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Texas Law For Enforcing Non-Compete Agreements

Non-compete agreements and non-solicitation agreements are tools that companies utilize to protect from employees competition in the same industry. The laws have changed throughout the years are the result of several major lawsuits. This resulted in strict requirements to make true non-compete agreements enforceable. Texas Non-Compete Agreement Attorney Richard Weaver represent businesses seeking to enforce these restrictive agreements against employees that violate the non-compete agreements and non-solicitation agreements they have signed. The Texas law governing these binding agreements shows the specific restrains that allow a business to protect its intellectual property rights. Along these same lines, many of the non-competition agreements that the attorneys at The Weaver Law Firm review are non-valid. Usually, a former employee has presented the contract to the firm for a review and consultation regarding the non-enforceability of the purported agreement.

Non-Competition agreements are very typical for employees to sign. Through these agreements, employers attempt to protect their proprietary rights to customer lists, business research, scientific innovations and inventions. This confidential information may be the life-blood to the survival of a business. If done incorrectly, these agreements may improperly attempt to restrain employees and executives in their efforts to offer their services to competitors and the free market.

Texas lawyers helped covenant not to compete laws to change on a large scale in June 2011. The effect of this new law is that Texas non-compete agreements previously considered to be invalid now may be enforceable. If you have been presented with a non compete agreement or if you are considering whether to end an employment relationship with a “non-compete agreement,” contact an experienced employment lawyer.

When you signed your employment agreement, did you notice whether there was a non-compete provision towards the end of your employment contract? Perhaps you did not think there was one because there was not a bold title identifying the non-compete provisions. Many Texas professionals, executives, and employees often the non-compete covenant because they are excited about the hiring process and obtaining a new job. It is not until the employee is planning to leave employment when he considers the non-competition agreement. Other times, it is not until post-employment after receiving a threatening letter from the former employer’s lawyer.

What Are Texas Non-Compete Agreements?

A covenant not to compete is an agreement between an employee and an employer that has the purpose to restrict an employee’s post-employment activities related to the type of work the employee can perform after working for the company. Texas non-compete contracts try to prevent an employee from working in the employee’s chosen profession, trade, or industry. They also try to prevent the employee from soliciting a former employer’s customers or hiring the former employer’s employees. Typical accompanying contracts or clause include non-solicitation agreement and non-disclosure agreements (NDAs).

It is the opinion of Texas lawyers that courts generally disfavor non-compete agreements. Many Texas attorneys believe that courts may enforce a non-compete covenant if it is executed for valid consideration, contains reasonable geographic, temporal, and activity restrictions, and protects the employer’s legitimate business interests.

What Are the Legal Requirements to Enforce a Non-Compete Agreement?

Under Texas law there are two main requirements on whether a non-compete agreement is enforceable. The first requirement is that an employee’s promise not to compete must be reasonably related to an interest worthy of the employer’s protection.

Prior to this above referenced law, the employee and employer were required to enter into an agreement with reciprocal promises, and the promise given by the employer must have given rise to the employer’s interest in preventing the employee from competing. The non-compete provision must have been designed to enforce the employee’s promise to the employer in the underlying agreement.

The Texas Supreme Court decided in June 2011, that an employee’s promises must only be reasonably related to or have a factual nexus with an employer’s non-compete agreement.

The second requirement is that a non-compete must contain reasonable restrictions describing the covenant’s geographical limits, restrictive time period, and description of the employee’s activities to be restrained.

In order to determine whether restrictions are reasonable the fact finder may have to consider a complex factual scenario. A judge or jury may also have to examine the employer’s businesses interests and whether they are being protected by the non-compete agreement.

An employer has a better chance of enforcing a non-compete agreement if it provides the employee with confidential information or trade secrets and in return the employee promises not to disclose the employer’s confidential information or trade secrets. The agreement should also have an agreement that the employee will not perform similar duties for a competing business in the same geographic area for a reasonable period of time.

Texas Non-Compete Law and Confidential Information

Under the new Texas non-compete law, the employee’s non-compete promise will become enforceable if and when the employer provides the employee with confidential information. The employer is not required to provide confidential information or other valid consideration at the time the employee signs a Texas covenant not to compete.

How Do Recent Employment Laws Affect Employees?

The good news is that courts are more closely scrutinizing the scope of a covenant’s restrictions under the second requirement. Courts may reform the agreement if a covenant’s restrictions are overly broad. This is in the situations where a court finds a non-compete agreement to be enforceable under the first requirement.

Generally, Texas covenant not to compete laws are complex. It is the area of Texas employment law that can prevent a person from earning a living in the industry or trade that the person loves or went to school to learn. Read your contract before you sign and call an experienced lawyer for a consultation before you sign.

Results come first in business law matters. Our attorneys are experienced in drafting and litigating non-compete and non-solicitation agreements both in employment matters and in relation to the sale of businesses. To have our attorneys review or prepare your non-compete agreement, call us at 713-572-4900 or email our attorneys your questions.