Non-Compete vs. Non-Solicitation Agreements in Texas: What's the Difference and Which Do You Need?

If you signed a restrictive covenant when you were hired – or if you're an employer trying to protect your business after a key employee leaves – understanding the difference between a non-compete and a non-solicitation agreement is not a technicality. It determines what you can and cannot do, and what remedies are available if the agreement is violated.

Here is a plain-English breakdown of how these two agreements differ, what each protects, and how Texas courts treat them.

What Is a Non-Compete Agreement?

A non-compete agreement is a contract in which an employee or contractor agrees not to work for a competitor – or start a competing business – for a defined period after leaving a job. In Texas, a non-compete must specify a time limit, a geographic area, and the type of work or activity that is restricted. The agreement does not prevent you from working – it prevents you from working in a competing capacity within the defined boundaries.

Non-competes are common in industries where employees have access to confidential business information, proprietary processes, key client relationships, or specialized training the employer invested in providing.

What Is a Non-Solicitation Agreement?

A non-solicitation agreement is a contract in which a former employee agrees not to solicit a former employer's customers or employees for a defined period after leaving. It does not restrict where you work or who you work for. What it restricts is targeted outreach – reaching out to the employer's clients to take their business, or reaching out to the employer's staff to recruit them away.

Non-solicitation agreements often appear alongside non-competes in the same contract, but an employer may also choose to use only a non-solicitation agreement when the primary concern is protecting client relationships and the workforce.

What Non-Compete and Non-Solicitation Agreements Have in Common

Both non-competes and non-solicitation agreements are governed by the same state law – the Texas Covenants Not to Compete Act. Both must meet the same core criteria to be enforced:

• The agreement must be ancillary to – or part of – an otherwise enforceable agreement. It cannot stand alone. It must be tied to something: an employment contract, a promise to provide confidential information, a stock option grant, specialized training, or another legitimate business arrangement.
• It must contain reasonable limitations as to time, geographic area, and scope of activity. The restriction cannot be broader than necessary to protect the employer's legitimate business interests.

Like a non-compete agreement, a non-solicitation agreement that lacks consideration, is overbroad in scope, or is not properly tied to an underlying employment agreement may not be enforceable in court.

Where They Differ: Scope and Geography

Scope

A non-compete agreement prohibits a former employee from working for a competitor or operating a competing business for a defined period within a defined geographic area. It is a broad restriction on professional activity.

A non-solicitation agreement is narrower. It prohibits the former employee from reaching out to specific categories of people – typically the employer's customers or employees – but it does not prevent the former employee from competing in the market generally. You can go work for a competitor. You just cannot call your former employer's clients or recruit their staff.

Geographic Requirements

Non-competes require a defined geographic limitation. If the geographic restriction is broader than the employee's actual territory or reach, it may not be enforceable as written.

Non-solicitation agreements are analyzed more by the relationships and information they protect than by a strict geographic territory. In Hernandez v. Combined Insurance Company of America, a Texas appellate court allowed an employee non-solicitation restriction to reach employees the departing managers had never personally dealt with, because the managers had access to confidential information about the company's workforce – though the court also required the restriction to be limited to the states where the managers actually worked.

A Note on Healthcare

Texas law includes specific restrictions on non-competes for healthcare practitioners. Agreements signed in connection with clinical practice must meet additional requirements – including limits on duration and geographic scope – and there are provisions that allow for buyouts. If you are a physician, nurse practitioner, physician assistant, or other licensed healthcare professional, the rules that apply to your non-compete are not the same as those governing general employment agreements. This is an area where an attorney review before you sign – or before you leave an employer – is essential.

Side-by-Side: Non-Compete vs. Non-Solicitation

What Happens When Non-Compete or Non-Solicitation Agreements Is Violated?

When a restrictive covenant, like a non-compete or non-solicitation agreement, is violated, Texas law gives the non-breaching party several tools: damages, injunctive relief, or both.

• Damages compensate the employer for actual losses caused by the violation – lost clients, lost revenue, costs associated with replacing recruited employees. The employer must be able to quantify and prove those losses.
• Injunctive relief is a court order that stops the violation – requiring the former employee to cease competing, stop contacting clients, or stop recruiting colleagues. Because injunctions act immediately, they are often the more urgent remedy when a violation is actively harming the business. Texas courts require employers to demonstrate actual or imminent harm; fear or suspicion alone will not support a temporary injunction.
• Attorney's fees may be awarded to the defendant if an employer knowingly drafted an overbroad agreement and tried to enforce it beyond what was necessary to protect legitimate business interests.

One important limitation on damages: if a court finds a non-compete or non-solicitation provision is overbroad and reforms it, the employer cannot recover damages for breaches that occurred before the reformation. Post-reformation injunctive relief is available – but pre-reformation damages are not.

What Is Reformation?

Texas courts are required to reform overbroad restrictive covenants rather than void them. If a non-compete has an unreasonable geographic scope or duration, a court narrows it to what is reasonable and enforces the revised version. The same applies to non-solicitation agreements. This mandatory reformation – sometimes called blue-penciling – means a broadly worded agreement that is otherwise valid is never simply thrown out. It gets narrowed and enforced.

What Counts as Solicitation?

One of the most contested issues in non-solicitation enforcement is what constitutes "solicitation." The answer is more fact-specific than many employees realize.

Conduct that can constitute solicitation includes:

• Texting former clients about a new role or new employer
• Sending announcements about a career change directly to former clients
• Encouraging current colleagues to follow you to a new employer
• Using confidential client contact information to reach out, even informally

What generally does not constitute solicitation:

• Passively accepting a former client who contacts you after your departure
• Responding to a former client's inquiry without having prompted it
• Posting a general public announcement of a new role on social media or LinkedIn – provided it is broadly distributed and not targeted at specific former clients
• Discussing future opportunities with former colleagues without actively urging or incentivizing their departure

The line between a general announcement and a targeted solicitation is often where these disputes are actually fought. Courts look at who received the communication, how it was delivered, and whether the former employee initiated contact or merely responded to it.

Which Agreement Do You Need?

The right answer depends on who the employee is, what they have access to, and what harm you are actually trying to prevent.

Use a non-compete when:

• The employee has deep access to trade secrets, strategic plans, pricing models, or proprietary methodologies that would give a competitor a direct advantage
• The employee is a senior executive, business development lead, or key person whose departure to a competitor poses a genuine competitive threat to your market position
• The employee's knowledge of your business – not just their relationships – is what you need to protect

Use a non-solicitation agreement when:

• The primary risk is that the employee will take established, high-value client relationships
• Your team has specialized skills, such as in the insurance, financial services, consulting, and technology industries that are hard to replace
• The employee's role involves client-facing work or team leadership, but their competitive knowledge alone does not pose a strategic threat
• You want protection for lower-level employees where a non-compete would likely be overbroad

Use both when:

• The employee is a senior salesperson, account executive, or manager with both strategic knowledge and significant client or employee relationships
• The employee's departure poses risks on multiple fronts – competitive intelligence, client defection, and talent loss

Questions About Your Texas Non-Compete or Non-Solicitation Agreement?

Whether you need an agreement drafted, an existing one reviewed before signing, or representation in a dispute, our attorneys have spent decades on both sides of these matters. We work with Texas employers, employees, and executives on the full range of restrictive covenant issues.

Call (713) 783-3110 or contact us online to schedule a consultation.