Non-compete agreements are only as strong as the legal framework behind them. Texas non-compete law has specific requirements, and when a violation occurs, acting quickly is critical. Here is what every Dallas business owner needs to know.
What makes a non-compete enforceable in Texas?
Under the Texas Covenants Not to Compete Act, a non-compete agreement is enforceable only if it meets two core requirements:
- It must be tied to an otherwise enforceable agreement, such as a confidentiality agreement providing access to trade secrets or a training agreement. A standalone non-compete without that foundation is unlikely to hold up in court.
- It must contain reasonable limits on time, geographic scope and type of activity. Courts will not enforce restrictions that go beyond what is necessary to protect a legitimate business interest.
Common drafting mistakes include overly broad geographic restrictions, vague definitions of restricted activities and inadequate consideration.
If a court finds the restrictions too broad, a judge must rewrite the contract to make it reasonable, which is why knowing how to enforce a non-compete in Texas correctly from the start matters. This also prevents the business from recovering damages for violations that occurred before the rewrite.
What businesses can do when a non-compete is violated
Identifying a violation is the first step. Common examples include a former employee working directly for a competitor, reaching out to your customers or employees, or using confidential information to gain a leg up. Once you suspect a violation, take the following steps:
- Document everything: Save evidence of the violation, including LinkedIn activity, new employer information, customer contact and any relevant communications.
- Identify witnesses: Colleagues, customers or vendors who have firsthand knowledge of the violation can be critical to your case.
- Do not confront the former employee: Direct contact before talking to an attorney can hurt your legal position and give the other side an advantage.
- Consult an attorney right away: If the violation is actively causing harm, a Temporary Restraining Order or temporary injunction may be the fastest way to stop the damage. A TRO can sometimes be granted the same day it is filed.
Damages in enforceable non-compete cases can include lost profits, repayment of the former employee’s gains and attorney’s fees if the contract allows. If the contract requires rewriting by a judge, damages from before the rewrite are not available under Texas law.
The longer you wait, the harder it becomes to show serious harm, which is a required threshold for emergency court relief.
Speed and strategy are important in non-compete disputes
Protecting your business from non-compete violations requires both a well-drafted agreement and a non-compete agreement attorney in Dallas who can move fast when it counts. Contact JB Schwartz PLLC for a confidential consultation. We represent Dallas businesses in non-compete disputes from emergency court filings through full litigation.