By now, you have probably heard that a federal court in Texas stopped the ban on non-compete agreements from going into effect on September 4th. This means the the ban is dead (long-live the non-compete agreements!) and we are back to the status quo in Texas: non-compete agreements are still enforceable.
Yes, there is still a possibility of an appeal, but trust me when I say that if an appeal is filed, due to the current legal and political landscape, there is less than 0.1% chance that the ban will be resuscitated.
So, what does that mean for those who are being asked to sign non-compete agreements?
First, make sure you read the agreement that’s presented to you and understand what restrictions will apply if you leave the company. If you don’t understand the restrictions, ask the potential employer to explain them or consult with a lawyer. If the employer’s explanation does not make sense or doesn’t match the language in the agreement, or if the employer says “don’t worry, we don’t enforce such agreements” but won’t take it out of your contract, that is a red flag.
Second, if you do agree to a non-compete clause, make sure you negotiate some favorable terms in exchange for agreeing not to compete or negotiate a more favorable non-compete. Yes, you can and should negotiate non-compete terms just like you negotiate your compensation.
Third, make sure you think about how the non-compete restraints will affect your career path. None of us accept jobs thinking that we will leave them right away. However, things happen. Sometimes, you find out that you cannot stand your boss or that job is not what you thought it was and you want to leave. Sometimes, another company makes you a much better offer. And sometimes, a company lets you go suddenly. You should think about how the non-compete restraints will affect you if you end up in one of these situations.
Finally, understand that your best leverage in terms of negotiating the most favorable non-compete restraints for you are before you accept the job. Do not let the employer rush you into signing an employment agreement without reading and understanding it and without consulting with a lawyer if you want one to review the agreement.
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.