20 Jan 2022

Non-Compete Agreement: Can Your Employer Dictate Your Actions?

non-compete agreement texas

Did your employer ask you to sign a non-compete agreement? In some cases, you might hear it called a covenant not to compete, but it means the same thing. Often, employers ask new hires to sign this contract. 

It restricts the actions of the employee after the employment relationship ends. Specifically, it bars them from working for a competitor or starting a competing business for a specific period of time.

It’s not hard to see why an employer would want someone, especially an executive, to sign this agreement. The contract limits the amount of competition the company faces from people with intimate knowledge of the business. Moreover, it prevents employees from luring away clients, customers, or even other employees. 

However, they also allow an employer to control the actions of an employee long after they part ways. That doesn’t quite fit in with the traditions of free enterprise we value in this country. Oftentimes, a state won’t enforce an extreme non-compete agreement that lasts for a long time. 

What does that mean for you? When you have greener pastures on the horizon, a non-compete might not be as big a hurdle as it seems. 

Texas & Non-Compete Agreements

Unlike some other states, Texas often favors these restrictive agreements. Unfortunately, this remains true even with the signing of the Executive Order Promoting Competition in the American Economy last summer. This order directed the FTC to examine the potential of federal rule changes that might impact non-compete contracts. 

However, employer-friendly rules are still in place. Still, there are options to help soften the impact on employees. When you have an employment attorney Houston trusts on your side, you have an advocate to help you explore your options. 

How an Employment Lawyer Can Help

Before you sign anything at a new job, it’s always a good idea to have an attorney review your employment agreement. This helps you avoid major hurdles down the road. Moreover, it puts you in a better position to understand your rights and options in a new situation. 

Oftentimes, restrictions on potential competition come in a few different situations. As you review your agreement, you might look for a non-compete clause. Maybe you never see those specific terms. 

However, this doesn’t mean there are no restrictions on what you do after you part ways with the company. The details are essential, and an attorney knows more about these red flags than the average employee. 

Under Texas Law

Under the Texas Business and Commerce Code, Paragraph 15.50(a) states the following. 

“[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 promisee.”

There are a few things that might be difficult to parse out there. However, the bottom line is that there are 4 factors that courts consider when they evaluate a non-compete agreement. 

  • Something of value supports the agreement (usually financial perks). 
  • The agreement covers a reasonable amount of time. 
  • Your agreement contains a reasonable geographic scope. 
  • The agreement restrains reasonable activities. 

Typically, court decisions on these rules become more specific when you examine them industry by industry. No two situations are quite the same, and that’s what makes the guidance of an attorney so useful. 

In the Face of a Non-Compete Agreement, You Need an Advocate

When you have concerns about any form of contract, it’s crucial to speak with an experienced attorney. Because Texas recognizes many non-compete agreements, it’s important to have someone with the right expertise review it. 

This is especially true when the contract seems quite broad and has the potential to limit your future ability to earn an income. With an employment attorney on your side, you have someone to advise you on your options. 

Moreover, you have someone to help you negotiate for more favorable terms. Reach out to an experienced employment lawyer for a free consultation today. 

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