While the trend since 2006 has been toward enhanced greater noncompete enforceability -- at least according to the Texas Supreme Court – lower courts still require some convincing. When you review yours, keep the following pragmatic tips in mind.

  • Clearly state the consideration for the agreement. While courts may imply that an employer provided confidential information as consideration for a noncompete, do not give the trial court a reason to deny enforceability based on lack of consideration. Make a specific promise.
  • Be accurate about the consideration provided and make sure it is current. Frequently, the confidential information recited is never provided or worse, it is stale information which is not valuable to seal the deal. Old consideration is not valid. Make sure you include the type of ongoing consideration that employees receive.
  • Be thoughtful about who is signing. Not everyone in the organization needs a noncompete. Perhaps all employees need to sign a non-disclosure agreement and a non-solicitation of your employees but many should be free to leave and compete without restriction. This leaves you with the ability to tell the court that you only ask your sales team and executives to sign noncompetes – an entirely reasonable business approach.
  • Don't be greedy. This is the big one. Many noncompetes are not written to protect the business without thoughtful limits on time, scope and geography that make sense for both sides. Without such restrictions, the employer can argue the limits prevent reasonable competition. Recently the argument was that the noncompete was so broad it covered areas of the state the employee never entered as an employee. While reformation is supposed to be required, why let a judge decide what is reasonable for your business? Instead, craft an agreement that is reasonable, protects your business and be able to tell your employees and, if necessary, a judge why it is appropriate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.