What Happens If I Break a Non-Compete Agreement?

Depending on your line of work, your employer may have asked you to sign a non-compete agreement when you joined the company. Most often, these agreements are included as a clause in your employment contract.

Prior to signing, we encourage you to seek the advice of an attorney to protect your rights. But what happens if you have already signed, and you need to get out of a non-compete agreement?

On This Page:

• What Is a Non-Compete Agreement?
• What Happens If I Break a Non-Compete Agreement in Texas?
• Are There Loopholes In Non-Compete Agreements?
• Can I Get Out of a Non-Compete Agreement?
• Is a Non-Compete Agreement Enforceable in Texas?
• Can You Go To Jail For Breaking A Non-Compete?

Not every non-compete agreement is created equal. To learn more about the enforceability of non-compete agreements in Texas and the options available to you, call (713) 783-3110 today.

A non-compete agreement (also known as restrictive covenant or covenant not to compete) is generally a clause in an employment contract that stipulates how or when an employee can conduct business after leaving an employer.

Non-compete agreements can be tricky. While they aim to protect a company's confidential information and competitive edge, they can also be seen as restrictions on an employee's ability to earn a living.

• Employers add these to employee contracts because they don't want to train an employee and share trade secrets only for that employee to leave and use that knowledge to compete against them.
• Critics say that non-competes restrict worker mobility. Employees may be forced to stay in jobs they want to leave, switch to a lower-paying field or relocate, or risk a lawsuit.

Before you sign an employment agreement, carefully review if for a non-compete clause and make sure you understand its obligations and restrictions. Better yet, ask a business lawyer to review it with you before you sign.

An attorney experienced with drafting, negotiating and litigating non-compete and other business agreements can advise you on reasonable limitations for your specific industry and identify which elements can be challenged should you seek to get out of a non-compete agreement.

If you violate the terms of a legally enforceable non-compete agreement, your employee may ask the courts for an injunction to stop improper competitive activity and pursue actions (such as a lawsuit) to recover financial damages. The consequences may even be outlined in your non-compete clause. There are available defenses, however, as described below.

There aren't exactly "loopholes" in a non-compete agreement that you can exploit, but there are situations where a non-compete agreement might be considered unenforceable. We outline a few of these reasons in the next section.

A fair, enforceable non-compete protects all parties involved. However, if you violated – or plan to violate – what you consider to be an overly burdensome non-compete agreement, seek the advice of a non-compete agreement attorney immediately. Our business and contract law team has decades of experience defending clients against non-compete violation claims. We are available to discuss your situation, available defenses, and how we can help you proceed.

Although every non-compete agreement and employer are different, you may be able to get out of a non-compete by raising one of the following defenses:

• The employer breached your employment contract;
• The restrictions are overly broad; or
• The non-compete does not protect a legitimate business interest, such as confidential information or an investment in specialized trainings.

Yes, non-compete agreements are legally binding and enforceable in Texas, though there are restrictions.

To hold up in court and be enforceable in Texas, a non-compete agreement must:

• Be ancillary to an otherwise enforceable agreement (such as an employment contract)
• Be reasonable in scope of activity
• Be reasonable in geographic area
• Be reasonable in duration / time period

If a court deems any of these elements to be broader than necessary to protect the interests of the business, the court can reform or void the agreement.

Read about recent developments on non-compete agreements at the federal level.

Violating a non-compete agreement is not a criminal offense. Non-compete agreements are considered civil contracts and violating them leads to civil penalties. 

If you break a non-compete agreement, your former employer may sue you for breach of contract. If they win, you could be ordered to:

• Stop working for your new employer (if it violates the non-compete clause).
• Pay them financial damages for any losses they can prove resulted from you working for a competitor.

If you're concerned about a non-compete agreement, consult with an attorney who can advise you on the specific enforceability of your agreement.

If you are unsure about the legalities of your non-compete agreement, our Houston business litigation firm is here to help. Call us today at (713) 783-3110 or contact us online.