Despite Texas courts tending to favor employment mobility, getting out of a non-compete agreement in Texas can still be tricky.
To understand how you might be able to get out of a Texas non-compete agreement, you first need to know what makes a non-compete agreement enforceable.
Under Texas law noncompete agreements can be enforceable if:
- The non-compete provision is part of an otherwise enforceable agreement.
- The non-compete requirement is supported by valid consideration (consideration meaning something of value provided to the employee).
- The non-compete requirement is reasonable in geographic scope, timeframe, and activities being restrained.
Next, identify the consideration that was given by your employer to justify the restrictions set forth in your non-compete agreement.
For example, if your employer contends that it gave you confidential information or specialized training as consideration, you’d need to go about proving that the information or training wasn’t actually special.
Then, you’ll want to consider whether the restrictions in your non-compete agreement are reasonable in scope and duration.
In some cases, a technical defect (such as the employer not signing the agreement) can affect enforceability.
Finally, the employer’s conduct (e.g., unclean hands, or conduct inconsistent with enforcement) can sometimes provide the employee with a good way out of a non-compete.
Texas Non-Compete Agreement FAQ
The best way to know whether your particular agreement can be enforced is to have it reviewed by a qualified lawyer. Attorney Robert Wood is the authority on Texas noncompete law, having handled these cases for nearly 30 years.
However, if you’re not ready to speak with a lawyer, the answers below will help you gain a better understanding of how Texas law treats non-compete agreements.
Are Texas Non-Compete Agreements Enforceable Under the Texas Covenants Not to Compete Act?
The Texas Covenants Not to Compete Act governs non-compete agreements or covenants not to compete, in Texas.
Under the Act, a non-compete is enforceable if it is part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable.
What does this mean in practice? Based on the Act and Texas case law, in order to be enforceable, the following must be true of a non-compete agreement:
- Restrictions imposed on the employee must be reasonable in order to protect the employer’s legitimate business interests; and
- Employee must receive sufficient consideration for the restrictions on employment.
Did I Receive Suitable Non-Compete Consideration?
For a non-compete agreement to be enforceable, the employee must receive adequate or sufficient consideration. Additionally, that consideration also has to be something beyond a promise to continue employing the employee, or a cash bonus. So, under Texas law, examples of adequate consideration may include:
- Confidential information that could be very valuable to a competitor;
- Specialized training; and/or
- Stock options that provide the employee with interest in the business that is similar to that of shareholders.
Even if an employee receives any of the above forms of consideration but that consideration is not specified in writing in the non-compete agreement, the employee may be able to argue that the non-compete agreement is unenforceable.
Also, in situations where the employer did not provide sufficient consideration under Texas law, the employee may be able to get out of the non-compete agreement. For instance, if the employer offered a lump sum of cash as consideration, that is not considered to be adequate consideration in Texas, and the agreement likely will be unenforceable.
Is My Texas Non-Compete Agreement Reasonable in Scope and Duration?
An employee also may be able to get out of a non-compete agreement if the restrictions are unreasonable. Above all, a non-compete agreement must be reasonable in all of the following ways to be enforceable:
- Scope of activity restricted;
- Scope of geographic area restricted; and
- Temporal duration.
What Are Other Reasons a Texas Non-Compete Agreement May Be Unenforceable?
There are other reasons that a non-compete agreement may be unenforceable—allowing an employee to extract himself or herself from its terms—even if it is reasonable and there is adequate consideration. The following are a couple of examples of reasons that an employee in Texas may be able to get out of a non-compete agreement:
- The employer failed to sign the agreement;
- The employer failed to abide by other technical requirements of the Texas Covenants Not to Compete Act; or
- Employer behaved in a manner that may negate the non-compete agreement.
While getting out of a non-compete agreement in Texas can be complicated, there are a variety of strategies that employees may be able to use in order to show that a non-compete agreement is unenforceable.
How can I get out of a non-compete agreement in Texas?
If you want to get out of a non-compete agreement in Texas, there are several options available to you. Some potential ways to get out of a non-compete agreement in Texas include the following:
- Negotiate with the employer to modify the terms of the agreement. If the terms of the non-compete agreement are overly restrictive or burdensome, you may be able to negotiate with the employer to modify the agreement in a way that is more reasonable and workable for you.
- Challenge the enforceability of the agreement in court. If you believe that the non-compete agreement is unenforceable or violates the law, you may be able to challenge its enforceability in court. An attorney can help you understand your legal rights and options in this situation.
- Wait for the agreement to expire. If the non-compete agreement has a specific duration, you may be able to wait for the agreement to expire and then begin working for a competitor.
- Seek a waiver or exemption from the agreement. In some cases, you may be able to seek a waiver or exemption from the non-compete agreement from the employer or a court. This could allow you to work for a competitor without violating the agreement.
Ultimately, the best option for getting out of a non-compete agreement in Texas will depend on the specific terms of the agreement and your individual circumstances.
Can I work for a competitor if I signed a non-compete in Texas?
Whether you are able to work for a competitor after signing a non-compete agreement in Texas depends on the specific terms of your agreement and whether it is considered to be reasonable and enforceable under Texas law. If your agreement is found to be unreasonable or unenforceable, then you may be able to work for a competitor without violating the agreement. However, it’s always best to review the specific terms of your agreement with an attorney before making any decisions about working for a competitor.
How long is a non-compete agreement valid in Texas?
There is no specific time period during which a non-compete agreement is valid in Texas. The duration of a non-compete agreement in Texas must be reasonable, meaning that it must be no longer than necessary to protect the legitimate business interests of the employer. The specific duration of a non-compete agreement will depend on the facts and circumstances of the case, including the nature of the employer’s business and the type of information or trade secrets that are being protected. In general, however, non-compete agreements in Texas are typically only enforceable for a period of one to two years.
What happens if you break a non-compete in Texas?
If you violate a non-compete agreement in Texas, the employer may be able to seek legal remedies against you. This could include obtaining a court order to prevent you from continuing to compete with the employer or seeking monetary damages to compensate the employer for any losses that they may have suffered as a result of your actions. The specific consequences of violating a non-compete agreement in Texas will depend on the specific terms of the agreement and the facts and circumstances of the case. It’s always best to consult with an attorney if you are unsure about whether your actions may violate a non-compete agreement.
How worried should I be about a non-compete?
Whether you should be worried about a non-compete agreement will depend on the specific terms of the agreement and your individual circumstances. If you have signed a non-compete agreement that is reasonable in scope, duration, and geographic area, and you are not planning to engage in any activities that would violate the agreement, then you may not need to be too worried about it.
However, if the terms of the agreement are overly restrictive or if you are planning to engage in activities that may violate the agreement, then you may want to consult with an attorney to understand your rights and potential risks. In general, it’s always best to carefully review any non-compete agreement before signing it, and to consult with an attorney if you have any concerns or questions.
Can a company prevent you from working for a competitor Texas?
Yes, a company can prevent you from working for a competitor in Texas if you have signed a valid and enforceable non-compete agreement. If you have signed a valid non-compete agreement, and you are planning to work for a competitor in a way that would violate the agreement, then the company may be able to seek legal remedies against you, including obtaining a court order to prevent you from competing. It’s always best to carefully review the terms of any non-compete agreement before signing it, and to consult with an attorney if you have any concerns or questions.
This information was brought to you by attorney Robert Wood. Robert’s firm assists many employees bound by non-compete agreements in Texas. Also, they are extremely familiar with Texas law governing these types of agreements. Their firm has substantial experience with this field inside and outside Texas courtrooms.
In addition to employees, they also represent companies. This makes us incredibly valuable because they know how employers can view violations of non-compete agreements.
If you are party to a non-compete agreement or have a legal matter involving a non-compete in Texas, contact us today.