Strategies for Getting Out of a Non-Compete Agreement in Texas
Are you stuck in a non-compete agreement in Texas? Wood Edwards LLP can help develop strategies to help you get out of your agreement.
Getting out of a non-compete agreement can be tricky. But an employee in Texas will always want to focus on the consideration that was given by the employer to justify the restrictions.
For example, if the employer contends that it gave confidential information or specialized training as consideration, whether the information or training is truly special will have to be tested.
Also, the restrictions will need review to ensure they are reasonable in scope and duration. So, in some cases, a technical defect (such as the employer not signing the agreement) can affect enforceability. Finally, the employer’s conduct (e.g., unclean hands, or conduct inconsistent with enforcement) can sometimes provide the employee with a good defense.
If an employee wants to determine the best strategies for getting out of a non-compete agreement in Texas, it is important to understand what makes a non-compete agreement enforceable (and thus what could make a non-compete agreement unenforceable).
In order to get out of a non-compete agreement, a Texas employee will need to prove that the non-compete agreement is unenforceable. So, to make your non-compete agreement unenforceable you need and experienced legal team on your case. Wood Edawrds LLP can look into your agreement today and start developing strategies for your case.
Understanding Non-Compete Agreements Under Texas Law
The Texas Covenants Not to Compete Act governs non-compete agreements, or covenants not to compete, in Texas.
Under the Act, a non-compete is enforceable if it is part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable.
What does this mean in practice? Based on the Act and Texas case law, in order to be enforceable, the following must be true of a non-compete agreement:
- Restrictions imposed on the employee must be reasonable in order to protect the employer’s legitimate business interests; and
- Employee must receive sufficient consideration for the restrictions on employment.
Determining Whether Employee Actually Received Suitable Non-Compete Consideration
For a non-compete agreement to be enforceable, the employee must receive adequate or sufficient consideration. Additionally, that consideration also has to be something beyond a promise to continue employing the employee, or a cash bonus. So, under Texas law, examples of adequate consideration may include:
- Confidential information that could be very valuable to a competitor;
- Specialized training; and/or
- Stock options that provide the employee with interest in the business that is similar to that of shareholders.
Even if an employee receives any of the above forms of consideration but that consideration is not specified in writing in the non-compete agreement, the employee may be able to argue that the non-compete agreement is unenforceable.
Also, in situations where the employer did not provide sufficient consideration under Texas law, the employee may be able to get out of the non-compete agreement. For instance, if the employer offered a lump sum of cash as consideration, that is not considered to be adequate consideration in Texas, and the agreement likely will be unenforceable.
Is the Non-Compete Agreement Reasonable in Scope and Duration?
An employee also may be able to get out of a non-compete agreement if the restrictions are unreasonable. Above all, a non-compete agreement must be reasonable in all of the following ways to be enforceable:
- Scope of activity restricted;
- Scope of geographic area restricted; and
- Temporal duration.
Other Reasons a Non-Compete Agreement May Be Unenforceable in Texas
There are other reasons that a non-compete agreement may be unenforceable—allowing an employee to extract himself or herself from its terms—even if it is reasonable and there is adequate consideration. The following are a couple of examples of reasons that an employee in Texas may be able to get out of a non-compete agreement:
- Employer failed to sign the agreement;
- Employer failed to abide by other technical requirements of the Texas Covenants Not to Compete Act; or
- Employer behaved in a manner that may negate the non-compete agreement.
While getting out of a non-compete agreement in Texas can be complicated, there are a variety of strategies that employees may be able to use in order to show that a non-compete agreement is unenforceable.
How Wood Edwards LLP Can Help With Your Texas Non-Compete Agreement
We assist many employees bound by non-compete agreements in Texas. Also, we are extremely familiar with Texas law governing these types of agreements. Our firm has substantial experience with this field inside and outside Texas courtrooms.
In addition to employees, we also represent companies. This makes us incredibly valuable because we know how employers can view violations of non-compete agreements.
If you are party to a noncompete agreement, or have a legal matter involving a non compete in Texas, contact us today.