Jackson Law Firm

Drafting a non-compete agreement with reasonable time limits

The court will rule a non-compete agreement unenforceable if it is not drafted correctly. One critical aspect of enforceability is the inclusion of a reasonable time period that the covenant is in effect. According to Texas Business and Commerce Code §15.50(a), the time limitation is not reasonable if it is vague, or if the restriction it imposes goes above the amount of time needed to protect the interests of the business.

The time necessary to protect the company’s interests should be considered and set carefully. There is not a specific time frame that works across contracts within the same industry, company or job title. Instead, when an employer is preparing to offer a position, the prospective employee’s duties and the knowledge specific to those duties should be considered in relation to how time will affect their application to business. For example, if the company produces computer software, the relatively quick obsolescence of the product may render a limitation of even one year unnecessary.

If a dispute over a non-compete agreement goes to court, the court may reform the contract to reflect the amount of protection necessary. While employment litigation may seem like a positive solution for the company, damages incurred before the contract was reformed may not be awarded. If the court rules in favor of the former employee, the company may be ordered to pay damages, including court costs and attorney’s fees.

The Texas Workforce Commission states that competition is generally promoted, so the agreement must show that the company would be harmed by the sharing of the knowledge, but the former employee would not be harmed through the enforcement of the agreement.

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