Non-compete agreements have become a hot topic in Texas as more employers try to restrict their former employees` ability to work for competitors. A non-compete agreement is a legal document that prohibits an employee from working for a competitor for a certain period after leaving their job. But does Texas enforce non-compete agreements?
The answer is yes, Texas does enforce non-compete agreements, but only to a certain extent. Non-compete agreements are legal in Texas, but they must meet specific requirements to be enforceable. According to the Texas Business and Commerce Code, non-compete agreements must be:
1. Reasonable in scope
The agreement cannot be so broad that it prevents an employee from working in their chosen profession. The scope of the agreement must be limited to a reasonable geographic area and duration.
2. Based on a legitimate business interest
The agreement must protect a legitimate business interest, such as trade secrets or customer relationships. The employer must show that the employee has access to sensitive information or that the employee`s departure would cause significant harm to the business.
3. Supported by consideration
The employee must receive something of value in exchange for signing the non-compete agreement. This consideration could be a signing bonus, stock options, or a promotion.
If a non-compete agreement does not meet these requirements, it may not be enforceable. However, if the agreement does meet these requirements, a court may enforce it.
There are some exceptions to non-compete agreements in Texas. For example, physicians are exempt from non-compete agreements related to patient care. Additionally, non-compete agreements cannot be enforced against employees who are terminated without cause or are laid off.
In summary, non-compete agreements are legal in Texas, but they must meet specific guidelines to be enforceable. Employers should ensure that their agreements are reasonable in scope, based on a legitimate business interest, and supported by consideration. Employees should carefully review any non-compete agreements before signing them and seek legal advice if necessary.
