Non-Compete Agreement in Texas
State-specific overview · Employment Law
Texas enforces non-competes under Texas Business & Commerce Code § 15.50 if they protect legitimate business interests and are reasonable in scope and duration.
How Texas treats Non-Compete Agreement
Texas Business & Commerce Code § 15.50 permits non-compete agreements that are ancillary to an otherwise enforceable agreement and impose reasonable restrictions considering the legitimate business interests, duration, area, and line of business. Legitimate business interests include trade secrets, confidential business information, substantial relationships with prospective or existing customers, and goodwill associated with an ongoing business. The agreement must not be greater than necessary to protect these interests. Courts apply a reasonableness standard and may modify overly broad provisions.
The general definition of Non-Compete Agreement
A contract clause restricting an employee from working for competitors or starting a competing business after leaving.
A non-compete agreement is a contract between an employer and employee that prevents the employee from working for a competitor or starting a competing business for a set period after leaving the job. These agreements are designed to protect the employer's trade secrets and customer relationships. However, courts scrutinize them carefully because they restrict a person's right to earn a living. A non-compete is generally enforceable only if it is reasonable in scope (limited to a specific geographic area and time period) and protects a legitimate business interest. Some states, like California, disfavor non-competes entirely.
Read the full Non-Compete Agreement entry →This page is a plain-English reference and is not legal advice. State laws change frequently. For specific situations consult a licensed attorney in Texas.