In Texas a non-compete has to be ancillary to an otherwise enforceable agreement. What does this mean? The consideration (or value) in the separate agreement must give rise to the employer’s interest in keeping the employee from working and the non-compete must be designed to prevent the employee from breaching the promise she gave as consideration (value) in the other agreement. Examples are the best way to understand what this means.
Say I go to work as a programmer for a company that makes a state of the art mp3 player with a highly advanced new technology. In order to carry out my job I will be provided access to the source code for the technology and my job will include manipulating and altering the code. The company states in my employment agreement that it will provide me with the source code and that because I am being provided with the source code I cannot work in the mp3 player industry for 1 year after I quit or am fired from the company. (Yes there is a nondisclosure agreement and common law duty not to disclose an employer’s trade secrets but ignore that.) So, there is an otherwise enforceable agreement (the agreement to provide me with the source code) and providing me with the code gives rise to the non-compete.
The alternative is an agreement that has nothing to do with a non-compete. Say a company agrees to pay me $100 in the event I quit or am fired. There is also a one year non-compete. Yes, there is an ancillary agreement – the promise to pay $100- but it has nothing to do with keeping me out of the industry for a year. This doesn’t work.
The trick is to tie what the company is trying to protect to the non-compete. Court’s are far more likely to enforce a non-compete when the employer has provided something of value that is worth protecting.
