Non-compete agreements, also known as restrictive covenants, are commonly used by employers to protect their business interests from competition. These agreements typically prevent employees from entering into a similar business or industry for a period of time after leaving their current employer. In Texas, non-compete agreements are enforceable, but they must meet certain requirements to be valid.
One of the key requirements for a non-compete agreement in Texas is the consideration. Consideration is the exchange of something of value between two parties. In the case of a non-compete agreement, the consideration is typically the job itself. In other words, the employer agrees to employ the employee in exchange for the employee agreeing to the terms of the non-compete agreement.
However, in Texas, mere employment is not considered adequate consideration for a non-compete agreement. Instead, the employee must receive additional benefits or compensation beyond their regular salary. This could include bonuses, stock options, promotions, or access to confidential information.
The consideration must also be provided at the time the employee signs the non-compete agreement, or within seven days of signing. If the consideration is not given until after the employee has started working, the non-compete agreement may not be enforceable.
Another important consideration for non-compete agreements in Texas is the scope of the restriction. The agreement must be reasonable in terms of the scope of the restriction, the geographic area covered, and the duration of the restriction. If the restriction is too broad or extends for an unreasonable amount of time, it may not be enforceable.
In addition, the non-compete agreement must be designed to protect a legitimate business interest of the employer, such as trade secrets, client relationships, or confidential information. It cannot be used to prevent competition in general or to restrict an employee`s ability to work in their chosen field.
In summary, non-compete agreements in Texas are enforceable if they meet certain requirements, including adequate consideration, reasonable scope, and protection of legitimate business interests. As an employee, it is important to understand the terms of any non-compete agreement you sign and to negotiate the terms if necessary. As an employer, it is important to ensure that your non-compete agreements are legally enforceable and designed to protect your business interests without unfairly restricting your employees.