If you have a remote workforce, you likely have employees scattered throughout the country with access to proprietary information, client relationships, and trade secrets that could damage your business if used against you. Non-compete agreements can protect those interests – but securing those protections when dealing with a remote workforce can get tricky.
Why? Most non-compete agreements were drafted for a specific geographic location – for example, a 50-mile radius around a Houston office. That makes sense for a local workforce that serves local clients. But what about a remote employee whose “territory” is virtual rather than physical – such as a portfolio of client accounts across multiple states?
First, Consider Whether a Non-Compete Is the Right Tool
Before drafting a non-compete for remote employees, consider whether it is the most effective way to protect your interests. The rules for non-compete agreements vary significantly by state, and a remote workforce means your agreements may need to comply with laws in states far more restrictive than Texas.
Alternatives worth considering for a dispersed workforce include:
- Non-solicitation agreements prevent former employees from soliciting your clients or colleagues for a defined period, and are more consistently enforceable across states than non-competes
- Non-disclosure and confidentiality agreements – protect trade secrets and proprietary information without geographic restrictions or time limits tied to employment location
- Garden leave provisions – keep departing employees on payroll but out of the business for a period, protecting time-sensitive confidential information during the transition
- Forfeiture or clawback provisions – require an employee to forfeit deferred compensation, restricted stock, bonuses, or other contingent benefits if they join a competitor or start a competing business. In Texas, these provisions can be enforceable if they are structured properly. Clawback provisions that attempt to strip an employee of compensation they already earned, however, are likely to be treated by the courts as an unenforceable non-compete agreement in disguise.
- Trade secret protections under the Texas Uniform Trade Secrets Act – if a former employee misappropriates or discloses your trade secrets, state law provides remedies including injunctive relief and civil liability regardless of whether a non-compete agreement exists. This protection does not require a geographic restriction or a defined time period, but it does require that the trade secrets are genuinely valuable and that you have taken reasonable measures to keep them confidential.
These alternatives are often more durable protections for a remote workforce, particularly where employees are based in states with significant non-compete restrictions.
Drafting Geographic Restrictions That Hold Up for Remote Employees
For remote workers, determining a reasonable geographic restriction requires a different analysis than drawing a radius around a physical office. One solution Texas courts have recognized is a non-compete that is limited to the employee's actual clients. This can serve as a reasonable alternative to a geographic limitation when the employer's business is not geographically confined.
The key requirement is that the restriction must be tied to clients with whom the employee had meaningful contact and responsibility during their employment – such as a portfolio of client relationships or a set of accounts – not every client the company ever served.
Nationwide Non-Compete Restrictions Are Rarely Enforceable
Texas courts will usually view a clause that bars an employee from working anywhere in the United States as overbroad and unenforceable unless the employee held a senior executive role or had access to highly specialized trade secrets with national significance. Courts look at where the employee actually developed business and personally served clients – not where the employer would prefer to prevent competition.
Broader Restrictions for Senior Executives Can Hold Up to Court Scrutiny
Texas courts have upheld wider geographic restrictions, including nationwide restrictions, where the employer's business operates nationally and the employee's role and knowledge align with that scope.
In a recent Texas Business Court decision, Galderma Laboratories, L.P. v. Brenner, the court noted that the permissible breadth of a geographic restriction depends on the nature of the employer's business and the extent of the employee's involvement in it. In this case, a high-level employee had extensive knowledge of the company’s U.S. operations, and the court ruled that a nationwide restriction was reasonable. This is the exception, however, not the rule.
For standard remote employees without executive-level access to strategic information, nationwide restrictions remain difficult to enforce.
Which State's Law Governs?
Non-compete agreements are regulated by state law and, for remote employees, determining which state’s laws govern is not always a straightforward analysis. It generally comes down to where the employee physically works – but which state has a more significant relationship with the parties and employment relationship, and which state has the greater stake in the outcome can also factor in.
For a detailed analysis of how Texas courts determine which state's law applies and what happens when an employee relocates across state lines, see our guide to enforcing non-compete agreements across state lines.
If you are a Texas employer with remote workers in other states, consider:
- Including a choice-of-law clause designating Texas law – this establishes Texas as the starting point, though courts may override it if another state has a stronger connection to the employment relationship
- Including a forum-selection clause – designating Texas as the venue for disputes. Texas courts treat forum-selection clauses as presumptively valid unless enforcement would be unreasonable, unjust, or contrary to public policy
- Drafting a separate agreement that complies with the laws of the state where your employee is based – particularly for employees in states with significant non-compete restrictions
What If an Employee Relocates?
If an employee relocates after signing a non-compete, the geographic restrictions in the original agreement may not reach their new location – particularly if the agreement tied the restricted territory to a specific region, office location, or the employer's operating area at the time of signing. A restriction written around Houston-area competition, for example, does not automatically follow an employee who moves to Denver and engages in competitive activity in that area.
This does not mean the non-compete disappears. If you and your attorney drafted the non-compete to include restrictions on soliciting the former employee's clients or competing for business in their old territory, those likely remain enforceable, regardless of where the employee relocates.
Protect Your Business Beyond the Non-Compete
Protecting against competition from former remote employees requires more than a single contract provision. Non-compete agreements work best when paired with:
- Clear remote work policies governing data access, personal and company device use, and information security
- Non-disclosure agreements covering proprietary information, client data, and trade secrets
- Non-solicitation agreements restricting contact with clients and colleagues after departure
- Reasonable measures to maintain the confidentiality of trade secrets through consistent business practices
Together, these protections reduce reliance on any single agreement and create overlapping layers of protection that are more defensible across multiple states.
If you need help drafting or reviewing non-compete agreements for a remote or multi-state workforce, call (713) 783-3110 or contact us online to speak with a Hendershot Cowart P.C. attorney.