Are Non Compete Agreements Legal In Texas

If you are involved in a non-compete agreement or have a non-compete business in Texas, contact us today. 1. Do not design your non-competition clause with an industry-wide exclusion. That should be clear now, but you`d be surprised how many non-competitors still have it. To understand how you can exit a Texas non-compete agreement, you must first determine what makes a non-compete agreement applicable – and thus what could make a non-compete agreement unfeasible. If you know anything about the texas non-compete law, you know that the Texas non-compete clause requires reasonable restrictions regarding “the time, geographic area and extent of activity to be retained.” Tex. Bus. Com. As far as the field of activity is concerned, there are no strict and rapid rules, but the cases have shown that the courts are less likely to impose non-competition prohibitions preventing a worker from cooperating with clients with whom the worker has not had contact during his work. However, companies can generally prevent contact with existing customers. Non-competition prohibitions may prevent an employee from working for his competitors, but time and geographic constraints must be proportionate in order for the agreement to be considered valid.

4. Finally, keep in mind that determining whether a Texas non-compete clause is applicable in the written form is only the first step. Even if the scope is contrary to the industry-wide exclusionary rule, the court may issue a referral order that partially imposes non-competition prohibitions or reform non-competition to expand its scope. For more information on the practical results of the Texas non-compete clause, see Wolfes First Law of Texas Non-Compete Litigation. The Fifth Circuit weighed on the industry exclusion rule in D`Onofrio v. Vacation Publications, Inc., 888 F.3d 197, 211-12 (5th Cir. 2018), where it applied Haass and Stroman to a travel industry non-compete clause. The court found that non-competition prohibitions are unenforceable in written form because the agreements are “an industry-wide restriction that prevents former employees from working in work not only related to the sale or marketing of cruises, but also to a variety of other travel products – and is not limited to geography or customers with whom former employees have actually worked during their employment.” Id. to 212. However, the Texas legislature has made an exception by allowing, in certain circumstances, the enforceability of non-competition agreements.