Texas courts recognize that companies have legitimate interests worth protecting and that non-compete agreements can be a viable means to protect their competitive edge. But a signed agreement is not the same as an enforceable one.
What Makes a Non-Compete Enforceable?
To be enforceable in Texas, a non-compete must:
- Be ancillary to or part of an otherwise enforceable agreement
- Be supported by adequate consideration – typically access to confidential information, trade secrets, or specialized training
- Restrict competition only within a reasonable geographic area
- Limit prohibited activities to those that directly threaten the employer's legitimate business interests
- Impose restrictions for a reasonable period of time – typically one to two years
The enforceability of a non-compete is reviewed by courts on a case-by-case basis. To improve the chances that your non-compete will be viewed favorably by the court, keep the following in mind when working with an attorney to draft your non-compete agreement.
1. Specify the Business Interests You Are Protecting – and Make Sure They Are Legitimate
For a non-compete to be enforceable in Texas, it must be seen as a reasonable means to protect an employer's legitimate business interests. Recognized protectable interests include:
- Trade secrets and confidential information – proprietary processes, pricing strategies, client lists, formulas, and other information that provide a competitive edge and that the employer has taken reasonable steps to keep confidential
- Business goodwill – the customer relationships, reputation, and expected future patronage an employee develops through their work on behalf of the employer
- Specialized training – investment in skills or knowledge that confers a competitive advantage on the employee and that the employer paid to develop
Courts will not enforce a non-compete simply to prevent competition. The employer must demonstrate that the interests being protected are real, that the employee had meaningful access to them, and that restricting competition is necessary to protect them.
2. Provide Adequate Consideration
Non-competes are enforceable only if they are ancillary to or part of an otherwise enforceable agreement and provide adequate consideration (something of value) to the employee in return.
What Is "Consideration" in a Non-Compete Agreement?
Consideration is the something of value an employee receives in exchange for agreeing to the restrictions in a non-compete.
The consideration requirement exists because a non-compete restricts an employee's ability to earn a living after they leave. Texas courts require that restriction to be justified by something the employer actually provided – and will not enforce a non-compete that amounts to a one-sided promise with nothing meaningful in return.
What qualifies as adequate consideration:
- Access to confidential information or trade secrets – an employer's promise to provide, or actual provision of, proprietary business information the employee would not otherwise have
- Specialized training – employer-funded training, certifications, or skills development that gives the employee a competitive advantage
- Equity compensation – stock options or other equity tied to protecting the employer's goodwill, provided the connection between the compensation and the protectable interest is clear
- A non-disclosure agreement combined with the provision of confidential information
What does not qualify: A pay raise, a bonus, a severance package, or the continuation of at-will employment, standing alone, is generally not sufficient consideration for a non-compete in Texas.
3. Make Reasonable Restrictions on Duration, Scope, and Geographic Area
Non-competes must be reasonable – meaning no broader than necessary to protect the employer's legitimate interests – when restricting duration, geographic area, and scope of prohibited activity. If any element is unreasonable, Texas courts are required by statute to reform – not void – the agreement to make it enforceable.
Duration
Texas courts have consistently found one- to two-year restrictions presumptively reasonable for employees with significant client relationships and access to confidential information. Restrictions of two to five years can be reasonable depending on the circumstances and the employee's role.
The key principle: the duration must not exceed what is necessary to protect the employer's legitimate interest. For a covenant designed to protect confidential information, a restriction should not persist beyond the point at which that information loses its competitive value.
Practical guidance:
- One to two years is the safest range for most employees
- Restrictions beyond two years require stronger justification tied to the nature of the protectable interest
- Restrictions of five or more years face significant scrutiny and risk of reformation
Geographic Area
Geographic restrictions must correspond to the actual territory where the employee worked or where the employer conducted business. A restriction that extends beyond where the employee actually served customers or exercised meaningful influence will likely be reformed.
Practical guidance:
- Limit the geographic scope to the territory the employee actually worked in and where the employer has documented customer relationships
- Avoid county or statewide restrictions unless the employee genuinely worked throughout those areas or had high-level access to company-wide strategies and operations
- For employees in industries with defined sales territories, restrict competition to that territory
- Consider a client-based restriction for remote employees as an alternative to a geographic limitation
- If including a radius measurement, specify whether the radius is measured in road miles or straight-line distance, and define the center point precisely
Scope of Activity
The scope of prohibited activity must be tied to activities that could actually threaten the employer's competitive advantage. A restriction that prohibits an employee from working in an entire industry, or from working for any competitor in any capacity, will likely be reformed.
Practical guidance:
- Restrict specific competitive activities – such as by product line, target market, or named direct competitors – not entire industries or job categories.
- Narrowly tailor the restriction to activities related to the employee's actual job function and the customer relationships they had dealings with while employed
- Avoid industry-wide exclusions, which are routinely found unreasonable and unenforceable by Texas courts
- Avoid "in any capacity" language – courts have specifically reformed provisions barring employees from working for a competitor in any capacity, limiting the restriction instead to roles that are the same as or substantially similar to the employee's prior responsibilities
4. Include Language to Make the Right to Enforce Assignable
Employers should consider adding clear language that allows them to assign the right of enforcement to any new owners of the company in the event of an ownership change or merger and acquisition. Assigning the right to enforce a business's covenants can play a role in attracting buyers and determining the ultimate purchase price.
As a buyer, ensure key employees are covered by a non-compete before completing the transaction, or you may find yourself competing against the talent you sought to acquire. A seller non-compete that prevents a seller from creating a competing business within a reasonable geographic distance and period of time may be equally important in a business acquisition.
5. Tailor the Agreement to the Specific Employee
Employers should account for the specific circumstances of each employment relationship – the employee's role, their access to confidential information, their level of seniority, and what competitive harm the employer is genuinely trying to prevent.
This is not only a matter of enforceability in Texas courts. The FTC has also made clear that blanket non-compete agreements imposed indiscriminately across an entire workforce are a priority enforcement target. In recent months, the agency has taken action against several national employers – including a major pest control company – whose non-competes applied to frontline workers, hourly employees, and others with no meaningful access to trade secrets, proprietary information, or client relationships.
Texas courts apply a similar lens. A non-compete must protect a genuine business interest – not simply prevent competition. Courts are particularly skeptical of restrictions on lower-wage workers and employees who had no meaningful access to confidential information or client relationships.
The practical guidance: Do not apply a standard non-compete agreement uniformly across your workforce. Instead, evaluate each role – or each category of role – individually:
- Does this employee have meaningful access to trade secrets, confidential client relationships, or proprietary business strategies?
- Are they in a position where leaving for a competitor would actually threaten the interests the agreement is designed to protect?
If the honest answer is no, a non-compete is both legally vulnerable in Texas courts and a potential target for FTC enforcement.
6. Special Considerations for Physician and Healthcare Non-Competes
Texas law has additional requirements for physician non-competes – and those requirements were enhanced when Texas Senate Bill 1318 took effect September 1, 2025. The law also extended certain non-compete protections to dentists, nurses, and physician assistants for the first time.
For agreements entered into or renewed on or after September 1, 2025, non-compete agreements with physicians and covered healthcare practitioners must:
- Restrict practice only within a five-mile radius of where the physician or practitioner primarily practiced
- Cap the restriction period at one year from the date of termination
- Include a defined buyout provision that cannot exceed the practitioner's total annual salary and wages at the time of termination
- Allow the physician access to records for patients treated within the year prior to separation
- Permit continued care for patients with acute conditions after departure
Agreements signed before September 1, 2025, remain governed by prior law unless renewed or modified.
For a full overview of Texas physician non-compete requirements and SB 1318's impact, see our guide to physician non-compete agreements in Texas.
Ready to Draft a Non-Compete Agreement That Will Hold Up in Texas?
A non-compete is only as valuable as its enforceability. Agreements that are overbroad, lack adequate consideration, or are applied too broadly across your workforce are vulnerable to challenge in court – and increasingly, to FTC scrutiny.
Hendershot Cowart P.C. has drafted, reviewed, and litigated non-compete agreements in Texas for more than 35 years. We work with employers to build agreements that protect what matters – trade secrets, client relationships, and competitive intelligence – without overreaching in ways that invite litigation or undermine enforcement.
We also represent employees and executives who need a non-compete reviewed before signing, or who are facing a dispute after the fact.
Call (713) 783-3110 or contact us online to speak with a Houston non-compete attorney.