Texas Non-competes Easy to Enforce Under New Ruling

The Texas Supreme Court issued a decision on October 20 that will make non-compete agreements significantly easier for employers to enforce. An employer may now enforce its non-compete restrictions even if it did not provide anything of value to the employee at the time the agreement was signed.The Supreme Court criticized lower courts and lawyers for reading too much into its 1994 decision which has long governed non-competes. The requirements that non-competition agreements arise out of enforceable agreements between the employer and employee were not meant, the court said, to create the “overly technical disputes” that have occurred since the Court issued that 1994 decision.

“This changes the playing field completely,” said Dallas employment lawyer Matt Hill , who advises and represents employees concerning their non-competes. “Under the previous standard, most of the non-compete agreements I saw were unenforceable. Now, almost all will be enforceable.”

The decision will most affect at-will employees who have no guarantee of continued employment. “It used to be a two-way street,” Hill said. “Employers had to give employees something of value to bind them. Now, it’s not clear that is still true.”

The new decision will make it much more difficult for employees to invalidate their non-competes. The focus now, Hill said, will be whether the restrictions placed on the employee are reasonable.

“This decision really undercuts the ability of employees to make a living in Texas,” Hill said. “If an employee isn’t willing to risk being sued, he can be frozen out of the field he’s worked in all his life.”

The main lesson for employees from the decision, Hill said, is to know what they are getting into when they sign an agreement with the company. “On the front end, if an employer wants you, they’re willing to work with you to make the restrictions reasonable. Once you’ve signed, though, you’re stuck. And now the court is saying it won’t save you from yourself.”

Dallas employment lawyer Matt Hill represents and advises employees and executives in disputes and negotiations with their employers, including non-compete disputes. His website is at http://www.texasemployeerights.com.

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