Texas Laws Regarding Non-Compete Agreements

Many businesses in Texas rely on the use of non-compete agreements as part of their employment contracts. These agreements require the employee to refrain from working for the competitor or within a specific industry after their employment with the company is terminated.

Generally, a non-compete agreement protects a business’s interest, but it must be within reason. Also, the employee gets something in return for signing this agreement. The purpose of the non-compete is to protect valuable company information, including trade secrets, marketing strategies, customer information or client lists, and even manufacturing processes.

Non-Compete Requirements in Texas

Texas requires that a non-compete not be burdensome on the employee. That means that if the non-compete is too broad, the courts may swing in favor of the employee because of the burden the agreement placed on that employee. Some examples of a non-compete being too burdensome include:

• Too large of a geographical area
• Too long of a time period
• Too broad of a term regarding profession or industry – such as stating the employee cannot work in “retail”

Non-Competes for At-Will Employees

At-will workers can be terminated at any time and they are not contracted with the company. The Texas Supreme Court now enforces non-compete agreements for at-will employees just as much as they do for contracted employees. If the employer shares confidential information with the employee, the non-compete agreement will be upheld in the courts.

While the at-will exception is great for employers, it also makes hiring more difficult. Employers must be cautious about hiring any employee with a non-compete for their at-will work in the past, and they should consult an attorney before hiring an employee to ensure they are not violating their non-compete.

An employment lawyer can help businesses and employees understand the Texas laws regarding non-compete agreements. Because non-compete violations are very serious – and costly – employers and employees needed to understand their rights.