As in many other states, Texas law recognizes that companies may enter into noncompete agreements with employees.
Also known as noncompetition agreements, these contracts may restrict workers from providing services or confidential information to competing businesses both while employed with the company and for a specified period following an employee’s departure.
However, for a noncompete agreement to be enforceable, the terms of the contract may have to meet certain basic criteria for reasonableness.
How long does a noncompetition agreement last?
There is no hard-and-fast rule for the length of time that a noncompete agreement may last. Generally speaking, the terms may limit a worker’s activity during employment and for a period of several months or years after an employee leaves the company, depending on the nature of the industry and the worker’s position in the business.
What is the allowable scope of a noncompete contract?
Texas law also allows businesses to include reasonable geographical and business scope limitations into noncompete agreements. For instance, a company may stipulate that an employee refrain from working with competitors within the geographical areas where he or she has worked for the business. A noncompetition contract may also restrict employees from working with existing company clients and competitors.
When might a noncompetition agreement be unfair?
While Texas does not set specific limits on the extensiveness of noncompete agreements, contracts that are overly broad may not be enforceable. If an agreement subjects an employee to greater restrictions than reasonably necessary to protect a company’s legitimate business interests, the certain terms of the contract may not hold up in court.