Non-compete agreements provide serious protection against competition from former employees, but can substantially limit their future work ability.
Employees cannot compete against their current employers. Once separated, employees are free to use the skills, connections, and knowledge learned to take business from their former employers. However, employers in Texas can limit the loss from this competition through post-employment covenants not to compete – “non-compete” agreements.
You should tailor the agreement to the employee and company’s goals.
Texas’ requirements for non-competes are in Chapter 15 of the Texas Business & Commerce Code. Texas Courts cannot enforce non-competes which are over-broad in terms of geography, duration, or scope of activity. Seeking to enforce a clearly over-broad non-compete can even expose the employer to a counter-claim for attorneys’ fees. Thus, it is critical to follow the law in implementing non-competes.
Also – other states impose limits on non-competes which may create problems. At least one state (Colorado) even assesses criminal penalties for violating these limits. Employers can consider using choice-of-law and forum selection clauses to avoid the uncertainty of other state laws. Otherwise, company counsel should consider state-specific law where any non-compete will be performed.
I draft non-compete agreements and regularly represent clients in non-compete lawsuits.
Texas Courts enforce non-competes on a weekly basis. If you need a lawyer to draft an effective non-compete, or to enforce one for you in Court, feel free to call me to consult on the issue.