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Noncompete Agreements in Texas 

Posted by Michael Keller | Jun 01, 2021 | 0 Comments

Noncompete agreements can be one of the most complicated areas of the law for the lay person to navigate.  You're ready to hire a new employee, but you'd like to have them sign a noncompete agreement.  And you don't really understand what you can and can't ask for.

When does it come up?

It should be noted that the law surrounding noncompete agreements is related to other similar agreements found in the context of employment agreements, as well as other more complicated transactions like the sale of a business.  These include confidentiality agreements, non-disclosure agreements, and non-solicitation of employees or customer agreements.  But to the average working American, the most fundamental question is whether he or she will be able to work in the industry in which he or she is skilled if the employment terminates. 

It's a balance.

The law recognizes that there is a give-and-take in noncompete agreements between the individual's right to engage in gainful employment balanced against the employer's right to protect its investment, such as time and money spent training an employee and/or exposure of the employee to confidential or trade secrets that might unfairly benefit a competitor/future employer.  

These considerations often occur in the arena of highly compensated individuals, but the use of noncompete agreements has crept into contracts involving lower paying jobs which are highly customer centric, such as hairdressers or personal trainers. 

What about the scope of the agreement?

Texas's resolution of these issues is codified in Tex. Bus. & Com. Code Ann. Section 15.50 et. seq.  Texas law does not set hard and fast rules, such as the maximum duration of a noncompete agreement, but instructs courts to consider whether a justifiable interest of the employer is served by restrictions on the employee's right to obtain employment in terms of: 

  • Geography; 
  • Duration; and  
  • Scope/nature of the activity. 

Courts are also instructed to blueline, or limit, noncompete agreements that are overly broad. Although the statute permits an employee to recover attorneys' fees if the employee can prove that the employer knowingly sought to enforce an overly broad restriction, it's not a very common occurrence. 

Enforceable, but subject to negotiation.

The most important thing to remember is that noncompete agreements are frequently enforceable, but they are also subject to negotiation in many instances, which can limit their reach.  

At the end of the day, a prospective employer should consider whether and under what circumstances a noncompete agreement should be signed and the potential effect of a prospective employee's requests to limit the agreement.

The Keller Firm Can Help

If you are considering adding a noncompete clause to your employment contract, it is a good idea to consult a lawyer to develop a better understanding of whether your agreement will be enforceable.  Contact The Keller Firm to discuss your matter today.

Disclaimer: This website is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with The Keller Firm through this site does not form an attorney/client relationship. 

About the Author

Michael Keller

Attorney and Founder


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