What Is a Non-Compete Agreement?
Non-compete agreements are legal contracts between an employer and an employee. These agreements are implemented to prevent the employee from revealing proprietary information or organizational secrets to other parties during or after employment. It is not unusual for an organization to ask an employee to sign a contract at the beginning of their professional relationship. The agreements for key employees are generally more tailored to the affairs the key employee will work within. An employer typically utilizes a non-compete agreement to protect the company’s confidential information in the event a departing employee becomes a competitor or is hired by a competing organization. Non-compete agreements are generally enforceable in Texas if they are supported by valid consideration and contain reasonable restrictions regarding the covenant’s time period, geographical limitations, and the scope of the activities to be restrained.
What Makes a Non-Complete Agreement Enforceable?
Currently, Texas law typically upholds non-compete agreements that are considered reasonable in scope. To be clear, internet-based or templatized documents rarely work. Determining if a non-complete agreement’s terms and restrictions are reasonable can be a complex and fact-intensive process. To be considered reasonable, a non-compete agreement must contain language that pertains directly to the company’s interests. A non-compete may prohibit the employee from working for a business competitor for a specific amount of time or within a certain geographical range, sharing proprietary information with a new employer, or taking client information from their previous employer to their new employer.
What Factors Do the Courts Consider?
Texas Courts favor non-compete agreements where limitations are specific to the duties and responsibilities performed by the employee who signed the contract. Additionally, employers will have greater success in enforcing an agreement when the employee who is in possession of confidential information is provided with adequate consideration by receiving a benefit for signing the agreement. There are clever things that can be done regarding the consideration requirement if the agreement is signed after the initiation of the employment relationship. Thee factors that the Courts consider when determining if a specific non-compete agreement is enforceable include the following:
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Is the agreement needed to protect the employer’s legitimate businesses interest, such as trade secrets and confidential business information?
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Does the agreement have a reasonable duration?
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Is the agreement limited to a specific geographic location?
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Is the non-compete agreement supported by consideration?
Minimize Your Risk When a Key Employee Leaves Your Organization
Key employees are those who understand the intricacies of the operation and are aware of the confidential business strategies inherent to the company’s ongoing success. But even when a key employee who has signed a non-compete agreement gives their notice to terminate employment, it can still bring a sense of concern to those in charge. Not all former employees adhere to their contractual obligations under non-compete agreements, and companies must consider what actions to take and how to respond when an employee violates an agreement. But instead of preparing for litigation, employers can consider taking specific steps to mitigate their risk:
· Attempt to Retain the Departing Employee
If you risk losing an employee whose contribution to your organization is significant, consider enticing them to stay by making a substantial offer to remain on board. If their decision to depart was based on an issue regarding greater compensation or a more flexible schedule, it might be wise to explore these options. Providing a key employee with additional benefits may give them the impetus they need to continue their role as a highly functioning member of your organization. When you are faced with losing an employee who is a critical component to the success of your organization, do not hesitate to be creative and explore all available options to keep them in your employ.
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Obtain Assurance from the Departing Employee.
When maintaining an ongoing relationship with your employee is not possible, arrange a time to meet before their exit interview. During your meeting, remind your employee of their post-employment obligations per the signed agreement, their legal responsibility regarding nondisclosure, and the importance of preserving the confidential information they had access to during their employment.
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Contact the Departing Employee’s New Employer.
You may also consider informing the departing employee’s new employer that your former employee signed a non-compete agreement in which they agreed not to disclose confidential information about your organization. Outline your efforts to obtain assurances from your departing employee that they will honor their legal obligations of confidentiality and nondisclosure. You can ensure that the new employer understands the risks of allowing your confidential information into their company’s operations.
Find Out if Your Texas Non-Compete Agreement is Enforceable
While taking the steps outlined above may not eliminate the need for litigation in every situation, they may reduce the number of instances where a lawsuit is filed. You can find out if your Texas non-compete agreement is enforceable by contacting the attorneys at Treaty Oak ELG and arranging a free consultation. Call us at 512 298 2346 or email the firm’s founding member Natalie Lynch for help now.
About Attorney Natalie Lynch
Attorney Natalie Lynch is the managing member of Treaty Oak ELG, and she and her team of attorneys and legal professionals have many years of experience working with businesses to help minimize employment risk factors. Ms. Lynch is also a dispute resolution mediator and the only consulting and credentialed investigator in Central Texas who conducts third-party investigations into allegations of harassment, discrimination, hostile work environment, and other issues.
Call Treaty Oak ELG Now for a Free Consultation
If you are an employer working to resolve a labor and employment dispute, protect yourself, your employees, and your business by contacting Treaty Oak ELG. Our team can help you navigate the complexities of your legal dispute from inception to resolution. If you are involved in a labor or employment dispute, contact Treaty Oak ELG now to schedule a free consultation. Call Natalie Lynch at 512 298 2346 or write to her.
