Many people initially have the wrong idea about noncompetition agreements. The purpose of this type of contract is to protect confidential business information that could lead to an unfair disadvantage to the company or losses if others found out about it. An incorrectly worded contract makes it invalid, so it’s crucial that you understand what makes it valid.
No restrictions on employee mobility
Non-competition agreement contracts and disputes regarding employee mobility are unlikely to go in your favor. Texas law prohibits restricting employee mobility under the Texas Free Enterprise and Antitrust Act of 1983. While an employee may have to wait a certain amount of time before working for a competing employer for the sake of protecting sensitive information, the length must be reasonable in the eyes of the law.
When it comes to protecting a company’s confidential information and trade secrets, non-competition agreements are enforceable. The law declares that it’s reasonable for a business to ask that employees don’t share confidential information or trade secrets.
Reasonable in scope
The entire non-competition agreement must be reasonable in scope even if the reason you created it is valid. This means that the limitations and length of the restrictions must be reasonable. It must also honor an employee’s right to take on contract work. These contracts can’t interfere with normal competition between companies either. They also can’t exceed what is necessary to protect confidential information. The geographic scope, thus, must be just right, or else, a judge may rule it’s invalid.
In Texas, there are certain elements that this type of contract needs to contain. Offer, capacity, adequate consideration, and acceptance are some of the necessary components of a valid non-competition agreement. If your contract is missing any of these elements, then the law may deem it invalid. You should consult with a lawyer when drafting your agreement to ensure it’s valid under Texas law.
The law surrounding non-compete agreements is complex. You want the contract to only stipulate what’s absolutely necessary to protect your business’s trade secrets and confidential information. These legal documents are not for preventing employees from working for someone else.