When can an employer enforce a noncompete agreement?
You may have owned your own business for decades and have seen many employees come and go in the process. Sometimes you may be worried that an employee who has been with you for years will leave your employment to start their own competing business. For this reason, you may choose to have new or resigning employees enter into a noncompete agreement.
What is a noncompete agreement?
A noncompete agreement is a document signed by an employee stating that they will not work for a competitor or utilize trade secrets in future employment, at least for a certain number of years and withing a specific geographic radius around their former employer. Under Texas law a noncompete agreement is only valid if it is part of another enforceable employment agreement and if it is reasonable in terms of time, geography and scope.
Employer’s obligations under a noncompete agreement
In Texas a noncompete agreement will only be enforced when challenged by an employee if the employer can show that not enforcing it would harm the employer. In addition, enforcing the agreement cannot place an unreasonable burden on the former employee’s ability to make a living. Specialized knowledge of the company can support a need to limit competition. More general knowledge is harder to protect through a noncompete agreement.
Know your rights as an employer
Texas law recognizes that public policy supports robust competition in the business world and that agreements limiting enforcement should only be deemed valid if absolutely necessary. Still, many employers rely on noncompete agreements to protect their customer base, method of operation and trade secrets. Texas employers looking to learn more about noncompete agreements can seek the help they need to understand their rights when an employee leaves their employment.