Are non-compete agreements enforceable in Texas?

This article looks at the debate surrounding non-competes and what Texas law says on the topic.

One question that both employers and employees often have is whether or not non-compete agreements are enforceable in Texas. The confusion is understandable since, as USA Today reports, non-compete agreements have stirred up quite a bit of debate in recent years and a number of states, including Maine, Maryland, Massachusetts, and Utah, have taken steps to either ban them or restrict their use. In Texas, however, non-compete agreements are usually enforceable. Below is a look at the debate surrounding non-compete agreements and what Texas law says on the subject.

Protection against unfair competition

Non-compete agreements are designed to protect companies against unfair competition practices. Such agreements typically place restrictions on the type of employment a current employee can seek after they leave their current employer. That employee may have had access to a company's trade secrets or may have benefited from training that was paid for by his or her employer. Without a non-compete agreement in place, that employee could simply go a competing company and offer those trade secrets and skills gained in training for a premium.

However, non-competes are not without controversy. Some analysts argue that non-competes have been abused and that low-level employees should not be forced to sign them. As USA Today reports, a 2014 survey found that about 30 percent of workers making less than $40,000 have signed a non-compete agreement. Critics contend that such agreements make it difficult for employees to find new jobs. As a result, a number of states have restricted the use of non-compete agreements in recent years.

What Texas law says

Texas, however, is one of the more employer-friendly states and, as such, has generally taken a favorable approach to non-competes. As the Houston Chronicle reports, the courts in Texas have preferred not interfering in employment contracts as much as possible and that attitude extends to non-compete agreements.

That being said, not all non-compete agreements are enforceable in Texas. To be enforceable, the restrictions imposed by such an agreement have to be reasonable in scope. For example, a non-compete agreement has a much better chance of being enforced if it is only in effect for a limited amount of time after an employee leaves their job. Likewise, non-competes that only apply to a certain metro area or region and not to the entire state also tend to be looked upon more favorably by the courts.

Employment contract law

While Texas law is generally business-friendly, businesses still need the help of an experienced business litigation law firm if they want their rights protected and enforced. With qualified legal counsel on hand, businesses will have th e help they need to resolve employment and other contract disputes.