If you signed a non-compete agreement in Texas and are ready to change jobs, plan your exit strategy before making a move – set a date, practice your resignation, and be discreet about your plans until the time is right.
If you signed a non-compete agreement and are preparing to resign, you may also want to consider these questions:
- What should you tell your new employer and when?
- Will starting your own business violate the non-compete?
- Should you address your non-compete agreement with your current employer?
The first step is to contact an attorney who specializes in contract law and non-compete agreements. A non-compete attorney can review your agreement and advise you on its restrictions, its enforceability, and any consequences that may be outlined in the agreement.
It could be that your new employment will not violate the terms of the agreement, or you can work with your new employer to temporarily revise your new role to avoid violating the agreement until the non-compete expires. Alternatively, if your non-compete is overly broad, it may not be enforceable according to Texas law.
To be enforceable in Texas, a non-compete agreement must:
- Be ancillary to an otherwise enforceable agreement, such as an employment agreement;
- Be reasonable in scope of activity (the type of work you can do);
- Be reasonable in geographic area (where you can work); and
- Be reasonable in duration (how long the restrictions will last).
If the agreement is overly broad, your employer may still seek to enforce it. However, Texas courts have recognized that overly broad restrictions hurt employees’ prospects and inhibit the free market, and are unlikely to enforce it as written.
What to Tell Your Current Employer and When
Before telling your current employer that you are resigning, be aware of the restrictions outlined in your non-compete agreement. Get a copy of your agreement and discuss it with a Texas non-compete attorney. Don’t assume your non-compete agreement is unenforceable. These agreements are frequently the cause of lawsuits and should be taken seriously.
Your employer may remind you of your legal obligations to comply with your non-compete agreement in the closing interview; however, there is no reason for you to bring it up proactively.
Leave your current role on good terms – don’t air grievances and don’t leave yourself open to trade secret claims. Promptly return all company property – including your laptop, cell phone, building keys, security badges, etc. – to avoid trade secret theft claims. Don’t make hard or electronic copies of company files. Uphold your fiduciary duty to serve your current employer’s business interests until your employment ends.
Should You Tell Your New Employer About Your Non-Compete? (And What to Say)
Yes – you should tell your prospective employer about your non-compete agreement before accepting a job offer, not after. During the interview process and before accepting a new position, discuss your non-compete agreement and its restrictions. Depending on the terms, you may need to inform them that you are currently restricted from engaging in certain activities or disclosing confidential information. Your attorney can review your agreement and strategize with you on the best way to approach this discussion.
Being upfront will allow your prospective employer to review your non-compete agreement with their legal counsel and assess potential risks. Your new employer may decide that the non-compete will not restrict your new responsibilities. Or you may be able to negotiate temporary revisions to your proposed role to avoid any violations until the agreement expires.
What Happens If Your New Employer Doesn't Know About Your Non-Compete?
Texas law does not require you to proactively tell a new employer about a non-compete agreement. Staying silent is not, on its own, a legal violation.
That said, silence is not without risk. How you handled the transition – what you said, what role you held, and what your new employer now knows – can all become relevant if a dispute follows.
The clearest line involves active misrepresentation. If a prospective employer asked you directly whether you had any post-employment restrictions and you said no, that is no longer a matter of omission. It is an affirmative false statement – and it invites consequences beyond the non-compete claim itself, including potential fraud exposure.
You are not required to volunteer the information, but you cannot misrepresent the situation when asked.
The stakes are also higher if you hold – or held – a position of trust. Executives, officers, and others with fiduciary responsibilities carry a duty of loyalty that can impose disclosure obligations beyond what a standard employment agreement requires. In those roles, actively concealing a conflict of interest during employment negotiations can constitute a breach of fiduciary duty, regardless of what the non-compete itself says.
Finally, non-disclosure can complicate your new employer's position. Whether your former employer can pursue a claim against your new employer often turns on what the new employer knew and when. An employee's silence about a non-compete doesn't eliminate that risk – it can delay it until the moment a cease-and-desist letter arrives and puts the new employer on notice.
The bottom line: Non-disclosure isn't automatically unlawful, but it creates risk that can escalate quickly – especially if your former employer takes action against you. The sooner you get legal counsel to assess the full picture, the better positioned you are to navigate it.
Starting Your Own Business with a Non-Compete in Place
Some non-compete agreements are unenforceable and will not interfere with your efforts to start your own business. However, if your business idea is in direct violation of a non-compete agreement that is reasonable and likely enforceable, you may need to wait until the non-compete expires or relocate outside of the restricted geographic area to start a successful business without the threat of litigation.
Review the agreement with a non-compete attorney to understand your options, risks, and potential consequences of starting a competing business in violation of the agreement.
What to Do If Your Non-Compete Is Overly Restrictive or Unenforceable?
If you believe your non-compete agreement is too restrictive, review the agreement with a non-compete attorney. State laws dictate non-compete agreements, so be sure to work with an attorney experienced in handling Texas non-compete agreement issues.
Although every non-compete agreement and employer is different, you may be able to raise one of the following defenses:
- Employer breach of contract: Your non-compete agreement must be ancillary, or part of, an otherwise enforceable agreement such as an employment contract. If your employer breached that contract – by not paying your wages or benefits as outlined in the contract, for example – you can argue that you are no longer required to fulfill your obligations.
- Overly broad scope of restrictions: In Texas, a non-compete agreement must be reasonable in its limitations. If the agreement restricts your activities in the entire state of Texas, for example, when the company’s target market is limited to north Houston, the courts may “reform” or revise the contract to be more reasonable.
- Does not protect a legitimate business interest: For a non-compete to be enforceable in Texas, it must be seen as a reasonable mechanism to protect an employer’s legitimate business interests. This can include a business’s goodwill, trade secrets, and other confidential or proprietary information. If the agreement merely seeks to stop you from working for a competitor, the courts are likely to revise or nullify the agreement altogether.
- Does not provide adequate consideration. Non-competes must provide adequate consideration (something of equal or proportional value) to the employee for entering into the agreement. Usually, employment and wages are considered adequate consideration for new employees. If you were asked to sign a non-compete agreement as an existing employee and not given something in exchange, such as a pay raise or promotion, the non-compete may not be enforceable.
If you plan to violate a non-compete agreement, our attorneys can review your agreement, review your options and available defenses, and strategize a way forward.
Changing Jobs with a Non-Compete Agreement: Talk to an Attorney Before the Situation Escalates
A non-compete agreement doesn't have to derail your career move – but ignoring it can. Whether you're preparing to resign, already in a new role, or facing a cease-and-desist letter from a former employer, the decisions you make in the days and weeks ahead will shape your options.
The right time to get legal advice is before problems arise. The second-best time is right now.
At Hendershot Cowart P.C., our business and contract law attorneys have decades of experience reviewing non-compete agreements, assessing enforceability, and defending clients against non-compete claims – whether those claims are directed at the employee, the new employer, or both. We represent clients throughout Texas from our Houston office, and we are available to discuss your situation today.
If you are navigating a job change with a non-compete in place – or you're already in a new role and need to understand your exposure – contact us online or call (713) 783-3110 to schedule a consultation with our team.