Enforcing Non-Compete Agreements in Texas – The Issue of Consideration

For an employer to enforce its noncompete agreement in a Texas court, it must show that it gave something to an employee in return for that employee’s promise not to compete. That “something” may differ from state to state. Some states want the employer to pay an employee $$$ for the specific promise not to compete. Other states find that just a simple promise of a employment, even the kind that can be terminated at any time, is an even exchange for an employee’s promise not to compete.  

Unlike many other states, Texas requires employers to give something more besides a job offer or money to an employee in order to extract a legally binding promise not to compete.  In this state, the consideration must have a “reasonable relationship” to the employer’s interest in restraining the employee from competing.  Simply restricting an employee from lawful competition for the sake of preventing competition will almost certainly fail. 

BOTTOM LINE: Texas employers should make sure that their non-compete agreements are supported by proper consideration under Texas law in order to enforce such agreements in court.  

Leiza Dolghih is the founder of Dolghih Law Group PLLC.  She is board certified in labor and employment law and has 16+ years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at leiza@dlg-legal.com or (214) 531-2403.