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Enforcing Non-Compete Agreements Across State Lines

Enforcing Non-Compete Agreements Across State Lines
Hendershot Cowart, P.C.

When accepting a position with a new employer, it’s common for many people to sign a non-compete agreement without completely understanding how it can impact their future. Depending on the terms of your non-compete, you are essentially signing away your right to work in the same field for a competing company if you choose to pursue other options. However, does this apply if you are offered a job in another state?

Texas and Non-Compete Contracts

Employers use non-competes, also known as a covenant not to compete, to limit an employee's ability to steal trade secrets and customer information in order to compete unfairly at another organization. Not every state allows non-compete agreements to be made, but in Texas, they are enforceable under certain conditions.

Whether the non-compete will be allowed by the law depends on the case. Typically, the court will enforce a non-compete as long as it is reasonable in its time limit, geography, and the scope of activity restricted. The court will determine what exactly constitutes reasonableness on a case by case basis. Additionally, the agreement has to be a valid employment agreement.

Can You Enforce a Non-Compete in Another State?

Because every state has different laws regarding non-compete agreements, it will depend on whether it will be enforced. Some states might, while others do not. Like Texas’s enforcement laws, most other states will not enforce an agreement that is too restrictive.

If it’s reasonable for the non-compete to be an issue in the new state, it might be upheld. For example, if you moved to a new state, but your former employer conducts business in the state, it could be cause for the non-compete to be enforced.

The state of Texas does not have an authoritative decision on the matter though, meaning Texas courts cannot stop another state’s actions. To be without a doubt enforceable outside of Texas, an employer will need to include specific guidelines within the agreement stating that there are exclusive jurisdiction and venue provisions. If this is added to the non-compete, Texas will be the only court to decide enforceability.

If you have questions or concerns about non-compete and whether it is enforceable, please don’t hesitate to reach out to the industry-leading business attorneys at Hendershot, Cowart P.C. today at (713) 909-7323.