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Non-Compete Agreements

 

Below you will find frequently asked questions regarding Non-Compete Agreements. 

 

* MaddreyMix is intended to provide some quick information for general educational purposes only. For answers to your specific questions, please give us a call so we can enter into an attorney/client relationship and help you with your particular situation.

 

How long does a non-compete agreement last?

 

Non-Compete Agreements are contracts that (generally) an employer gives an employee that states that after the employee leave the job, they cannot work for a competitor or start a competing business for a set period of time.

This time period can be anything the two parties agree upon, however, many courts do not kindly on agreements that restrict the type of work a person can do.

Additionally, the validity of these vary from state to state. In Texas, for example, courts are very wary of upholding these agreements unless they are tightly controlled

How long does a non-compete agreement last?

 

Non-Compete Agreements are contracts that (generally) an employer gives an employee that states that after the employee leave the job, they cannot work for a competitor or start a competing business for a set period of time.

This time period can be anything the two parties agree upon, however, many courts do not kindly on agreements that restrict the type of work a person can do.

Additionally, the validity of these vary from state to state. In Texas, for example, courts are very wary of upholding these agreements unless they are tightly controlled

What voids a non-compete?

 

A non-compete can be voided if the terms are unreasonable.

Some reasons why a Texas court might find that the non-compete is unreasonable and thus, void, are:

 

 

  • If the geographic area in which the employee cannot compete is too wide.
  • If the time period during which the employee cannot compete is too long.
  • The reason for restricting the employee is invalid.
  • If the employee does not benefit or receive anything in return for signing the agreement.

 

What are the pros and cons of a non-compete agreement?

 

Pro

 

 

  • Protects employer from training an employee only to see them leave to start a competing business or bring their newfound experience to a competitor;
  • They can be used as a negotiation tool by both parties – i.e. an employee can offer to enter a more restrictive agreement if the employer increases the salary offered;
  • They can be part of a comprehensive Confidentiality Agreement that can limit trade secrets and other intellectual property from being known by competitors.

 

 

Cons

 

 

  • These agreements almost always benefit the employer and not the employee;
  • Often there is an imbalance of negotiating power at the time of a job offer so new employees sign away their rights;
  • Generally, these documents are disfavored by the courts since they restrict the right of a person to work in the field they wish to work – therefore to be effective, they must be limited in scope, time, and geography (among other factors).

 

Is a non-compete enforceable?

 

In Texas, a non-compete is only enforceable if it is reasonable.

Specifically, a non-compete is enforceable when it does not unreasonably restrict an employee in its efforts to protect the legitimate business interests of the employer. For example, a non-compete that unreasonably restricts an employee in terms of geographic location or time would most likely be held unenforceable.

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