith Law Group, PLLC have negotiated and litigated non-competition agreements from both the employer and employee side. As such, we have a unique perspective in assisting our clients. If you have questions regarding your non-competition agreement, contact us today to set-up your free consultation.
With strength and integrity, we stand ready to help you!