COVID-19 Texas Employer Guide – Are Non-Compete Agreements Still Enforceable?

In Texas, the reason for termination of employment – whether it was for cause, without cause, a layoff, a reduction in force, or any other reason – does not affect the enforceability of a non-compete agreement. Therefore, employers should not assume that non-competition agreements are no longer enforceable and must carefully approach enforcement of such agreements against departing employees as well as the hiring of new employees who may be still bound by non-competition agreements with their former employers. 

The Fifth Circuit Rules Industry-Wide Noncompete Agreements Are Not Enforceable

The Fifth Circuit Court of Appeals recently considered whether a travel agency’s noncompete agreement with its employee was enforceable under Texas law.  It concluded that because the agreement did not have geographic limits, was not limited to the travel agency’s customers with whom the employee actually worked during her employment, and included entire travel agency industry, the non-compete was unenforceable.

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