Enforceability of Non-Compete Agreements in Texas: What You Need to Know

If you are considering signing a non-compete agreement in Texas, it is important to understand the enforceability of such agreements in the state. Non-compete agreements are legal contracts that prohibit employees from working for a competitor for a certain period of time after leaving their current employer. These agreements are designed to protect a company`s trade secrets, confidential information, and customer relationships.

However, non-compete agreements have become increasingly controversial in recent years as employers have attempted to enforce them more aggressively, and some employees have challenged their validity. In Texas, the enforceability of non-compete agreements is governed by a complex set of laws and court decisions that can be difficult to navigate without the help of an experienced attorney.

Here are some key things to know about the enforceability of non-compete agreements in Texas:

1. Non-compete agreements must be reasonable in scope and duration.

In order to be enforceable, non-compete agreements in Texas must be reasonable in scope and duration. This means that the agreement should only prohibit the employee from working for a competitor in a certain geographic area and for a certain period of time. The scope and duration of the agreement should be limited to what is necessary to protect the employer`s legitimate business interests.

2. Employers must offer consideration in exchange for the non-compete agreement.

In Texas, an employer must offer something of value in exchange for the employee`s agreement not to compete. This could be a signing bonus, a promotion, or continued employment. If an employer asks an employee to sign a non-compete agreement without offering anything in exchange, the agreement may not be enforceable.

3. Non-compete agreements can`t be used to prevent ordinary competition.

Texas law prohibits employers from using non-compete agreements to prevent ordinary competition. For example, an employer cannot prevent an employee from working for a competitor in a different industry or in a different part of the state. Non-compete agreements should only be used to protect the employer`s legitimate business interests.

4. Courts can modify or invalidate non-compete agreements.

If a non-compete agreement is found to be overly broad or unreasonable, a court may modify the agreement or declare it invalid. This means that the employee may be free to work for a competitor despite signing the agreement. However, the court will only modify or invalidate the agreement if it is deemed to be unenforceable under Texas law.

In conclusion, non-compete agreements can be a useful tool for protecting a company`s trade secrets and confidential information. However, employers must be careful to ensure that the agreement is reasonable in scope and duration, offers consideration in exchange for the employee`s agreement not to compete, and is not used to prevent ordinary competition. Employees should also be aware of their rights and consult with an attorney before signing a non-compete agreement.