Last night I was at dinner with some friends and the subject came up of the enforceability of non-competes in Texas. The first statement/question I always here is that they are not enforceable. I’m not sure where that “common knowledge” comes from. Maybe it’s just some core American/Texas value that someone cannot restrict your right to make a living, which a non-compete/non-solicit agreement can do for some period of time. It also is troubling that such an agreement can effectively put an employee out of their profession to some extent – even doctors (but not lawyers).

The Texas Supreme Court was silent on non-competes this year, though it is considering a new non-compete case from the Dallas Court of Appeals, Marsh USA Inc., v. Cook, previously discussed here. That said the court beginning with the Sheshunoff case in 2006 and followed by Mann has made non-competes easier to enforce by eliminating some technicalities that prevented enforcement.

The basic requirements for non-competes remain the same. They must be reasonable in scope and ancillary to an otherwise enforceable agreement. Employers will continue to use them in appropriate and inappropriate situations. Employees will attempt to find ways to circumvent them or even have courts declare the provision unenforceable.   Each party should obtain legal counsel before they draft or sign a non-compete. An ounce of prevention is well worth the expense.

Happy New Year.