Enforcing Your Non-compete Agreement in Texas
As we've discussed in prior articles, non-compete agreements are generally enforceable in Texas, as long as the agreements meet basic contract requirements, such as consideration and mutual performance, and are fairly specific as to length of time and geographical scope.
Do I need to use non-compete agreements in my business?
If you are in a competitive industry, the answer is probably yes. The point of a non-compete agreement is to prevent an unscrupulous employee with confidential information learned during employment from leaving your company and going to work for a competitor, where the confidential information might give your competitor an unfair advantage.
What does my non-compete agreement need to cover?
The general rules are that a non-compete agreement must be based on adequate consideration and must be reasonably limited in time, geographical scope and types of activity prohibited by the agreement.
What is adequate consideration in a contract?
Consideration refers to value exchanged by contract. For example, if you enter into a contract to sell a car for $10,000.00, both the car and the cash represent things of value. Money, however, is not always part of a contract — in fact, no money needs to change hands as long as the parties exchange something of value.
In the context of a non-compete agreement, consideration usually amounts to continued employment offered by the employer in exchange for the employee's promise to be bound by the non-compete agreement. Additional payment (other than regular wages) is not necessary for the agreement to be enforceable.
A Texas court of appeals recently upheld this notion in Tranter v Liss, et al. In that case, the court found that the promise of continued employment was adequate consideration provided in exchange for the employee's promise not to compete.
What if I learn a former employee is violating our agreement?
If you believe a former employee is violating your non-compete agreement, you should consult with an experienced Texas business law attorney as soon as possible to discuss your options.
Your best bet may be to seek a temporary injunction and a restraining order to keep the former employee from actively working with a competitor. A temporary injunction is essentially an emergency measure intended to prevent imminent, irreparable harm, which can be an invaluable remedy while your breach-of-contract case makes its way through the legal system.
For more information and assistance in evaluating, drafting, enforcing or defending against a non-compete agreement in Texas, schedule a meeting with one of our experienced Brazos County, Texas business law attorneys at the Peterson Law Group. Call 979-703-7014 today or visit us online.