Is My Non-Compete Agreement Enforceable in Texas?
Non-compete agreements are used in a variety of industries to prevent employees from using knowledge gained during employment, then leaving the company and using that knowledge to compete against the company.
Non-compete agreements were generally disfavored by courts in the past because they were seen as unfair restrictions on the ability to make a living. Non-compete agreements were thought to be a violation of basic public policy. Texas was among states that believed people should be free to make a living in any fashion permitted by law.
Texas Covenant Not to Compete Act
In the late twentieth century, however, as our nation's business sector grew in complexity, Texas came to agree that businesses needed some protection from unscrupulous employees who might seek employment only to steal trade secrets. So, in 1989, Texas enacted the Covenant Not to Compete Act to give teeth to non-compete agreements statewide.
Section 15.50(a) of the Texas Business & Commerce Code states:
A covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.
Requirements of a non-compete agreement
Practically speaking, the law requires non-compete agreements to be:
- Based on adequate consideration, and
- Reasonably limited in time, geographical area and scope of prohibited activity
If your non-compete agreement meets these requirements, along with the usual requirements for a valid contract, then the agreement is likely to be enforced by a court if necessary.
For assistance evaluating, drafting, enforcing or defending against a non-compete agreement in Texas, contact one of our experienced Brazos County, Texas business law attorneys at Peterson Law Group at 979-703-7014. We help clients overcome legal obstacles so you can focus on doing business.