If you’re a business owner, you may be wondering if you can use non-compete agreements. When you have your employees sign these agreements, they are giving up their right to work for the competition. They are also saying that they will not start the competition by running their own business.
Each state views non-compete agreements in its own way. In Texas, for example, the law permits non-compete agreements but only in certain situations. For instance, there are three different types of limitations that may need to be applied. Let’s take a closer look.
The scope of activity
The first limitation is in regards to the scope of the activity that the person will be carrying out. The wider the scope, the more likely that the noncompete agreement isn’t going to hold up. If it stops someone from doing a very specific thing that could be detrimental to your company, that may stand, but it cannot simply stop the person from working in the industry in any capacity.
The next thing to think about is the limitations on geography. You may be able to have someone sign a non-compete agreement that says they cannot work for the competition in the same town in Texas. But you likely cannot have them sign one that says they cannot work anywhere in the entire state or even in another state. Geographical limitations make sure that workers still have options.
The time frame
Finally, a non-compete agreement in Texas cannot last forever. It has to be limited to a certain amount of time, such as a year or two.
If you are trying to get all the paperwork set up or you have any questions about how to apply it, be sure you know what legal steps to take.