News & Blog

Texas Makes It Easier to Enforce Non-Competes

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Texas courts have viewed non-competes with a healthy amount of skepticism in the past. After all, people have a right to work and make a living. Reasonable restrictions as to time and place are hallmarks of enforceable non-competes. Plus, the non-compete needs to be ancillary to an otherwise enforceable agreement. Most of the time, Texas courts look to see if confidential or trade secret information is actually given to an employee. Traditionally, the giving of the confidential or trade secret information is the consideration for the non-compete.

Now, the Texas Supreme Court has opened the door to other types of consideration to enforce non-competes, making it easier for the employer and more difficult for the employee. Employers can now give consideration that is reasonably related to an interest worthy of protection for the non-compete to be enforceable. In a recent case, the Texas Supreme Court decided that stock options given to an employee were sufficient because it tied the long term business interests of the company, the employee, and corresponding goodwill developed with clients.

Employers now have the option of giving confidential information, trade secrets, stocks options, or other consideration that is reasonably related to an interest worthy of protection. That definition of reasonably related appears to be broad, and it will likely cause employers to tie employees to non-competes even when confidential or trade secret information is not given to an employee. This area of the law has just grown significantly, and it is imperative for both employers and employees to get seasoned advice when either preparing these non-compete agreements or reviewing them before signing the dotted line.

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