Texas Non-Competes in 2021
Texas non-compete law has changed very little over the last few years. There have not been any seminal Texas Supreme Court cases construing the Texas non-compete statute and little instructive case law from our intermediate appellate courts providing guidance. The reality is Texas trial judge are construing non-competes at the temporary restraining order/temporary injunction stages all the time but Texas trial judges don’t issue published opinions and we don’t see many appeals from those decisions.
So what are employers and employees to do?
From the Employer Side
Think narrow and reasonable. In terms of time, the shorter the better. Everyone always wants to two years but will six months accomplish what is necessary? Of course every situation is different. In terms of geography limit the covenant to where the employee worked and make sure the services they are prohibited from offering are the services they offered for the employer. Remember the Texas statute requires that the non-compete be ancillary to an otherwise enforceable agreement meaning there has to be something of value provided to the employee. When in doubt remember that a good customer non-solicitation provision can often be an alternative to a non-compete and easier to enforce.
From the Employee Side
First, don’t sign it unless you have to do so. Second, consider the restrictions you will encounter if you decide to move on to another job and assume they are enforceable. No one likes to think that way at the outset of employment but you should. Can you push back on some of the terms? Anything less is better. Employers do enforce non-competes and courts will uphold them. Don’t dismiss these restrictions as simply part of standard employment paperwork – they are not.