Can Former Employers Stop Me Working for a Competitor?
The non-compete clause (NCC), or covenants to not compete, are increasingly being used in Texas and across the United States. The agreement serves to protect a company's interests when the business involves confidential trade secrets and high-stakes transactions, such as in technology.
The enforceability of the non-compete agreement depends on its terms and other circumstances. If an employee signs a NCC, they are agreeing to avoid pursuit of a similar profession that is in competition with their current employer. Under Texas law, the non-compete agreement generally is enforceable if it is "reasonable" in its scope. Our state's courts have routinely upheld non-competes that aren't overly broad in the time and geographical restrictions they place on the employee and that are crafted narrowly to protect the company's legitimate business interests.
Employees must be careful when entering into non-compete agreements because a clause that is too broad may prevent them from future employment anywhere. In general, companies should only make their employees enter into a non-compete agreement if it is absolutely necessary to "protect legitimate business interests."
For instance, if you are a Houston medical device salesman, and the non-compete prohibits you from working anywhere within Texas for the next 20 years, a court may very well refuse to enforce it. On the other hand, a non-compete restricting you from working in medical device sales for a competitor within the Houston metropolitan area for a two-year period is more likely to be found to be reasonable. These agreements usually are enforced through injunctions. Damages and attorney fees may also be available to the company seeking enforcement.