Last time, we began looking at non-compete agreements, both as to their potential role in protecting sensitive business information, including intellectual property rights, as well as to the requirements for these agreements to be enforceable under Texas law.
Time, geography and scope of activity limitations are not an uncommon cause of litigation over non-compete agreements. Because determining what is reasonable with regard to concrete circumstances is not always straightforward, this is an area where disputes may come about.
Generally speaking, there are few—if any—hard and fast rules regarding what is considered reasonable and unreasonable in terms of geography, time, and scope of activity. Each case is unique and involves its own set of facts. It is critical for employers to work with experienced legal counsel when drafting and negotiating the terms of these agreements with their employees to ensure the agreements are enforceable in court.
Texas courts, when looking non-compete agreements, keep in mind the importance of market competition, and put the onus on employers to demonstrate that not enforcing a non-compete agreement would harm the employer and that enforcing it would not unreasonably burden the individual’s ability to find alternative employment in his or her profession or trade. Naturally, employees who have access to highly specialized industry knowledge typically have a harder time arguing for non-enforcement, while those with more generalized knowledge may have an easier time, depending on the circumstances of the case.
Contractual agreements, of course, need to work in concert with employment policy guidelines, both to reinforce any non-compete agreements and, if necessary, to clarify the employer’s expectations and to ensure the expectations are within legal limits. Working with experienced legal counsel on such matters is critical so that things are done correctly and effectively.