Your Texas employees must necessarily be familiar with your proprietary information in order to perform their job duties, but your trade secrets form the basis of your entire company. A noncompete clause in the employment contract may be the answer. However, you may have heard that some former employees are suing their employers in order to get out of their noncompete agreements.

At Leslie Wm. Adams & Associates, we often help business owners to craft noncompete agreements that can prevent former employees from sharing or using trade secrets.

According to the Texas Business and Commercial Code § 15.50, to be enforceable, a covenant not to compete must have these three primary elements:

  • Scope: It does not create any restraints on the employee that are not specifically necessary to protect the trade secret.
  • Time: You cannot leave the terms open-ended; the contract can only restrict the employee for a specific amount of time.
  • Geographical area: The employee can leave the geographical region where your company does business to find similar employment.

If your former employee decides to take the matter to court, he or she must prove that your covenant does meet the criteria listed in this section of the law. If he or she is successful, then the judge may impose a scope, geographical area and time limit. If it does have these elements, a judge may still determine that the agreement is not enforceable because the restrictions are more stringent than they have to be to protect your business interest. The judge may also order that you must pay the former employee’s attorney fees and court costs.

More information about business litigation matters is available on our webpage.