Looking Out For Your Career

Are executive non-compete agreements enforceable in Texas?

On Behalf of | Jun 28, 2021 | Noncompete Agreements

When searching for a new executive position, you should first understand how your current contract could impact your prospective employment.

A non-compete clause is a common addition to many employee contracts. The National Law Review reports that between 16 and 18 percent of all workers are subject to a non-compete agreement, and that number is much higher for business executives.

Here is what you need to know about the enforceability of such clauses in Texas.

Reasonable restrictions

Texas allows businesses to enforce non-compete conditions only if they provide reasonable restrictions on the duration, scope and geographic area of future activities. Conditions that are too broad are likely unenforceable.

For example, your employer can only limit activities that you performed for the company itself. They cannot prevent you from working in the same industry altogether.

Additionally, your employer can not enforce restrictions beyond the geographic area that it operates in. A company that only works in Houston would have difficulty enforcing a non-compete agreement for the whole country.

Sufficient consideration

In Texas, an employer can only place non-compete restrictions on employees that receive sufficient consideration beyond monetary bonuses or promises of continued employment. In general, adequate consideration includes any valuable company information that a business would want to protect, such as client lists, trade secrets and specialized training. Most executives have access to this kind of information.

Even if you believe you have received adequate consideration as an employee, your non-compete clause could still be unenforceable. A legal expert can help you understand your options.