Is My Non-Compete Agreement Enforceable if I Signed it After Starting My Employment?
In Texas, a Non-Compete Can Be Enforceable if it Was Signed After the Start of Employment—but the Specific Circumstances Always Matter.
Did you sign a non-compete that was proposed by your employer in Texas? Was the contract signed after you had already started your job? You may be wondering if the contract can still be enforced. The answer is “yes”—at least, it is possible that it is enforceable. However, the specific terms of the contract and the circumstances of your employment always matter. Our Lake Jackson and Pearland non-compete lawyers explain what you should know about the enforceability of non-compete agreements.
An Overview of Non-Compete Agreements
A non-compete agreement is a contract or clause within a contract whereby an employee agrees not to compete against an employer after their term of employment ends. The enforceability of non-competes in many other states is derived from court decisions commonly referred to as case law or precedent. In Texas, enforceability of non-competes is derived from the Covenants not to Compete Act.
Your Guide to the Enforceability of Non-Compete Clauses in Texas
A non-compete contract will only be enforced by a court in Texas if it meets certain basic legal standards. A non-compete that is deemed too broad—meaning overly restrictive on the employee—can be thrown out. Here are four key criteria that non-compete agreements must meet to be enforceable against an employee in Texas:
- Must be “Ancillary to or part of” to an Enforceable Agreement: The Texas Supreme Court has held that a non-compete is “ancillary to or part of” an otherwise enforceable agreement if: a) consideration from the employer gives rise to the employer’s interest in placing restraint on the employee’s competition; and b) the non-compete is designed to enforce the employee’s consideration or promise to that non-compete.
- Must be Reasonable: An agreement can be valid and enforceable if “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 employer. Reasonableness is determined on a case by case basis, but will generally be determined as follows:
- Time : Non-competes that are indefinite in duration will almost certainly be thrown out in Texas. Generally, periods of two (2) to five (5) years have been upheld. Longer periods, such as five (5) years are typically for executives or key employees, whereby the access to the employer’s information is much greater, and thus potentially more harmful to the employer.
- Geographical area . The geographical area must be applicable to where the employer actually does business. More specifically, enforceability is more likely to be enforceable as to the area where the employee actually carried out business for the employer.
- Scope of activity . Typically, an employee is free to work for a competitor as long as the employee is not using proprietary information or trade secrets in performance of their new job. Agreements are not enforceable if they seek to restrain particular careers or industries in their entirety.
- Genuine Business Interests: Finally, a non-compete agreement must be designed to protect an employer’s legitimate business interests. Some examples of valid business interests include trade secrets, customer and client relationships, and resources put into specialized training for the employee.
Notably, there is no specific state law or state regulation pertaining to when a non-compete agreement is signed. In other words, a non-compete signed by an employee after they have started working could still be valid if it meets all the requirements of Texas law.
Set Up a Confidential Consultation With a Texas Non-Compete Agreement Lawyer Today
At Cordoba Law Firm, PLLC , our Texas contract lawyers understand our state’s non-compete agreement laws. If you have any specific questions or concerns about the legal enforceability of a non-compete agreement, we are here to help. Contact our law firm today to set up your strictly private consultation with a top-rated attorney. We help clients with non-compete agreements in Lake Jackson, Pearland, and throughout Southeastern Texas.