What Makes a Non-Compete Agreement Enforceable?

There are two main components of a non-compete agreement that make it enforceable: the reasonableness of the scope in terms of time, activity, and geographic area, and whether the employer gave the employee valid consideration.

For How Long Is The Standard Non-Compete Agreement Valid?

In the context of employment relationships, most courts will enforce non-compete agreements for one year. Many courts are more willing to enforce them for two years, but anything beyond two years will be a case-dependent determination based on whether the court believes—based on the facts of the case and relationships of the parties involved—that a longer a restriction is warranted. In the context of business sales and purchases, courts are often willing to enforce non-compete agreements for five years or more.

How Enforceable Are Non-Compete Agreements?

Non-compete agreements are enforceable in the same way that any other contract is enforceable, but they have special requirements. A common misconception is that right-to-work states cannot restrict someone’s ability to work for another employer or open their own business. Texas is a right-to-work state, but the Texas Supreme Court has made it very clear on several occasions that non-compete agreements—assuming that certain requirements have been met—are enforceable, despite there being certain restrictions on trade. Although the Texas state legislature wants to encourage employees to move about freely and seek opportunities to better themselves, non-compete agreements are enforceable nonetheless.

What Should I Know Before Actually Signing A Non-Compete Agreement?

Prior to signing a non-compete agreement, an individual should certainly understand the scope in terms of time, activity, and geographic area. Unfortunately, we see many employees who have all kinds of questions about non-compete agreements once they’ve already signed one, left their job, or been terminated by their employer; if they had instead contacted us prior to signing, then we would have been able to perform a deeper analysis and help them make an informed decision about the best course of action. An individual should also understand and really question their employer about the confidentiality of the information that they’re being provided so as to eliminate the possibility of there being future questions about whether the employee was provided confidential information.

Are Non-Compete Agreements Enforceable If Someone Is Laid Off Or Fired?

Non-compete agreements are enforceable even if someone has been laid off or fired; there is no requirement that someone leave voluntarily. Furthermore, the termination could be for no cause and the agreement would still be enforceable. Once again, the applicable issues under such circumstances would be whether the employee was provided confidential information, and whether the scope of the agreement was reasonable.

For more information on Enforceability Of Non-Compete Agreement, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (281) 277-3066 today.