Depending on your job and its particular responsibilities, your employer may require you to sign a noncompete agreement when you come on board or receive a promotion. This is especially likely if your line of work involves unique intellectual property and specific knowledge of classified business methods, in which case your employer may have you sign an agreement that is intended to keep you from going to work for a competitor and taking trade secrets with you. However, there is a lot of confusion among employees about the flexibility, enforceability, and actual implications of noncompete agreements.
Our Houston employment attorneys at Shellist Lazarz Slobin LLP have served many clients over the years and often receive similar questions about noncompete agreements. Here are a few of the most common questions we hear:
#1. Are Noncompete Agreements Enforceable in Texas?
Yes. There is a common myth that noncompete agreements are not enforceable in the Lone Star state but, if it lines up with the requirements outlines in Texas Business and Commerce Code § 15.50, yours may hold up in court.
#2. Can My Employer Require Me to Sign a Noncompete Agreement?
Your employer can ask you to sign a noncompete agreement if state laws allow and if doing so is essential to protecting their business and their tricks of the trade. In many cases, courts have deemed signing a noncompete agreement to be a fair and legitimate waiver of rights in exchange for a paying job. With that said, it is not illegal for an employer to make a job offer contingent on signing a noncompete agreement. However, if your employer asks you to sign a noncompete agreement after you have already been employed with them for a time, you should typically only sign (or be asked to sign) if you are receiving a salary increase or a promotion in exchange.
#3. How Do I Know if My Noncompete Agreement is Enforceable?
Whip out your noncompete agreement and look over the terms. If it is not overly broad or unreasonably restrictive, it may be enforceable under Texas Business and Commerce Code § 15.50. According to the standards outlined therein, a legitimate noncompete agreement must not pose irrationally prohibitive limitations on time, sphere of professional involvement and activity, geographical area.
In addition to meeting the criteria outline in the TBCC, a noncompete agreement must also occur in conjunction with (and as a part of) another legally-binding agreement. This is typically why employers make noncompete agreements part of the onboarding process, along with confidentiality statements, etc.
#4. What Happens if I Break My Noncompete Agreement?
If your noncompete meets TBCC criteria for legitimacy and enforceability, you will likely face professional and financial consequences. In many cases, rather than suing for large amounts of money, an employer does not seek to sue for a large amount of money or appraise the current and potential future damage of the breach. Rather, they seek what is known as injunctive relief which, if successful, will result in a court order forcing you to leave your new employer. However, suing for monetary damages is also a common route employers take when they believe someone has made off with their trade secrets. You may be sued for lost profits, liquidated damages, and your former employer’s attorney and court fees.
Thinking About Leaving Your Job? Contact One of Our Houston Employment Lawyers for a Second Opinion.
Regardless of how certain you are that your noncompete agreement is unreasonable or overly restrictive, the court may still see it as legitimate. It’s critical that you get the help of an experienced employment law attorney before taking a job with a competitor, starting your own business, or leaving your current employer. Our team at Shellist Lazarz Slobin LLP is experienced in contract review and a variety of employment issues, and we are more than prepared to help you navigate your unique circumstances with as much confidence and information as possible.
Your first meeting with us is free. Consult with a Houston employment lawyer by calling (713) 352-3433. You can also contact us online to tell us a little bit yourself and find out how we can serve you.