What Happens If You Break a Non-Compete Agreement in Texas? 2024

If you are a Texas resident considering separating from your employer, it is crucial that you understand your contract’s non-compete clause and that you are aware of what happens if you break a non-compete agreement in Texas.

Employment Contracts in Texas May Include a Non-Compete Clause

A Texas court made headlines in July 2024 when it placed an injunction on a Federal Trade Commission (FTC) ban on non-compete agreements. Understanding your contract’s non-compete clause is essential to avoiding limitations to your future work in the state, as well as potential financial losses for failure to comply with the agreement.

At the start of a business relationship, an employer presents a contract to a prospective employee or consultant whom they have agreed to hire or conduct business with. In many industries and professions, it may be standard for these contracts to include a non-compete clause.

The more specialized an individual’s employment knowledge and role are, the more likely that a non-compete clause will be inserted into the contract. Additionally, due to the nature of contractor work, non-compete agreements are often included in the business agreement.

Conditions of a Non-Compete Agreement in Texas

Both Texas and federal law converge on the idea that promoting competition in the economy should be public policy. Non-compete clauses should not place undue burden on an individual – including excessively limiting their ability to earn from their skill or profession.

However, employers may want to include such clauses in their contracts if they fear competition from a current or former employee will impact their business.

A non-compete clause may specify:

• A geographical area where you may not practice your trade-in.
• With whom you may not pursue as a client or employer, such as a former employer’s clients
• A period in which the non-compete agreement can be enforceable.

A business may work with a skilled corporate attorney to draft sound non-compete clauses to protect their business.

What Happens if You Break a Non-Compete Agreement in Texas?

As with all other clauses in an employment or contract agreement, non-compete clauses may be enforceable by your company, and thus, a violation of the agreement may warrant legal action against the party at fault.

When a party subject to a contract that includes a non-compete agreement violates the agreement, it could constitute a breach of contract.

If found in breach of contract, you might face the following:

• An injunction against continued practice of your specialty or trade where it constitutes a violation of the non-compete agreement.
• Payment of damages based on the estimated loss suffered by the company through your breach.
• Payment of the company’s attorney and court fees is included in your own.

The final judgment against a defendant, if found at fault, is determined by Texas law, as well as terms stipulated in the non-compete clause language.

Options After Signing a Non-Compete Agreement

If you have signed a non-compete agreement in Texas and you are currently employed, you may want to speak with your employer for clarifications on what services you may or may not render outside of the scope of company hours.

For former employees or contractors no longer employed by a company, it may be helpful to speak with a business lawyer if you hope to pursue similar work to that which you performed for your former employer. They will advise you on your limitations and the merits of a potential breach of contract claim based on specific clause language and Texas and federal law.

Most non-compete agreements have a time limit. Texas law defines reasonable time and geographic limits allowable in a non-compete clause, and a knowledgeable business attorney can fight for you in court if you believe the non-compete agreement violates your rights to fair employment.

FAQs

What Happens if You Violate a Non-Compete in Texas?

If you violate a non-compete clause in Texas, your former employer may file a lawsuit against you for breach of contract. If you are found at fault by a Texas court, you may be subject to paying damages, which could bar you from continuing to perform the work. Additional attorney and court fees may be levied against you. It is up to the court to decide whether the non-compete agreement is enforceable and if you are in violation of it.

How Do You Get Out of a Non-Compete Agreement in Texas?

To get out of a non-compete agreement in Texas, you may be able to negotiate with your employer to modify the terms of the agreement. Additionally, you may be able to challenge the non-compete agreement in court if your former employer decides to pursue litigation. Non-compete agreements have time and geographic limits, and you may conduct business outside these limits.

What Professions Are Exempt From Non-Compete in Texas?

For purposes of public interest, Texas law places strict limits on non-compete agreements for certain professions. Non-compete clauses for physicians, for instance, must not include prohibitions on the continued care of patients. Physicians are also allowed access to former patients and their records even after leaving a place of employment. Other professions may enjoy protections from excessive non-compete agreements as per the Texas Business and Commerce Code.

What Voids a Non-Compete Agreement?

Texas courts spell out general conditions under which a non-compete clause would be enforceable. A non-compete agreement can be considered unenforceable if it is unreasonable under the law. This may be related to the length of time stipulated under the non-compete or the geographical region. If the agreement is too broad, it may also not be enforceable.

Violating a Non-Compete Agreement in Texas Can Be Costly

Understanding the consequences of breaking a non-compete agreement in Texas will save you the headache of litigation and a potential judgment against you in court. Even if you signed a non-compete agreement, it might not be enforceable. Speaking with a Texas business attorney can help clarify how you may proceed with your work if you are subject to one and avoid any penalties.

Yocom Rine P.C. is available to answer your employment contract questions. Our commitment to your legal needs is carried out through consistent, hard work and thorough preparation to represent you in court. Schedule a consultation today and discuss any concerns you may have about the non-compete agreement.