If you signed a non-compete agreement in Texas and are looking for a legal way to get out of it because maybe a competitor wants to poach you, you found an opening with a competitor, or you even want to start your own business within a similar industry, you have a few options.
Not all states enforce non-compete agreements; however, Texas does, but only under specific conditions. If your agreement doesn’t meet these requirements, then it might not hold in court or last as long as the employer stated.
In this guide, we’ll look at what makes non-compete agreements enforceable and what voids them in Texas. If you’re an employer looking to create a non-compete for your business, we have a free non-compete agreement template sample.
Quick summary
- Non-compete agreements are enforceable in Texas if they meet the state’s legal requirements
- Several grounds can void a non-compete entirely: the agreement has no consideration, employer breached the terms of the agreement, and or the scope of the restriction was too broad
- If you violate a non-compete in Texas it can lead to an injunction, damages, or both
- A Texas employment or business lawyer can assess whether your specific agreement would actually hold up in court before you make any moves
Are Non-compete Agreements Enforceable In Texas?
Yes, non-compete agreements can be enforced in Texas. However, it must meet certain conditions under the Texas Covenants Not to Compete Act. Here are the conditions:
1. It Must Be Ancillary to an Otherwise Enforceable Agreement
The non-compete can’t be a standalone; it needs to be tied to another agreement, typically an employment contract, confidentiality agreement, or a trade secret agreement.
2. The Employer Must Have a Legitimate Business Interest to Protect
Businesses can’t just have non-competes because it’s a nice-to-have; they need to have something worth protecting, such as trade secrets, confidential business information, established customer relationships, or specialized training provided to employees. Going to court with an ambiguous claim that an employee has been with the company a long time and knows too much to work for a competitor will hardly hold up.
3. The Restrictions Must Be Reasonable
A business can’t just ban employees and former employees from working for competitors indefinitely. This means the business needs to state the geographic scope, duration, and restricted activity, and all of it must be proportionate to what the employer is actually trying to protect. For example, a restriction that covers the entire country or continent, or lasts five years, and bans an employee from any role in their industry will most likely be deemed unreasonable and not upheld in court.
Pro Tip: The bottom line here is that if the duration seems overly lengthy and is preventing you from making a living, it’s grounds for a contract dispute.
What Voids a Non-Compete Agreement in Texas?
Certain conditions must be met before a non-compete can be enforceable. If your non-compete agreement contains any of the following, it’s grounds for voiding the agreement:
1. No Consideration
If you signed the agreement mid-employment and there was no added benefit such as a higher role, a raise, additional benefits, or access to trade secrets, then the non-compete will most likely not hold up in court.
2. Not Tied to a Protectable Interest
You must have access to business information worth protecting. If your role doesn’t involve trade secrets, confidential client relationships, or specialized employer-provided training, then there’s likely nothing the non-compete is protecting, rendering it void.
3. Unreasonable Scope
The agreement needs to specify what and where it’s restricting you from. For example, if the scope of the restriction is too broad in duration, geography, or activity, it may not be enforceable, or the court will rewrite the agreement to specify exactly what it covers.
4. Employer Breach
If the employer didn’t uphold their end of the agreement, such as owing salary, changing your role significantly without agreement, or terminating you without cause, the court may deem it unfair to enforce the contract.
5. No Underlying Enforceable Agreement
Your non-compete agreement is not a standalone agreement; so if the main contract is invalid for one issue or the other, the non-compete clause attached to it may also become void.
Can Texas Courts Modify a Non-Compete Instead of Voiding It?
Yes, and it is not the same thing as voiding the agreement. Unlike some states that completely throw out an ambiguous non-compete agreement, courts in Texas can rewrite the non-compete to specify what it restricts and protects.
This means that, as an employee, the agreement may not be completely thrown out; it could be modified by the court based on what it deems fair. This could be in your favor or not do so much for you. Ensure you get a legal read on your non-compete, even if it’s too broad and restrictive, to know what the likely outcome is before disputing it in court.
How Long Can a Non-Compete Last in Texas?
Texas has no set duration for non-competes, but courts review them for fairness and reasonableness. In most cases, here’s what’s most likely enforceable:
- Six months to two years is the most likely range without it becoming too restrictive. Most companies use one year and restrictions higher than two years, except for very senior leadership roles
- A non-compete may be enforceable for up to three years if the employer can prove that you had access to confidential information that could affect the business. However, it’s still highly debatable and might not hold up in court. The court is likely to modify the terms to focus on what’s necessary to protect the business and what’s fair to you, the employee.
How to Get Out of a Non-Compete Agreement in Texas
Getting out of a non-compete in Texas depends on the grounds you have and how much leverage you have to work with. Here are the main routes:
1. Challenge Enforceability
Look through the requirements of a valid noncompete agreement; does your agreement meet them? For example, was there any consideration attached to the agreement, like a salary review, additional benefits, etc.? Did you have access to sensitive business information? If it doesn’t meet the validity requirement, you have grounds for challenging the agreement.
2. Negotiate a Release
In most cases, nobody actually wants to spend time in court over contract disputes; it’s a lot of time and money that could be spent in more productive ways. If you’re leaving on reasonable terms, it’s worth asking for a written release or a narrowed restriction before you start working for the competition. It also comes off more professional and ethical rather than blindsiding the former employer.
3. Challenge the Scope
Businesses are allowed to protect their interests. However, if you deem the restriction unfair, you can challenge the scope such as the restriction location, duration, and roles. For example, if you’re a regional marketing lead for Texas, being restricted for up to three years from working for competitors is legitimate grounds to challenge the agreement.
4. Use the “Blue Pencil” Dynamic Strategically
Texan courts don’t always void contracts; sometimes they review and adjust the terms. Knowing this can help you prepare adequately, and instead of asking to invalidate the agreement totally, you can seek narrowing of the agreement.
5. Wait It Out
If the restricted period is short and the new opportunity can wait, sometimes the simplest option is to sit out the restriction period.
6. Consult a Texas Employment Lawyer
Non-compete law is specific, and the outcome of disputing it comes down to your specific situation and the details of your agreement. Consulting with an attorney who can review your employment agreement, assess the strength of your position versus the employer, and tell you what to realistically expect from the court’s ruling helps you understand whether it’s a fight worth fighting in the first place
Can I Work for a Competitor if I Signed a Non-Compete in Texas?
It all depends on the terms of your non-compete and the kind of role you’re taking with the competitor. Signing a non-compete doesn’t mean you’re automatically barred from working for all competitors; it restricts you from divulging information that could put your former employer at a disadvantage.
The best thing to do is review your non-compete terms and see if your new role violates the agreement in any way, such as:
- Location covered by the non-compete
- New role is restricted within the scope of the agreement
- You had access to confidential information that could put your new employer at a significant advantage
- Employer’s history with enforcing non-competes
What Happens if You Violate a Non-Compete in Texas?
If you signed a non-compete agreement and you violated it, any of the following could apply:
- Injunctive relief: This is the first and most common action after a violation. You are given a court order to stop working for the competitor while the case is decided. This can be short or long; what matters is that it disrupts your source of income.
- Damages: If your former employer is able to prove that your working for a competitor resulted in financial loss, e.g. lost clients because you used confidential information to poach them, they can sue you for damages.
- Attorney’s fees/Court costs: If your employer can prove that you knew the terms of the non-compete and intentionally violated them, the court can order you to pay the employer’s attorney’s fees in addition to other remedies.
Are There Special Non-Compete Rules for Certain Professions in Texas?
Yes. Texas has exemptions or restricted terms for some professions. This includes:
1. Physicians
Texas law includes specific protections for physician non-compete agreements. The agreement must give the physician the option to buy out of the restriction at a reasonable price, have a one-year limit, not exceed a geographic limitation of five miles, be stated clearly in writing, and become void if the physician is terminated without good cause.
2. Other licensed professionals
Attorneys in Texas are generally prohibited from entering into non-compete agreements with other attorneys that restrict their rights to practice after termination of the relationship, except an agreement concerning benefits upon retirement.
Non-Compete vs. Non-Solicitation Agreements in Texas
They are both restrictions but they’re not the same thing. A non-compete restricts where you can work and what roles you can take after leaving. A non-solicitation agreement restricts whether you can reach out to your former employer’s clients or recruit their employees, regardless of where you go next.
Non-solicitation agreements tend to be easier for Texas employers to enforce because they’re narrower. You can work for a competitor and still be bound by a non-solicitation agreement that prevents you from taking their clients with you.
What this means as an employee is that violating them carries different risks, and if your agreement contains both, the court may void the non-compete without invalidating the non-solicitation.
Working With a Texas Non-Compete Lawyer
Non-compete agreements are enforceable in Texas and are worth taking seriously. Consulting with a Texas non-compete lawyer helps you know the likelihood of your argument holding up in court based on the specificity of the agreement, the exact language used, your role, and what provisions the Texas court has made for situations like yours.
A Texas employment lawyer or business law attorney experienced in this area helps you:
- Review your specific agreement and assess its enforceability
- Identify the strongest grounds to challenge it
- Advise whether negotiating a release is a realistic path
- Represent you if your former employer seeks an injunction
- Help a new employer understand the risk before they hire you
Sandra Ighalo is the Managing Attorney of MCIS Law, PLLC, a nationwide business lawyer with nearly a decade of practice helping businesses and high-income earners get the best results.
Frequently Asked Questions
How Enforceable Are Non-Compete Agreements in Texas?
Yes, non-competes are enforceable in Texas if they meet the state’s requirements. If they don’t, they can be challenged by the employee, modified, or rejected by a Texas court.
What Makes a Non-Compete Agreement Valid or Enforceable in Texas?
It mustn’t be a standalone; it needs to be ancillary to an enforceable agreement, e.g. a clause in an employment contract, shows adequate consideration for the employee, is tied to a legitimate business interest like trade secrets or client relationships, and is reasonable in its geographic scope, duration, and restricted activities.
How Hard Is It to Get Out of a Non-Compete in Texas?
It depends on how well-drafted the agreement is and the strength of the employer’s business interest. If the agreement is vague, overbroad, or doesn’t meet the state’s requirements, it’s easier to defeat and void in court.
Can Texas Courts Modify or Void Non-Compete Agreements?
Yes to both. Texas courts can reform overly broad agreements and can also void them entirely. It depends on what requirements the agreement meets and its reasonableness to both parties’ interests.
Are There Specific Rules for Physicians Regarding Non-Competes in Texas?
Yes. Texas law includes specific protections for physician non-compete agreements. This includes buyout rights, a one-year maximum limit, a five-mile geographic restriction, and the right to continue treating patients in acute care situations.
Are Non-Solicitation Agreements Different From Non-Compete Agreements in Texas?
Yes, they are not the same thing. A non-compete restricts what you can do and where you can work. A non-solicitation agreement restricts who you can work with — for example, you can’t poach former clients.
