Noncompete Agreements

Many employers require new employees to sign a noncompete contract as a condition of employment. These contracts prohibit an employee from starting a competing business or going to work for a competitor for a certain period of time upon termination of the employment relationship.  Consequently, these contracts have the potential to limit a worker’s future career options dramatically, including the locations where that employee can work. Fortunately, the courts are not always inclined toward enforcing these non-compete agreements, which gives employees much more flexibility upon leaving their employer.

Houston employment lawyers Robert J. Wiley, and Kalandra N. Wheeler represent workers who have unfairly been forced to sign noncompete agreements and, as a result, cannot find meaningful work in the industries of their choice.  

Employers use non-compete agreements as a way to maintain their business advantage by keeping their business practices and strategies to themselves. However, these contracts can severely hurt employees who may decide that it is time to move on. 

Although noncompete laws vary in every state, a noncompete contract must meet certain standards in order to be enforceable.  Typically, the employer must prove that the noncompete agreement serves to protect its business interests. These interests include trade secrets, such as customer lists or manufacturing processes. Noncompete agreements signed by every employee within a company may not be enforceable if those employees do not have any specialized skills or knowledge. Secondly, noncompete contracts must be an exchange between the employer and signing employee. Most states consider employment in exchange for signing as valid enough to enforce a noncompete agreement. In some states, an employer must give an employee something more, such as a promotion, bonus, or severance, in exchange for signing.

Courts will likely not enforce a noncompete that requires an employee not to compete with their employer forever. In addition, the courts may require employers to justify longer periods of time in a noncompete agreement. Otherwise, the courts may hold such noncompete as too restrictive on the employee’s ability to find a meaningful career.

Noncompete agreements may include geographic restriction. However, the noncompete contract cannot be too broad on these geographic limits. Typically, geographic restrictions in an agreement can only prohibit an employee from working in an area or areas where the employer conducts business. Some states offer more protection to employees and limit these restrictions to regions where they actually performed work. These could be limited to counties, cities, or even to a certain mile-radius.

Violating a noncompete agreement can be costly both to you and your new employer. If you violate a noncompete, your former employer could sue you for damages for breach of contract. Your former employer could also sue as your new employer, especially if you share trade secrets, which is specialized knowledge that was meant to be confidential, with your new employer.  For example, if you were to give your new employer customer lists, your former employer would entitled to damages as a result of lost sales. Additionally, the noncompete may require you to pay attorneys’ fees and court costs.

Still, independent of the terms of a noncompete agreement, the courts prefer not to support unemployment as a result of the agreements, especially if it is preventing you from employing the professional skills and work experience that have taken many years to develop.

If you believe you have been unfairly forced to sign a noncompete agreement by your employer, or if you are currently having difficulty finding a new job because of a noncompete that you signed with your former employer, do not delay and contact our office now!