Labor & Employment Law

Texas Law Noncompete Agreements: Right to Work Myth

By Robert Wood

Texas courts continue to confirm the enforceability of some noncompete agreements here.  I routinely here from people that "Texas is a right to work state, and noncompete agreements are not enforceable here."  Five years ago, Texas courts were extremely unsympathetic to noncompete agreements.  But ever since the Sheshunoff and Mann Frankfort cases were decided, Texas courts have been more willing to enforce restrictive covenants against employees.

A recent case from the federal Northern District of Texas proves this point.  There, the employee was trained on the employer's "processes and requirements."  "She also became familiar" with the employer's "price schedule" for one of its customer contracts.  This kind of confidential information is routinely conveyed by employers to employees.

After the employee resigned, became employed by a competitor, and began doing work for one of her ex-employer's customers, her former employer sued her for violating her noncompete agreement.

The court enforced the agreement, based upon the confidential information that was conveyed.  In doing so, the court noted, "Two to five years has repeatedly been held as a reasonable time limitation, and the restraint here only lasts six months.  And Texas courts have upheld geographical limitations preventing competition within a metropolitan area, as the 50-mile limitation essentially does here."

OBSERVATION:

Once again, a Texas court dispels the "right to work" myth.  In Texas, noncompete agreements can indeed be enforceable. 

Full post as published by Texas Non-Compete Law Blog on February 11, 2011 (boomark / email).