Non Compete Agreements
Are Non-Compete Agreements Enforceable in Texas?
Contrary to some popular opinion, non-compete agreements are enforceable in Texas. While Texas courts generally are not eager to restrain competition, non-compete agreements are authorized by statute, and Texas courts will enforce properly drafted and tailored agreements. Whether you are a business owner in need of a non-compete agreement for key personnel, or if you are an employee wanting to confirm the enforceability of a non-compete agreement, it is important to have an attorney review the language of the non-compete along with the specific circumstances surrounding the agreement in order to advise on enforceability and potential risks.
What are the Requirements for an Enforceable Non-Compete Agreement?
- It must be ancillary to an otherwise enforceable agreement
- For example, if it was ancillary to an agreement to provide confidential information as consideration for the non-compete (courts may look at whether confidential information was actually provided).
- It must be limited in time (i.e. how long the non-compete agreement is in effect)
- Prohibitions from 1 to 5 years may very likely be found reasonable depending on the specific circumstances.
- It must be limited in scope (i.e. what work or activity is prohibited)
- The non-compete should be narrowly tailored to prohibit specific activity performed by the employee.
- It must be limited in geography
- This will be considered in the context of each specific case as it pertains to the territory where work is performed.
- Courts may take a broad approach when considering geographic limitations if the restriction is simply limiting contact with former clients.