Can You Argue a Non-Compete is “Unfair” and Win in Texas?

If you’re an employee in Texas and you’re bound by a non-compete agreement, you may wonder if you can argue that the agreement is “unfair” and win. The answer is yes, at least in some cases. In a recent case, a Texas Court of Appeals found that it would be unfair to enforce a 1-year non-compete agreement against an employee who only worked for his employer less than 5 months and was let go without cause.

In that case, the employer had hired the employee as a sales manager with the main purpose of attracting the customers of his former employer. As soon as the employer had obtained the maximum benefit from the employee’s contacts, it discharged him without reasonable cause. The Court of Appeals held that the trial court was correct in denying the injunction because the evidence supported the employee’s claim that his employer engaged in unconscionable conduct in discharging the employee without cause after only a short period of employment and after getting the benefit of customer contacts that the employee developed while working for a competitor of the employer.

This ruling is significant for Texas employees who have non-compete agreements that are far longer than the time they worked for their employers and who have been laid off or fired without cause. These employees may have an equitable defense to the enforcement of their agreements if they can show that their employers engaged in unconscionable conduct.

In summary, if you are a Texas employee who has signed a non-compete agreement, it’s essential to understand your rights and the circumstances under which you can argue for an equitable defense. If you believe that your employer has engaged in unconscionable conduct in enforcing your non-compete agreement, you should consult with an experienced employment law attorney who can help you navigate your legal options.

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.