Non-Compete Contracts in Texas: What You Need to Know

If you`re an employer in Texas, chances are that you`ve heard of non-compete contracts. These legal agreements are used to prevent employees from working with competing companies after leaving their current job. While non-compete agreements can be a valuable tool for employers, they can also be a source of confusion and controversy. In this article, we`ll explore some common questions about non-compete contracts in Texas.

What Is a Non-Compete Contract?

A non-compete contract, also known as a non-compete agreement, is a legal agreement between an employer and an employee that limits the employee`s ability to work for competing companies after leaving the employer. Non-compete agreements typically specify a certain period of time (often a few years) and a geographic area where the employee is prohibited from working for competitors.

Why Do Employers Use Non-Compete Contracts?

Employers use non-compete contracts to protect confidential information and prevent employees from taking valuable knowledge and skills to competitors. For example, a tech company may require employees to sign non-compete agreements to prevent them from working for a competitor and sharing trade secrets or customer information.

Are Non-Compete Contracts Enforceable in Texas?

In Texas, non-compete contracts are generally enforceable as long as they meet certain criteria. To be enforceable, a non-compete agreement must be:

– Part of a larger agreement, such as an employment contract or severance package.

– Reasonable in terms of duration, geographic scope, and the scope of prohibited activities.

– Necessary to protect the employer`s legitimate business interests.

It`s important to note that Texas law does not allow employers to enforce non-compete agreements against certain types of workers, such as low-wage employees or those who are terminated without cause.

What Happens if an Employee Violates a Non-Compete Contract?

If an employee violates a non-compete agreement, the employer may seek legal action to enforce the contract. This may involve a lawsuit to obtain an injunction preventing the employee from working for a competitor or seeking damages for any losses suffered as a result of the employee`s actions.

What Should Employers Consider When Drafting Non-Compete Contracts?

When drafting a non-compete agreement, employers should consider the following factors:

– The duration of the agreement: Non-compete contracts should be reasonable in terms of duration. Employers should consider the nature of their business and the amount of time needed to protect their legitimate business interests.

– The geographic scope: Non-compete agreements should also be reasonable in terms of geographic scope. Employers should consider the scope of their business and the areas where they have legitimate business interests.

– The scope of prohibited activities: Non-compete agreements should be narrow in terms of the scope of prohibited activities. Employers should only prohibit activities that are necessary to protect their legitimate business interests.

– The employee`s role: Employers should consider the employee`s role and responsibilities when drafting a non-compete agreement. The scope of the agreement should be tailored to the employee`s specific duties and responsibilities.

In conclusion, non-compete contracts are a valuable tool for employers to protect their legitimate business interests. However, they must be reasonable in terms of duration, geographic scope, and the scope of prohibited activities. Employers should carefully consider these factors when drafting non-compete agreements to ensure that they are enforceable under Texas law.