Depending on your line of work, your employer may have asked you to sign a non-compete agreement when you joined the company. Most often, these agreements are included as a clause in your employment contract. Prior to signing, we encourage you to seek the advice of an attorney to protect your rights. But what happens if you have already signed, and you need to get out of a non-compete agreement?
Not every non-compete agreement is created equal. Here's what you should know about the legality of non-compete agreements in Texas:
A non-compete agreement (also known as restrictive covenant or covenant not to compete) is generally a clause in an employment contract that stipulates how or when an employee can conduct business after leaving an employer. A non-compete agreement often means that your employer has designated that you can't start a competing business or work for a competitor. Employers add these to employee contracts because they don't want an employee to train and learn from them and then turn around and use that knowledge to compete against them. It helps to protect the rights and privacy of the business to avoid financial harm.
The scope of a non-compete agreement will depend on your employer. They will put in their own rules and requirements, so make sure to read it over before you sign it.
Yes, non-compete agreements are legally-binding and enforceable in Texas, though there are restrictions.
To be enforceable in Texas, a non-compete agreement must:
- Be ancillary to an otherwise enforceable agreement (such as an employment contract)
- Be reasonable in scope of activity
- Be reasonable in geographic area
- Be reasonable in duration / time period
If a court deems any of these elements to be broader than necessary to protect the interests of the business, the court can reform or nullify the agreement. An attorney experienced with drafting, negotiating and litigating non-compete and other business agreements can advise you on reasonable limitations for your specific industry and identify which elements can be challenged should you seek to get out of a non-compete agreement.
What Happens If I Break a Non-Compete Agreement in Texas?
If you violate the terms of a legally enforceable non-compete agreement, your employee may ask the courts for an injunction to stop improper competitive activity and pursue actions (such as a lawsuit) to recover financial damages. The consequences may even be outlined in your non-compete clause, as it was in this Texas case. There are available defenses, however, as described below.
A fair, enforceable non-compete protects all parties involved. However, if you violated – or plan to violate – what you consider to be an overly burdensome non-compete agreement, seek the advice of a non-compete agreement attorney immediately. Our business and contract law team has decades of experience defending clients against non-compete violation claims. We are available to discuss your situation, available defenses, and how we can help you proceed.
Although every non-compete agreement and employer are different, you may be able to raise one of the following defenses:
- Employer breach of contract;
- Overly-broad scope of restrictions; or
- Illegitimate business interests.
If you are unsure about the legalities of your non-compete agreement, our Houston business law firm is here to help. Call us today at (713) 909-7323.