The Enforceable Non-Compete Clause
Non-compete clauses in Texas have been found valid in Texas courts over the last several years. However, a business does not have carte blanche to draft a universal non-compete. There are important limitations that help balance the interests of your business and your employee’s right to work.
Per Texas Law, “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.” The considerations of time, geographical area, and scope of activity should reasonably reflect the work being done by the employee. Thus the non-compete clause for each employee should be specifically drafted in consideration of the role of that employee.
An additional consideration for all employers considering a non-compete clause is that there must be adequate consideration for the clause to be enforceable. One of the common forms of consideration is the disclosure of confidential information to the employee. This could include customer lists, specialized practices and procedures, trade secrets and specific strategy. Financial consideration is typically not sufficient to support a non-compete.