As in other states, Texas law recognizes that businesses may have the right to create non-compete agreements with employees.
Also called non-competition agreements, these types of contracts may restrict workers from offering services to or sharing privileged information with competing businesses. Such contracts may remain in effect both during employment and for a specified time after the employee leaves the company.
However, non-competition agreements may not be legally enforceable if the terms of the contract do not meet certain necessary criteria for reasonableness.
1. What scope does the law allow for non-compete agreements?
In Texas, a company’s non-competition agreement may include justifiable limitations on the scope of an employee’s interactions both within the industry and within the geographical region. For example, a business may restrict an employee from working with existing company competitors and clients and restrict the employee from providing comparable services within a certain geographical area.
2. How long do non-competition contracts last?
There is no set legal limit on the duration of a non-compete agreement after an employee leaves a company. A legitimate contract may restrict a worker’s activity during employment and for several months, or years, depending on the employee’s position within the company and the nature of the industry he or she works in.
3. When might a non-compete agreement be untenable?
Texas law does not contain a set of specific limitations on the reach of noncompete contracts. However, agreements that contain language that is overly broad may not hold up in court.
If a contract specifies limitations or constraints on an employee that exceed a company’s legitimate business interests, at least some of the terms of that agreement may not be legally enforceable.