Austin Non-Compete Lawyer
What is a non-compete agreement?
A non-compete agreement is an agreement that limits employees’ rights to continue in their profession for a certain period of time after they separate from their employment. These agreements originally came about to protect employers’ valuable assets, information, or training, but are now common across all job types and circumstances – from CEOs to food service workers.
For example, if you work in the tech industry, you may be exposed to secrets and privileged information at your current job. If you signed a non-compete, you may have jeopardized your right to leave work for a competitor in the same industry. A non-compete is typically very beneficial for the employer, but not the employee or executive.
Non-competition agreements are monopolistic restraints on free trade, period. However, the majority of states (including Texas) have statutory carveouts that allow for their existence and enforcement, but only under limited circumstances.
Ultimately, all non-compete agreements are enforceable only to the extent necessary to reasonably protect the employers’ good will.
Non-competes can harm an employee’s ability to find a new job in their field. While a non-compete may be a smart business decision for a company, it can be a very harmful one for the employee.
Non-compete agreements are enforceable in the state of Texas as long as they meet the requirements of Section 15 of the Texas Business and Commerce Code, as interpreted by the Texas Supreme Court and Courts of Appeals throughout the state.
Are all non-competes valid?
No. A non-compete is a contract, so it must meet the requirements of a contract to be valid. The three elements of a contract are:
- Offer: the non-compete is offered to the employee
- Acceptance: the non-compete is accepted by the employee
- Consideration: the benefit you and your employer receive under the non-compete
The element where issues usually arise in a non-compete is consideration. Issues in the validity of a Texas non-compete may arise where the only consideration for the employee is continued employment, or where the employer failed to provide new trade secrets or confidential information in exchange for the promise not to compete.
What are the terms of a non-compete?
Non-compete agreements usually contain three elements:
- Length of time: how long the non-compete will be upheld
- Geographic location: where the employee can work after leaving
- Activities of the employee: what type of work the employee can do for another company
Non-compete agreements in Austin, San Antonio, Houston, Dallas, and throughout Texas are only enforceable to the extent their restrictions are reasonable. If your agreement is too long, covers to much turf, or restricts all job activities (whether or not you did that job function in your prior job), your agreement may be over-broad and unenforceable as written. That does not mean you can disregard it – you should consult with an attorney about your rights and options.
I am starting a new job and my employer asked me to sign a non-compete, what do I do?
If you are worried you may be signing your future career away, consult with a lawyer first! An attorney can review the contract with you and make sure you are agreeing to reasonable terms in the non-compete and negotiate them if not. All non-compete agreements are negotiable. The best time to negotiate is before you sign. If you have competing job offers, but one has a restrictive non-compete, you may be able to negotiable better terms. With non-competes, an ounce of prevention is worth a pound of cure.
I am planning on resigning soon, but I signed a non-compete when I started. I want to find a new job in the same field, is that possible?
If you are in this situation, it would be best to contact a lawyer before taking further steps. You must review the non-compete you signed and apply the facts to better understand what it will restrict you from doing. If you have any doubts about moving forward from your current job because of a non-compete, it is time to consult with a Texas non-compete attorney.
I left my job a few months ago and have since started a new job in the same field. My old employer is now suing me or threatening to sue me regarding a non-compete I had signed with them. What do I do?
Talk to a lawyer as soon as possible! There may be information in the non-compete you signed that would make your employer’s case against you very challenging for them. Or, you may be taking actions that are extremely harmful to you. You should consult with a legal professional to help you review and better understand your situation.
I am quitting my job, and I signed a non-compete that said I cannot work for any other company in this industry in Texas. Is this valid?
It depends. Texas courts have ruled that for a non-compete to be enforceable, it must be reasonable in scope. Banning you from working in an entire field in a state as large as Texas may be unreasonable, if for example your recent work was limited to Travis County or the Central Texas area surrounding Austin, Texas. If you find yourself in this situation, you should contact a lawyer.
What is seen as reasonable for a geographical scope for non-compete?
Non-competes are more likely to be enforced when the agreement does not restrict the employee beyond the area where he or she worked for the employer. Sometimes, that are is measured in a 5 mile radius, but sometimes it is national. The details of each situation are incredible important.
What is seen as a reasonable time frame for a non-compete restriction?
There is no clear-cut answer to this. An unlimited restriction is definitely illegal and unreasonable. Not all non-competes need to specify duration of the agreement, but a court will only enforce them for a reasonable about of time. The reasonableness of a duration usually depends on the industry, the employee’s role in the company, the market of the company, and other similar factors.
What is seen as a reasonable scope of activity for a non-compete?
Again, there is no clear-cut answer here. The courts have generally been less likely to enforce a non-compete which prohibits an employee from working with clients that they had no contact with during their employment. However, it may be reasonable for a company to prevent the employee from having contact with existing clients or prospective clients. A valid non-compete can restrict an employee from working with competitors, but the geographical scope and time limitations must be reasonable.
How is a non-compete dispute resolved?
It varies on a case-by-case basis. Your lawyer will be able to give you an idea of possible outcomes for the case. If you have yet to sign the non-compete, this may be settled by working on the terms of the agreement with your employer.
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