preview

The Law Regarding Non Compete Agreements Essay

Decent Essays
Courts in Texas continue to struggle with the law regarding non-compete agreements, as a recent decision by the Dallas Court of Appeals indicates. That opinion adds to the trouble Texas employers may face when they seek to protect their business interests through enforcement of existing non-compete agreements with at-will employees.
A fundamental requirement for enforceability of a non-compete agreement in Texas is that the agreement must be "ancillary to or part of an otherwise enforceable agreement at the time the agreement is made." Tex. Bus. & Com. Code §§ 15.50. If the only "other agreement" with the employee is the at-will employment relationship, the covenant not to compete is not enforceable. Notwithstanding a reference in the statute to at-will employment relationships, the Texas Supreme Court has held that an employment at-will relationship, without more, does not constitute an "otherwise enforceable agreement." Light v. Centel Cellular Co., 883 S.W.2d 642 (Tex. 1994).
Employers often argue that a covenant not to compete can be ancillary to an agreement not to disclose confidential information. The court in the Light decision cited such an agreement, given in exchange for the employer actually providing the information, as an example of an "otherwise enforceable agreement." However, since then, several cases have raised concerns about how the courts will construe these types of agreements in the future.
First, the agreement must contain a "promise" to actually
Get Access