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Thursday, March 28, 2024

Texas Non-Compete Agreements Must Contain Reasonable Geographic Limitations or an Effective Substitute

Last updated Monday, March 22, 2010 01:00 ET

Mr. Clouse advises employers to avoid appearing greedy and to instead draft agreements as narrowly as possible while still protecting the business’s interests.

03/22/2010 / SubmitMyPR /

Texas employers may wish to ask their key employees to sign non-compete agreements; these agreements prevent employees from competing with employers post-employment.  But, cautions Dallas non-compete attorney Keith Clouse, for a non-compete agreement to be enforceable, an employer must carefully tailor the agreement to ensure that the restrictions on post-employment activities are reasonable and are no greater than is necessary to protect the company’s legitimate business interests. Mr. Clouse advises employers to avoid appearing greedy and to instead draft agreements as narrowly as possible while still protecting the business’s interests. 

In Texas, a non-compete agreement must contain a geographical area restriction that is reasonable.  Courts have previously looked at geographic restrictions in terms of miles or areas, such as clauses forbidding competition “within 20 miles of the Dallas office” or “within the states of Texas and Oklahoma.”  Now, recognizing the global reach of many companies, courts allow an employer to forego a specific geographic limitation by substituting a list of clients or customers that the employee cannot contact or by substituting a general statement regarding past clients that the employee cannot solicit, such as, “Employee may not solicit any customers with whom Employee had material contact during the last two years of his employment.” 

For help drafting a non-compete agreement or for advice regarding the enforceability of a non-compete agreement, please contact the Texas non-compete lawyers at Clouse Dunn Khoshbin LLP at [email protected].