Enforcing Texas Employment Contracts & Non-Compete AgreementsBy James Blake on
Non-compete agreements in employment contracts are often misunderstood by both employers and employees. Texas employment law generally protects employees, and Texas is known as a right to work state, often construing employment contracts and non-compete agreements against employers. Employees must beware of unreasonable non-compete agreements in Texas employment contracts; employers must take extra steps to ensure their non-compete agreement or employment contract is reasonable and enforceable in court.
Non-Compete Agreements & Employment Contract Law
Non-compete agreements in employment contracts are only enforceable in Texas to the extent the restrictions are “reasonable.” In particular, restrictions on competition must be reasonable in terms of their geographic scope and time duration. A three year non-compete agreement is often the upper limit for reasonable non-compete period in Texas, although it could be longer in some cases. As for the geographic scope of non-compete restrictions, many case-specific factors could be important to discuss with your business lawyer, including the employer’s business operations, business presence in the restricted area, the type of business conducted, etc.
Enforcing Non-Compete Agreements & Employment Contracts
Employers hiring at-will employees, take caution: the non-compete clause in your employment contract might not be enforceable. In Texas, courts protect employers against unfair competition. Paying your employees compensation (wages and tips) and employee training generally does not create unfair competition and doesn’t make a non-compete agreement enforceable. However, Texas employment law allows employers to leverage noncompete agreements in employment contracts for professional level employees with access to use of confidential information, as well as to other employees with use and access to intellectual property and other proprietary information.
Employees Beware Bad Non-Compete Agreements
Even if the non-compete agreement in your employment contract isn’t enforceable in court, it can still affect your future employment and business relationships. Former employers may send legal demand letters to your subsequent employers and business partners, which can damage future employment prospects, business ventures, etc. Unfortunately, in many cases, a new or prospective employer may be unwilling or unable to hire you due to the threat and cost of non-compete litigation, even if you would be likely to win in court.
To avoid unpleasant surprises and unfair consequences, it’s best to consult a Texas employment attorney to make sure that you understand the terms of your non-compete agreement. Our business law firm in Austin regularly consults with clients regarding employment contracts, NDAs, non-compete agreements, and other employment law matters.