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Non-Compete Agreement Enforcement

In Texas, non-compete agreements (also known as restrictive covenants or covenants not to compete) are contracts which lay the groundwork for managing conflicting employee-business interests. Professionals want the freedom to grow their careers while companies have a need to safeguard proprietary information, business strategies, and client relationships. A thorough non-compete agreement must walk a fine line between protecting the company’s best interest and upholding employee rights.

The language contained in these contracts can be immensely detailed and will often dictate the outcome of disputes; however, when conflicts endure, litigation or arbitration may become necessary. Contract enforcement and legality are often central issues in these cases and securing the services of an attorney well-acquainted with non-compete agreements is highly recommended.

Enforcing Non-compete Agreements

The existence of a signed non-compete agreement does not guarantee that it will be enforceable. In fact, in order to stand up to the intense scrutiny it will likely receive during a dispute, an agreement must meet several requirements. If a judge determines that certain terms are unreasonable, the court may reform or modify an agreement as it deems necessary. Due to the complexity of these cases, each dispute is reviewed on an individual basis.

In Texas, for an agreement to be enforceable it must:

  • Contain specific limitations regarding its scope and the geographical area covered
  • Clearly indicate the length of time that restrictions will apply
  • Not overstep its role in protecting a business’s goodwill or interests; it must be reasonable in its restrictions.
  • Be ancillary to part of, or included in an otherwise enforceable agreement

Obtaining Relief from Non-competes

A common method of seeking relief in the face of competitive harm or employee restriction in non-compete disputes is to seek a temporary injunction (TI) or temporary restraining order (TRO). This will allow the injured party a greater allotment of time to construct a defense and also why it is critical to act quickly. A thorough defense can involve gathering evidence, witness testimony, and relevant documentation.

To obtain an order it must be shown that damages will occur unless the TI or TRO is granted by the court. While, “irreparable injury” typically refers to that which cannot be compensated for or measured against a specific standard, precise interpretations can vary from court to court. Considering the speed that businesses move in our technological age, if you are involved in a dispute (or believe that one is on the horizon), there is no time to waste.

In order to secure a temporary injunction in Texas, an applicant must show that:

  • A cause of action occurred
  • The petitioner has a right to the relief
  • There exists a probably, imminent, and irreparable potential for damages
  • No adequate remedy at law

Damages in these cases can take many forms. For example, in a misappropriation case, a party may be able to recover profits from the use of trade secrets, the value an investor may have paid for the information, as well as potential royalties.

Non-Compete Agreements Can Differ between Industries

Non-compete agreements are far from one size fits all contracts and can be highly specific to an industry or profession. For example, in the medical industry, the terms of physician non-compete agreements must take into account the best interests of doctors, hospitals, and the public. While medical facilities have an interest in seeing that physicians do not leave to become competitors, non-competes must not be overly-restrictive or go against public policy; a patient’s treatment may not follow the career path or legal disputes of a physician.

In order to be legally enforceable, these agreements must allow a physician to:

  • Access a list of all patients treated or seen within one year of termination
  • Provide access to a previous patient’s medical records, pending that patient’s approval
  • Continue to treat specific patients for an acute illness post-termination
  • Buyout of the non-compete if necessary – a process overseen by an arbitrator

Drafting and negotiating the terms of a contract which sufficiently protects a medical facility without restricting its employee’s rights can take the eye of a skilled attorney. At Hendershot, Cannon, Martin & Hisey, P.C., we routinely represent professionals and businesses in a variety of industries including physicians and hospitals.

Houston Business Law Attorneys

Business law regarding non-compete agreements has shifted dramatically over the past decade, a trend which may very well continue into the future. At Hendershot, Cannon, Martin & Hisey, P.C., we stay on top of changes in corporate and business law to help ensure we can provide our clients with the most up to date legal strategies. If you have questions about how the language in a non-compete may affect your company or career, contact our legal team and draw from more than two decades of experience.

Call (713) 909-7323 or contact us online and learn about your legal options.

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