Non-Compete Agreements

A non-compete agreement (NCA) is initiated by employers so that restrictions can be placed on the activities of their employees once they are no longer working for the company. The last thing employers want is their star employee leaves with their clients and trade secrets. You invest in your employees and expect a degree of loyalty from them, and many employers memorialize that expectation with an NCA.

An NCA can restrict your employees from working from a rival company, soliciting your company's current clients, employing any previous workers from the company or using your company's trade secrets.

When drafting or considering an NCA, as with any legal agreement, it is essential to seek assistance from a local business lawyer. You could be an employee who has been asked to sign a non-compete agreement, or you could be an employer and are devising and drafting an agreement for your employees to follow. Whichever party you are our experienced business law team can help.

These are the most common NCA's, where an employee will be required to pledge that they will not work for an immediate competitor or form a company in the same industry within a specified period of time after having ceased employment with the company.

Texas does not allow NCA's merely to prohibit employees from leaving your company and finding work elsewhere. There must a legitimate business reason for an NCA to be upheld in court. For example, in the situation of a trade secret, there has to be a genuine trade secret that needs protecting. If you can't identify what trade secret you are protecting, then your NCA may not be valid.

NCA's require some consideration to be valid. That is, there must be some benefit to the employee. This could be in the form of a bonus payment, a pay increase or something else of value. You want to detail the benefit to the employee in the NCA.

If you succeed in gaining the employee's or potential employee's non-compete support then it is likely the employee will remain longer with the company. When it comes to the issue of trade secrets ensuring secrecy may be vital for your company's survival. It could involve software programs, food recipes, ingredients for products, specific formulas or manufacturing techniques. If you own a company and see the importance of a non-compete agreement, you should use an experienced business Texas attorney who knows Texas law well enough to guide you through the legal process and ensure your agreement suits your company needs.

In order to get a non-compete agreement upheld, the company has to prove it is required as a way of protecting genuine business interests. Often, the court will only favor very specific company requirements and it will ensure that an ex employee is not restricted too much. This would be in terms of distance from their ex employer with regards to setting up a similar business and the time frame that has to lapse before such an activity could take place.