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What Is a Non-Compete Clause?

If you accept a new job and sign an employment contract with a new employer, you may be subject to a non-compete clause. According to the Texas Workforce Commission, certain conditions must be met to make the agreement valid in Texas. Before signing any contract, it’s a good idea for a prospective employee to review it thoroughly.

As a prospective employee, you want to understand the terms and conditions of your employment agreement. If you opt to look for another job, your non-competition obligations may prevent you from taking up positions comparable to your present one.

Getting out of a noncompete agreement in Texas is a complicated process that requires understanding how non-compete clauses are enforced. At the Buzbee Law Firm, our commercial litigation attorneys can help protect your rights and your career’s future.

What Is a Non-Compete Agreement in Texas?

A non-competition agreement is a contractual relationship between an employer and an employee that prohibits the employee from working for a competitor after they leave their current employment. For example, when a high-tech company hires a marketing consultant, it must sign a noncompete clause prohibiting them from competing with the employer.

Most noncompete agreements have clauses concerning:

  • Disclosure of a company’s trade secrets
  • Starting your own company in the same niche
  • Making confidential information about a company’s employees public
  • Coaxing clients or staff from a rival company
  • Any other clause that competes with the current employer’s business model

It is up to the prospective employee’s non-compete to determine how much value they may transfer from the old workplace to the new job. This agreement must be drafted and signed by all parties to be legally binding.

While drafting a non-compete agreement, Texas employers must consider the non-compete statute’s requirements. You can contact a commercial litigation lawyer in Texas to understand the reasonable period of time requirement and other limitations of your case.

For a free legal consultation, call 844-349-9196

Enforceability of Non-Compete Agreements in Texas

State legislation governs the enforceability of covenants. For a non-compete to be valid in Texas, it must meet a set of conditions. The employer must prove that it doesn’t impose an undue barrier on the employee’s capacity to practice their profession. Also, the employer may demonstrate that the court’s refusal to enforce the agreement would be detrimental to the firm.

Public legislation in Texas has always supported the employer to prove that the non-compete provision is required. Texas courts have ruled that noncompete agreements may be enforced if the employer provides employees with access to confidential information.

Even if the above conditions are not met, the non-compete clause may still be enforceable if the employer can demonstrate that they have a genuine economic interest to safeguard. An employer can prove that a non-competition agreement is essential to the protection of trade secrets or other proprietary information.

Is the Texas Non-Compete Clause Reasonable?

Non-compete agreements may be terminated by either the employer or the employee if deemed unreasonable. The clause must contain reasonable limitations of the following criteria to be an enforceable agreement:

  • Time length
  • Geographic area
  • The scope of action

Reasonable Time Length

Under the Texas Covenants Not to Compete Act (Texas Business and Commerce Code §§ 15.50 – 15.52), a reasonable time restriction must be the minimum necessary length to protect the employer’s business interests or goodwill.

This usually refers to confidential information. In a standard employment contract, the employer has the burden to prove that the imposed time length is reasonable.

Reasonable Geographic Scope

In some cases, the noncompete clause can also impose restrictions over a specified geographic region. A reasonable geographic scope encompasses the area where the employee performed their work-related activity for the employer.

At the Buzbee Law Firm, we can help determine if the geographic scope restriction is reasonable by considering the employer’s and employee’s specific role within the company, their geographic location, and methods of doing legitimate business. Our lawyers will review all the key elements of your case to establish the validity of the non-compete clause.

Reasonable Scope of Activity

A reasonable scope provision must be no greater than necessary to protect the employer’s goodwill or business interests. Since this is highly dependent on the details of each case, our legal experts can help determine if your non-compete covenant has a reasonable scope of activity.

What Makes a Texas Non-Compete Agreement Unenforceable?

Even if a noncompete agreement has reasonable limitations, it may be invalid for other reasons. In Texas, various reasons can make a non-competition agreement unenforceable, including:

  • The employer didn’t sign the contract
  • The employer failed to comply with other technical criteria of a non-compete in Texas
  • The employer engaged in conduct that might render the non-compete void

While getting out of a non-compete agreement in Texas might be difficult, workers may be able to utilize several tactics to establish that the clause is invalid. For example, the non-compete limitations must always be joined by a separate enforceable agreement. Under Texas public policy, a simple non-compete obtained in return for compensation is void.

How do I Get Out of a Non-Compete in Texas?

Prospective employees should remember that revealing sensitive information about a former employer, such as intellectual property or a customer list, might harm that business. However, if an employee believes they have the necessary knowledge and abilities to establish their own business, they may bypass the non-compete clause.

To bypass the non-compete covenant, the employee must demonstrate that the clause was invalid. The absence of the employer’s signature on the agreement is one factor that might make the agreement void. The clause may also be invalid if it has unreasonable limitations regarding the time period, geographical radius, and scope.

What Happens if You Break a Non-Compete Agreement?

An employer may sue an employee for breach of contract if they fail to uphold the non-compete clause. Additionally, the company might take a variety of measures against the employee, including:

  • Claiming monetary damages: The employer might file a lawsuit against the employee for malicious behavior if they violated the non-compete and caused the company to lose money or profits. The employee must pay for the damages if the employer has a valid claim.
  • Filing a court order against an employee: If the noncompete agreement is broken, the court may compel the employee to stop working for a rival in the employer’s interest.
  • Claiming additional damage: Any losses incurred by the employer due to the employee’s infringement might be brought against the employee. Additional damages may include a decrease in the company’s overall performance or the loss of customers.

While it’s not a crime to break a non-competition agreement, it is considered a tort that may result in monetary penalties or court orders. However, the employee has the option to claim defense and avoid responsibility if successful.