non-compete agreement

Texas Non-Compete Agreements: A Guide for Employees and Employers

A non-compete agreement is designed to protect a company’s confidential information and is between the employer and employee. In Texas, both the employer and the employee must understand the state’s unique laws surrounding non-competes, to make sure legal requirements are being followed. In this blog, we will be going over Texas’s non-compete laws to help ensure employers and employees understand their options when drafting or signing these agreements.

What Is a Non-Compete Agreement?

A non-compete agreement is a contract between an employer and an employee that limits where and how the employee can work after leaving their job. It is meant to protect valuable employer information such as client lists or trade secrets from being used by competitors. 

A non-compete will typically specify these different elements: 

  • Duration: This refers to how long the employee is restricted from working for a competitor. It could be a few months or even a couple of years.
  • Geographic Scope: This defines the area where the restrictions apply, which might be within a certain state or region.
  • Type of Work: This limits the employee from doing specific jobs or working in certain industries.

Texas Non-Compete Laws Overview

Texas non-compete rules are governed by the Texas Business and Commerce Code. According to the code, to be enforceable in the state the non-compete must be necessary to protect the business’s legitimate interests like confidential information. The agreement also needs to have reasonable limitations, meaning it shouldn’t unfairly restrict someone from working elsewhere. The non-compete must have clear limits on time, geographic area, and the type of work covered.

Texas tends to be more employer-friendly in terms of enforcing non-competes compared to some other states, like California, where non-competes are largely unenforceable. 

For Employers: Drafting an Enforceable Non-Compete

When an employer is creating a non-compete agreement in Texas, they need to be sure to follow the necessary rules and regulations. Such as, according to the Texas code, the non-compete must be necessary to protect the business and its confidential information. Employers also should make sure that the limitations in the non-compete are reasonable in terms of time, geographic location, and scope of work. For example, limiting someone from working in a specific industry across an entire state for five years may be a bit extreme. Another thing the employer should consider when creating the agreement is giving something in return to the employee for signing the agreement. Some examples could be specialized training, access to proprietary information, or a higher level of responsibility. Potential employees may not want to agree to the non-compete if they don’t receive anything in return and the agreement may not hold up in court. 

For Employees: What to Know Before Signing a Non-Compete

business paperwork

If you are an employee being asked to sign a non-compete, there are a few things you should know before signing. Signing a non-compete can limit your future job opportunities, especially if you work in a specialized field. Figure out whether or not you see yourself working at this employer for a long period of time, if not, it may not be worth signing a non-compete over. Make sure you look it over thoroughly before signing and determine important aspects such as, how long will it last and what geographic area it covers. If you feel the non-compete is unfair, consulting with an attorney specializing in employment law can help you understand your rights and potentially negotiate terms. 

Seek Legal Guidance With Your Employment Needs

If you are an employer or employee in the state of Texas, it is important to be aware of non-compete agreements and what they entail. These agreements can have a significant impact on your career or business operations, so being educated on how they work is essential.  

If you have questions or need assistance regarding non-compete agreements in Texas, don’t hesitate to reach out to a qualified attorney. The Law Office of Sandy McCorquodale P.C. stands ready to fight with you. Contact us today for a consultation on your case.