Texas Noncompete Agreement: What's Included and Enforceability
Quick Facts — Noncompete Agreement Lawyers (Texas)
- Avg cost to draft a Non-Compete Agreement: $540.00
- Avg cost to review a Non-Compete Agreement: $550.00
- Lawyers available: 57 Texas employment lawyers
- Clients helped: 25 recent noncompete agreement projects in Texas
- Avg lawyer rating: 4.88 (8 reviews)
Is a Non-Compete Agreement Enforceable in Texas?
In Texas, non-compete agreements that restrict employees from competing against former employers in similar industries are permitted and can be legally enforced. For a non-compete agreement to be legally enforceable, it must meet certain requirements laid out in Texas state laws.
Some of these requirements include:
- The non-compete must be signed at the time of employment and be ancillary or part of an offer for employment.
- There must be limitations on the duration of the agreement and the geographical area the agreement covers.
- There must be limitations on the scope of activity that the agreement restricts.
- Physicians who sign non-compete agreements cannot be denied access to a list of previous patients and medical records.
- Attorneys cannot participate in non-compete agreements.
As long as these conditions are met, most non-compete agreements will be enforced in Texas.
How Long Does a Texas Non-Compete Agreement Last?
The Texas Court of Appeals has regularly enforced non-compete agreements that last between two and five years. This time frame has been ruled reasonable in the eyes of the court.
When looking at the duration of a non-compete agreement, courts will also consider the geographic boundary. The geographic area that is restricted under the non-compete agreement must be an area where the employee or worked or where the employer conducts business.
How Do You Get Around a Non-Compete Agreement in Texas?
Even though non-compete agreements are enforceable in Texas, there are a few ways to potentially get around them.
Here are some of the ways:
- Challenge the agreement's validity. You may be able to challenge the validity of the non-compete agreement if it is overly restrictive in terms of time, geographic scope, or the type of work it covers. The agreement must be reasonable and not impose undue hardship on the employee.
- Negotiate with your employer. If the non-compete agreement is overly restrictive, you can try negotiating with your employer to have it modified or narrowed.
- Look for a loophole. Sometimes non-compete agreements contain loopholes or exceptions that you can exploit. For example, the agreement may not apply to certain geographical areas or job functions.
- Wait it out. If the non-compete agreement has a time limit, you can simply wait until it expires before entering into competition with your former employer.
- Ask the court to modify. Texas allows courts to “blue pencil” or modify overly broad or restrictive non-compete agreements. If a term or restraint is more than necessary to protect the employer’s interests, you can request that the term be reasonably modified.
What Happens If You Break a Non-Compete Agreement in Texas?
If you violate a legally enforceable non-compete agreement, you could face serious repercussions. Once a non-compete is violated, your former employer can petition the court for an injunction to order you to stop the activity that violates the contract. From there, your former employer could file a lawsuit against you for breach of contract in an attempt to recover financial damages.
Texas allows punitive damages to be awarded in breach of contract cases. This means that the breaching party could be fined for their wrongdoing on top of any damages the court has already awarded the non-breaching party. In past cases, Texas courts have awarded employers over $100,000 in punitive damages following a breach of a non-compete agreement.
What Voids a Texas Non-Compete Agreement?
A non-compete agreement in Texas will be void if it lacks adequate consideration. Continued employment is not adequate consideration in Texas so when a new employee signs a non-compete, it must be supported by independent valuable consideration like a new position, raise in pay, or additional benefits.
Frequently Asked Questions
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Thank you so much — this was a meaningful engagement and I am glad the review gave you what you needed. Non-compete and severance matters in Georgia involve some nuances that can really affect your position, and I wanted to make sure you walked away with a thorough picture. Please come back anytime. -Allen
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Could someone go to jail if they are accused of fraud for never intending to not breaching his or her non compete non solicit contract?
I am really curious when employment contract can become criminal. Is it criminal to ask you coworker to come work with you, considering if you are accused of fraud for breaching non compete non solicit?
Matthew S.
No, this at worst is a civil matter and not a criminal matter. F
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Noncompete agreement choice of law?
I recently accepted a job offer with a new employer and they sent me a Noncompete Agreement to sign. I have some questions about the agreement, specifically related to the choice of law. My former employer and I are in different states, and I want to make sure I understand the implications of the agreement before signing.
Venus C.
Congratulations on your new job. Generally, a choice of law clause contained in a non-compete agreement indicates which state law will govern the contract. By way of general example, let's pretend we have a non-compete agreement that states the choice of law is Florida. Let's also pretend the parties to this agreement had a dispute and one party filed a lawsuit against the other in the state of New York. In this pretend scenario, because the parties agreed Florida to be their choice of law for the non-compete agreement, the court in New York would abide by that contractual agreement and apply Florida law. While choice of law clauses are commonly used to indicate what law will apply to a contract, the language used or omitted plays a significant role in their interpretation and enforceability.
Business Contracts
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California
Noncompete agreement time restrictions?
I am an entrepreneur who recently signed a Noncompete Agreement with a potential business partner, and I am looking to gain a better understanding of the time restrictions that are in place. I am concerned that the terms of the agreement may prevent me from pursuing other opportunities in the future and want to make sure I am aware of all the restrictions before making any decisions.
Gagandeep K.
The non-compete agreement will likely specify the non-compete period/time restriction. If that is not obviously stated, you should consider having an attorney review the non-compete agreement. Typically, a non-compete agreement in a partnership or LLC places a geographic limitation for a certain time period such that the partner/member is prevented from carrying-on a similar business in a geographic area where the partnership/LLC has done and continues to do business. You can read more about non-compete agreements in California here: https://www.contractscounsel.com/t/us/noncompete-agreement/california.
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I recently accepted a new position with a company that has requested that I sign a noncompete agreement. I understand the agreement and the limitations it puts on me, but I am concerned about how the agreement would be affected if the company is sold or changes ownership in the future. I would like to understand my legal rights in the event of a change of control.
Thomas L.
If the future company buys the equity of your current employer, the Non-Compete continues in effect. If the future company buys the assets, the Non-Compete is terminated. I would request a sentence be added to the effect that "if there is a change of control of the Company (meaning more than 50% of the equity interest or 50% of the voting equity control) is sold or transferred, then this Non-Compete Agreement is terminated.
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I recently left my job as an employee at a company that I had worked for for over a year. I was asked to sign a noncompete agreement when I began the job, which I did. I have since started a new job in the same industry as my former employer, which is in violation of the noncompete agreement. I am now wondering what the consequences of this breach of contract may be and am seeking legal advice.
Gregory F.
I would be happy to schedule a paid telephone consultation with you to review the non-compete agreement, advise you on its scope and enforceability, and answer your questions. Please contact me via email at greg@fidlonlegal.com to discuss.
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