Non-compete agreements are common in Texas employment contracts, especially in professional, sales, medical, and executive positions. Employers often use them to prevent former employees from competing after leaving a job.
But under Texas law, not every non-compete is enforceable. Many are drafted too broadly and cannot legally restrict a former employee’s career.
This article explains when non-compete agreements are valid in Texas—and when they are not.
What Is a Non-Compete Agreement?
A non-compete agreement is a contract provision that limits an employee’s ability to:
- Work for a competitor
- Start a competing business
- Solicit former clients
- Operate in a specific geographic area
- Compete for a certain period of time
after leaving an employer.
In Texas, these agreements are governed by statute, not just general contract law.
The Texas Law Governing Non-Competes
Texas regulates non-compete agreements under Texas Business and Commerce Code § 15.50(a), which provides:
“A covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement… and contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable.”
In practical terms, this statute creates four main legal requirements.
Requirement #1: The Agreement Must Be “Ancillary” to a Valid Contract
A non-compete must be connected to a legitimate employment agreement.
Usually, this means the employer must provide something of real value, such as:
- Trade secrets
- Confidential information
- Specialized training
- Proprietary customer data
If an employer gives nothing in exchange for the restriction, the non-compete is likely unenforceable.
Courts will not enforce non-competes that exist only to restrain competition.
Requirement #2: The Employer Must Provide Legitimate Consideration
Under Texas Business & Commerce Code § 15.50(a), the employer’s promise must be “designed to enforce the employee’s return promise.”
Common qualifying consideration includes:
- Access to confidential client lists
- Business strategies
- Pricing data
- Protected intellectual property
A vague promise of “employment” alone is often insufficient.
Requirement #3: Time Limits Must Be Reasonable
Texas courts examine how long the restriction lasts.
Most enforceable non-competes fall within:
- 6 months
- 1 year
- 2 years (sometimes)
Agreements lasting five or ten years are rarely upheld.
If the time period is excessive, courts may reduce it or refuse enforcement.
Requirement #4: Geographic Scope Must Be Reasonable
A non-compete must be limited to areas where the employer actually does business.
Examples of reasonable restrictions:
- One county
- One city
- A defined sales territory
- A specific region
Examples of problematic restrictions:
- “Anywhere in Texas”
- “Nationwide” (for local businesses)
- “Anywhere in the United States”
Overly broad geographic limits are a common reason non-competes fail in court.
Requirement #5: Activity Restrictions Must Match the Job
The agreement must restrict only the activities the employee actually performed.
For example:
A salesperson may be restricted from selling similar products to the same customers.
But they usually cannot be barred from working in an unrelated department or industry.
Texas courts will not enforce agreements that unnecessarily block a person’s entire profession.
When Courts Can Modify an Unfair Non-Compete
Even if a non-compete is too broad, Texas law allows courts to “reform” it.
Under Texas Business & Commerce Code § 15.51(c), courts may:
- Reduce time limits
- Narrow geographic areas
- Limit restricted activities
Instead of voiding the agreement completely.
This means employers often still get partial protection—even if the original contract was unreasonable.
Special Rules for Medical Professionals
Physicians are subject to additional protections under Texas Business & Commerce Code § 15.50(b).
Medical non-competes must include:
- Buy-out options
- Access to patient records
- Continued patient care rights
Without these protections, a physician’s non-compete may be invalid.
Can You Be Sued for Violating a Non-Compete?
Yes. Employers may seek:
- Injunctions (court orders stopping competition)
- Monetary damages
- Attorneys’ fees
- Temporary restraining orders
Violating a valid non-compete can quickly lead to litigation.
However, many lawsuits fail because the underlying agreement is legally defective.
Are Non-Competes Always Enforceable in Texas?
No.
Common reasons non-competes fail include:
- No real consideration
- Excessive duration
- Overbroad territory
- Unreasonable job restrictions
- Poor drafting
Texas courts strictly apply statutory requirements.
What Employees Should Do Before Signing
Before signing a non-compete, employees should:
- Read the geographic limits
- Check the time period
- Review activity restrictions
- Understand buy-out provisions
- Consult an attorney if needed
Many people unknowingly sign agreements that restrict them for years.
What Employers Should Know
Employers should ensure their agreements:
- Match actual business needs
- Provide valid consideration
- Are narrowly tailored
- Comply with statutory requirements
Poorly drafted non-competes are expensive to enforce and often fail.
When to Consult a Texas Attorney
You should speak with an attorney if:
- You are threatened over a non-compete
- You want to challenge enforcement
- You are drafting an agreement
- You received a cease-and-desist letter
- You are being sued
Early legal review can prevent costly litigation.
Final Thoughts
Non-compete agreements in Texas are not automatically enforceable. They must meet strict statutory requirements regarding fairness, necessity, and scope.
Whether you are an employer or employee, understanding these rules can protect your livelihood and your business.
If you are facing a non-compete dispute, professional legal guidance is essential.
At David C. Barsalou, Attorney at Law, PLLC, we help clients navigate business, family, tax, estate planning, and real estate matters ranging from document drafting to litigation with clarity and confidence. If you’d like guidance on your situation, schedule a consultation today. Call us at (713) 397-4678, email barsalou.law@gmail.com, or reach us through our Contact Page. We’re here to help you take the next step.
