An employer in any industry has the right to require their employees to sign a non-compete agreement – a contract in which the employee promises not to work in competition with the employer, in the event that the employee leaves the company.
However, employers do not have free reign to draft any restrictions they want. According to Texas law, for a non-compete agreement to be enforceable, the terms of it must be reasonable.
What is “reasonable”?
The terms of a non-compete agreement are considered reasonable if:
- They protect the employer’s legitimate business interests,
- They don’t cause the employee undue hardship and
- They don’t cause harm to the general public.
Make it specific
To make a non-compete agreement that has a high likelihood of being enforceable under the law, keep in mind the following criteria:
- Reasonable geographic restrictions: If you own a printing company in Texas, is it reasonable to prevent your employees from working for another printing company anywhere in the United States?
- Reasonable non-compete period: A court may be likely to enforce a non-compete agreement that prevents a former employee from working for a competitor for six months after the termination of their employment. Six years, on the other hand, may be less likely.
- Reasonable restrictions on activity: It’s okay to prohibit a former employee from engaging in certain types of activities that would jeopardize the company’s confidential information. However, blanket restrictions that would make it difficult for a former employee to ever find work again are unacceptable.
If special circumstances in your industry mandate longer or broader restrictions on your non-compete agreement, make sure you have a solid legal rationale for them. An experienced business attorney can assess your specific situation and help you determine the best options available to you under the law.