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Geography matters in Texas non-compete agreements

Non-compete agreements have an important place in business. They protect valid business interests.

But it the non-compete agreement is not constructed correctly, it can be negated. Texas law decrees that a non-compete can’t demand greater restriction than is necessary to protect the business.

Interests and restrictions

Protectable business interests include:

  • Trade secrets
  • Confidential information
  • Specialized training
  • Relationships with current or former customers
  • Referral sources

Restrictions on a non-compete agreement include limits on the job duties. They cannot be overbroad – a computer programmer cannot be prohibited from working as a landscaper at another company

Restricts also cannot be overbroad regarding geography. Many non-competes will forbid the employee from working in the state. However, if the business doesn’t have customers in an area of the state, then the non-compete can’t be enforced. For example, if an employee works in Houston and the company only does business in the Houston and Dallas metropolitan areas, then a non-compete that covers the entire state is invalid if the employee wants to work in Amarillo.

The non-compete must also be of a proper time duration. The period stated can only be of a length necessary to protect the business’s information or interests. Periods of two years are usually found to be reasonable.

If you are an employee or a company that has a non-compete in an agreement and you have questions, contact a qualified, experienced attorney for a proper consultation.

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