Some Texas employers require new employees to sign non-compete agreements. They are sometimes called non-compete clauses (NCC) or covenants not to compete (CNC) and are designed to protect the company’s goodwill and confidential information. When signing a contract with a CNC, an employee agrees that when he leaves his employment, he will not work for one of the employer’s competitors for some agreed upon period of time. While this may sound acceptable at the beginning of a new job, this can be a serious restriction on the employee’s career growth if he later resigns or is terminated.
What Is Required for a Covenant Not to Compete to Be Valid?
In Texas, contracts that restrain trade or commerce are illegal under the Texas Free Enterprise and Antitrust Act of 1983. However, an exception has been carved out to permit the enforceability of non-compete agreements. In order to be valid, the agreement must meet these requirements:
● It must be ancillary to or a part of another enforceable agreement, such as an employment contract or a confidentiality agreement (but not an “at will” employment agreement, absent other circumstances).
● The agreement must contain specific limitations as to time period, geographical area, and scope that are reasonable.
● The covenant not to compete must require only the least amount of restraint that is necessary to protect the employer’s goodwill and business interests.
Special Rules for Non-Compete Agreements for Doctors
In order for a non-compete agreement between a physician and an employer to be valid, it must meet additional requirements. These include:
● It must not deny the doctor access to a list of patients who he saw or treated within one year of his termination of employment or contract.
● It must allow him access to the medical records of his patients if they authorize it.
● It must provide for a buyout provision for the non-compete clause itself.
● The doctor must not be prohibited from treating patients with acute illnesses after the contract or employment has been terminated.
Has your employer asked you to sign a non-compete agreement in the Dallas/Fort Worth area, or anywhere else in Texas? You should have an experienced employment law attorney review it before you sign it to be certain that it is legal and that the terms are reasonable. Contact us online or call our office directly at 817.380.4888 to schedule a free consultation with Attorney Walt Taylor to discuss your situation and obtain legal advice on your covenant not to compete.