Texas Non-Compete Agreement Overview
Texas enforces non-compete agreements under the Texas Business and Commerce Code Section 15.50, which requires that a non-compete be ancillary to or part of an otherwise enforceable agreement at the time the agreement is made. This means the non-compete cannot stand alone — it must be connected to a separate agreement that provides consideration, such as an employment agreement providing confidential information, trade secrets, or specialized training.
Texas is a blue-pencil (reformation) state, meaning courts can reform overbroad non-competes to make them enforceable rather than voiding the entire agreement. The statute specifically authorizes courts to reform the agreement to the extent necessary to cause the limitations to be reasonable and to enforce the covenant as reformed. Texas courts have been active in reforming non-competes, and the reformation doctrine provides a safety net for employers who draft agreements that are initially too broad. There is no statutory cap on duration, but courts evaluate reasonableness case by case, with 2 years being commonly upheld.
Enforceable
Enforceability
No statutory cap
Max duration
Yes (reformation)
Blue-pencil
Must be ancillary to enforceable agreement
Consideration
Texas Enforceability Requirements
Understanding Texas's specific rules is essential for drafting an enforceable non-compete agreement. The following provisions apply in Texas.
Key Provisions
- Must be ANCILLARY to an otherwise enforceable agreement (Tex. Bus. & Com. Code Section 15.50)
- The underlying agreement must provide consideration (confidential info, training, etc.)
- Courts can and will reform (blue-pencil) overbroad agreements
- No statutory cap on duration — courts evaluate reasonableness
- Geographic and activity restrictions must be reasonable
- Must protect a legitimate business interest: goodwill, trade secrets, specialized training
- Continued employment alone may not be sufficient consideration — must be tied to enforceable agreement
How to Draft a Non-Compete in Texas
Follow these steps to create an enforceable non-compete agreement that complies with Texas law.
Verify State Requirements
Confirm that your non-compete complies with Texas's enforceability standards, including any income thresholds, duration caps, and procedural requirements.
Define Restricted Activities Narrowly
Be specific about what activities are restricted. Broad prohibitions are more likely to be struck down or modified by Texas courts.
Set Reasonable Geographic Scope
Limit the geographic restriction to areas where your company actually operates or where the employee had client responsibility in Texas.
Provide Adequate Consideration
Ensure the employee receives adequate consideration for the non-compete restriction. In Texas, must be ancillary to enforceable agreement.
Include Severability and Signatures
Add a severability clause and get proper signatures from both parties. In Texas, this helps protect the enforceable portions of the agreement if any provision is found overbroad.
Recent Legal Changes in Texas
Texas has not significantly amended its non-compete statute in recent years. The ancillary requirement remains the central enforceability test. Texas courts continue to actively reform overbroad agreements rather than voiding them.
Employer Tips for Texas
Ensure the non-compete is part of a broader agreement that provides consideration — do not present it as a standalone document. Tie the non-compete to specific confidential information or specialized training the employee will receive. Include reformation authorization. Keep restrictions as narrow as possible while protecting legitimate interests.
Employee Rights in Texas
Texas employees should verify that the non-compete is ancillary to an otherwise enforceable agreement. If the employer provides no confidential information, training, or other consideration beyond employment itself, the non-compete may lack the required ancillary basis. Courts can narrow overbroad restrictions, so even partially valid agreements may be enforced in modified form.
Sample Texas Non-Compete Agreement
Below is a preview of our Texas-specific non-compete agreement. Your customized document will include all provisions required for enforceability in Texas.
NON-COMPETE AGREEMENT
STATE OF TEXAS
Covenant Not to Compete
EMPLOYER:
Company Name: [Legal Entity Name]
Address: [Texas Address]
Business Type: [Industry]
EMPLOYEE:
Name: [Full Legal Name]
Position: [Job Title]
Start Date: [Date]
NON-COMPETE TERMS
Restricted Activities: [Specific Activities]
Geographic Scope: [Area]
Duration: [Time Period] following termination
Consideration: [What Employee Receives]
Governing Law: State of Texas
Texas Non-Compete Agreement FAQ
Answers to common questions about non-compete agreements in Texas, including enforceability, duration limits, and employee rights.
Official Texas Resources
Use these official resources to verify Texas non-compete enforceability rules and access state employment law information.
Related Texas Documents
Depending on your situation, you may need additional documents alongside your Texas non-compete agreement.
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