A non-compete lawyer in Texas is well versed in Texas’s Non-Compete Act (the “Act”). Under the Act, non-compete covenants are assessed as an anti-trust exception, not merely a contractual provision. Thus, a valid non-compete covenant “facilitates economic competition and is not a naked restraint on trade.” Tex. Bus. & Com. Code § 15.04; see also Marsh USA Inc. v. Cook, 354 S.W.3d 764, 770 (Tex. 2011).
Primary Issues of a Non-Compete Covenant
To comply with the Act, a non-compete lawyer must carefully draft covenants. Furthermore, for most employee non-competes, there are five primary issues to cover.
Ancillary
Non-compete covenants must be “ancillary to or part of an otherwise enforceable agreement at the time the agreement is made.” To be “ancillary to or part of” an otherwise enforceable agreement, the business interest being protected must be reasonably related to consideration given. Thus, non-competes require a protectable business interest for the employer (e.g., protecting confidential information) and consideration to the employee (e.g., confidential information, training, or goodwill). See Marsh, 354 S.W.3d at 775.
Scope
Non-competes require a reasonable scope of restrained activity. Tex. Bus. & Com. Code § 15.50(a). Moreover, this “reasonable” determination varies on a case-by-case basis. For example, a restriction against working for a competitor in any capacity may be unenforceable in some cases. That “any capacity” argument is often referred to as the “janitor rule” because a party may argue it is not a reasonable scope limitation to prevent a salesperson from leaving her employer to work at a competitor as a janitor.
Geography
Non-competes require a reasonable geographic restriction. Tex. Bus. & Com. Code § 15.50(a). Therefore, to comply with this restriction, careful drafting often considers where the employee works and where the employer operates.
Time
Lastly, non-competes also require a reasonable time restriction. Tex. Bus. & Com. Code § 15.50(a). However, this limitation is fact-dependent and requires looking at the rationale for the restriction and the business interest being protected.
Non-Compete Lawyer Considerations
A non-compete lawyer has additional considerations in certain scenarios. For example, a non-compete’s reasonable limitations (especially time limitations) may be more expansive against a person selling a business than limitations against an at-will employee.
On the other hand, a non-compete’s restrictions against a “person licensed as a physician by the Texas Medical Board” require additional provisions to comply with the Act. As a result, the absences of such restrictions, and/or public interest may lead a court to determine a non-compete is invalid. For example, a non-compete was not enforceable against a doctor in Nacogdoches, partially because preventing the doctor from practicing medicine in the restricted geographic area could adversely affect public interest.
Certainly, a non-compete lawyer’s efforts may include demand letters, pre-suit litigation, lawsuits, and injunctions. Whether enforcing or defending, a non-compete lawyer should consider issues such as confidentiality; counterclaims; related claims (e.g., fiduciary duty and tortious interference); and points raised on our other pages, such as trade secret litigation and non-solicitation agreements.
The Dallas employment lawyers at Rogge Dunn Group routinely draft non-competes and litigate non-compete lawsuits. To learn more about the non-compete lawyers at Rogge Dunn Group, visit their attorney biographies here:
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