Non-Compete Agreement in Texas: What You Need to Know

A non-compete agreement is a legally binding contract that restricts an employee from working for a competitor or starting a similar business after leaving their current employer. Texas is known for its pro-business environment, and this extends to non-compete agreements as well.

If you are an employer or an employee in Texas, here is what you need to know about non-compete agreements:

1. Texas has specific requirements for non-compete agreements.

Texas requires that non-compete agreements be reasonable in scope, duration, and geographic area. This means that the agreement cannot be overly broad and must be limited to protecting the employer`s legitimate business interests. The agreement must also be limited in duration, typically no longer than two years, and geographically limited to the areas where the employer conducts business.

2. Non-compete agreements must be supported by consideration.

In Texas, non-compete agreements must be supported by consideration, which means that the employee must receive something in exchange for signing the agreement. This can be in the form of a signing bonus, a higher salary, or other benefits.

3. Courts will take into account the employee`s circumstances.

Courts in Texas will take into account the employee`s circumstances when evaluating the enforceability of a non-compete agreement. This includes factors such as the employee`s level of expertise, the nature of the employer`s business, and the employee`s access to confidential information.

4. Non-compete agreements are enforceable in Texas.

In Texas, non-compete agreements are generally enforceable, provided that they meet the requirements listed above. However, employers should be aware that courts will strictly construe these agreements against them and will not enforce agreements that are overly broad or that restrict an employee`s ability to earn a living.

5. There are exceptions to non-compete agreements.

Texas law recognizes several exceptions to non-compete agreements, including agreements involving physicians, lawyers, and certain low-wage workers. Additionally, non-compete agreements may be unenforceable if the employer breaches the agreement first or if the agreement violates public policy.

In summary, non-compete agreements are an important tool for Texas employers to protect their business interests. However, these agreements must be carefully drafted to ensure that they are reasonable and enforceable. As an employee, it is important to understand your rights and obligations under these agreements before signing them.