A non-compete agreement is generally an employment agreement whose purpose is to limit an employee's post-employment activities and protect an employer's proprietary information and trade secrets. Non-compete agreements aim to prevent an employee from working in the area of the employer's trade or industry and to prevent a former employee from soliciting an employer's customers.
In the past, these agreements were difficult for an employer to enforce. However, recent changes in the law have made these agreements much easier to enforce. Courts now look more toward the scope of the agreement to determine if its restrictions are reasonable rather than whether they are generally enforceable or not.
The non-compete agreement must contain limitations as to time, geographical area, and scope of the 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. However, these limitations vary from employer to employer and even from employee to employee depending on the nature of the work, the duration of the employee's employment, and the area the employment restriction is to encompass.
Non-compete agreements are a great concern to both the employer and the employee. Considering recent changes in the law concerning non-compete agreements, using a form from a different state or one that is outdated could affect the enforceability of the agreement. Starzyk & Associates, P.C. has years of experience in negotiating, drafting, and litigating non-compete agreements on behalf of our clients. Furthermore, since our firm concentrates solely on employment law practice, we keep up to date on recent changes in employment law that can affect your non-compete agreements.
Frequently Asked Questions about Non-Compete Agreements
What is a covenant not to compete?
A covenant not to compete is also known as a non-compete agreement. It is a promise by an employee not to compete with his or her employer for a specified time, in a particular place or in a particular way.
Are non-compete agreements enforceable?
Generally speaking, yes. Courts will enforce non-competition agreements as long as the duration, geographical area and scope of activity are not overly broad.
Are non-compete agreements valid if signed after employment has already started?
Yes. Just because a non-compete was signed after an employee already began working for a company will not affect its enforceability.
If the non-compete agreement is too broad as to the geographical area, can it still be enforced?
Texas courts have the ability to re-draft non-compete agreements so that they are no broader than what is enforceable. Therefore, an overly broad geographical area will not necessarily void an otherwise valid non-compete agreement.
What happens if an employee attempts to compete despite a valid agreement?
An employer may file a lawsuit against the employee. This lawsuit could enjoin the employee from competing either on his or her own or for a competitor as well as result in damages against the employee for the breach of the non-compete agreement. The injunction may prevent the employee from competing during the course of the litigation.