Texas Noncompete Agreements: Rules for Enforceability

Noncompete agreements are meant to protect a company’s legitimate business interests, its investment in workers, and its current market position. Noncompetes do this by prohibiting workers from starting new business ventures that will compete with the employer, working with one of the company’s established competitors, or sharing confidential business information.

If you are asked to sign a noncompete agreement in Texas and you subsequently violate or challenge its terms, the court may uphold it against you. For personalized legal advice on noncompetes and employment issues, consult with an employment lawyer in your area.

3 Ways Noncompete Agreements Keep Employers Competitive

A noncompete agreement is a way an employer keeps itself competitive by protecting trade secrets and its investment in talented, specialized workers.

Generally, they limit employees’ career choices after they leave the employer in the following ways:

1. The period of time the employee must avoid working for a competitor. A worker cannot be barred from working for a competitor for the rest of his or her life, but he or she may be prohibited from working for one for a year or two after leaving the original company.
2. Geographic scope. An employer can only prohibit a former employee from working in a geographic area with an immediate competitor. For example, an employer in Corpus Christi may have a very difficult time justifying prohibiting a former employee from finding work in Dallas.
3. The definition of a competitor. An employer must be specific about what types of business constitute a competitor. An employer may list a few specific companies or state which types of operations are considered to be competition in an employment agreement.

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Who Gets a Noncompete Agreement?

Generally, noncompete agreements are reserved for workers whose specialized skills give a company an advantage over its competitors. Asking a programmer with knowledge of industry software to sign a noncompete agreement may be deemed justifiable, whereas asking a restaurant server to sign one often is not.

Mark Oberti, an employment attorney at Oberti Sullivan in Houston, says that most sales teams have noncompete agreements and that, in Texas, energy industry employees have seen an increase in noncompetes over the past 15 years.

Determining if Your Noncompete Agreement Is Fair

Although Texas courts uphold non-compete agreements, they may do so only if they do not infringe on employees’ rights to seek and maintain productive employment in their fields.

In other words, if your noncompete agreement has restrictive covenants, you may challenge it on the grounds that it is not fair. The court must consider whether an agreement was too restrictive and whether the employer had a good reason to impose such an agreement.

“Employers have gotten the memo that it’s actually not that hard to have an enforceable noncompete clause in Texas,” Oberti says.

“But, for a regular salesperson, most of the time the noncompete can say, ‘For a year or two, you can’t solicit customers you personally dealt with.’ It can’t say, ‘You can’t solicit any of the company’s customers, whether you dealt with them or not, or any of the potential customers.’ You’ll see agreements that use that sort of language. For the most part, if it’s a regular frontline salesperson, the courts will say that’s broad.”

Get Legal Advice Before Drafting Your Noncompete Agreement

It’s much easier to alter an unfair agreement to make it fair than it is to sign, then challenge, an unfair agreement. If you’re asked to sign a noncompete agreement, bring it to an experienced employment lawyer to discuss its terms and determine if it can be revised to be more favorable to you. You do not know what your career’s future holds, so do not sign a contract that unfairly restricts it.