There are several types of agreements, also known as restrictive covenants, that employers may require their employees to sign. These non compete agreements restrict the employee from engaging in certain specific behaviors. Non-compete agreements are an example of one of these restrictive covenants that are frequently used by employers.
In a field that relies on research and innovation, an employer may choose to protect its valuable intangible assets, confidential or sensitive information and trade secrets with written non-disclosure agreements, often containing arbitration clauses. A non-disclosure agreement lawyer can often effectively draft an agreement to protect an employer’s trade secrets if the information in question is clearly identified and the business otherwise maintains the secrecy of such information.
In a highly competitive industry or one where individuals have received specialized training and have unique skills, non-solicitation agreements can protect the employer from existing customers and departing employees. The purpose of the non-solicitation agreement is to prevent customers and/or former employees from poaching highly trained and skilled employees.
Non-compete agreements can prevent a former employee or contractor from going to work for a competitor, but they also serve another purpose. With remote work being the norm in many companies, some employers are horrified to learn that current employees are operating competing businesses while still on the payroll. And doing so while using confidential information (and technology and other assets) obtained from the employer. These employers needed a non-compete attorney yesterday. Texas courts have issued guidelines that discuss what a departing employee planning to resign can and cannot do before resigning.
Let’s review Texas non-compete laws.
Non-Compete Agreements in Texas: Are They Enforceable
While the Supreme Court of Texas years ago determined that Texas non-compete agreements may constitute unconstitutional restraints on trade, the state legislature subsequently passed a statute authorizing such agreements in certain instances.
Chapter 15 of the Texas Business and Commerce Code promotes free trade and competition in Texas, and Section 15 details practices prohibited because they may restrict free trade.
Section 15.50 of the Texas Business and Commerce Code is the Texas non-compete statute. It states that any Texas non-compete agreement (a.k.a. Covenant not to compete)
Is enforceable if it is ancillary to or 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 and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promises.
Sub-paragraphs of Section 15.50 give more specific criteria for enforceability of non-compete agreements in Texas that pertain specifically to physicians.
Some businesses fear such an agreement will limit their rights under the traditional doctrine of employment at-will, but the two concepts don’t have to be mutually exclusive. You can have many types of restrictive covenants in an at-will employment arrangement. All employers should consult with a non-compete agreement lawyer to ensure their contract is properly drafted and satisfies the requirements of the statute.
A Non-Compete Agreement Lawyer for Texas Employers
The best time to work with a Texas non-compete agreement attorney is when your company is young. Develop the agreements early on, and have your employees sign them during the onboarding process.
Sometimes employees who sign agreements do not honor them. An employee may breach a fiduciary duty by competing with you secretly while still employed. Former workers may cross the boundary of legal and fair competition, taking disparaging information about you to customers and vendors to gain an unfair competitive advantage for themselves or their new employer. If a current or former employee breaches a restrictive covenant with you, you will want to make them cease and desist. It may be necessary to take them to court to do so.
Our business litigators can evaluate whether a former employee has crossed the line, help you to develop the evidence you may need to establish or defend against such a claim, and persuasively present your case. Call us today for a consultation with a Texas non-compete attorney.