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Is your non-compete agreement legally enforceable?

When you interviewed for your current job, your prospective employer may have told you that he or she requires all new employees to sign non-compete clauses in their contracts. You really needed the job, so you didn't fret much over it at the time. However, after being with the company for more than a year, you've decided it's time to move on. In searching for new employment opportunities, you began to worry that the contract you signed may limit your choices.

Non-compete agreements are common to the face of business in Texas and the rest of the United States. They are tools business owners can use to protect their assets. While you're never obligated (by law) to sign such an agreement, if you don't, you may risk losing or not getting a particular job. The clearer your understanding of non-compete clauses and what state law says about them, the better. It's also a good idea to have a support plan in mind if a contract problem arises.

Facts regarding enforceability

If you believe your employer has inflicted undue limitations on you regarding your ability to find employment at another company, you may want to review the following list, which includes facts about non-compete agreements and what makes them stand up in court:

  • Most non-compete clauses include wording that defines the amount of time a past employee must refrain from working for a competitor. This amount of time must not be unreasonable.
  • Because such agreements are designed to keep past employees from working for direct competitors, geographical restrictions must be realistic, meaning related to businesses located within the direct scope of competition from the employer with whom you signed a contract.
  • Non-compete clauses are designed to protect trade secrets, customer lists and proprietary information. Your employer must be able to prove that the agreement he or she required you to sign directly protected his or her business interests.
  • What did you receive in exchange for signing a non-compete agreement? If you were already employed at the time, the court may want to know if your employer granted you a raise, bonus or other incentive for signing, or if you signed at the time of hire, the court may consider your job a sufficient fair exchange.

It's always a good idea to carefully review any contract a prospective or current employer asks you to sign. You can also seek assistance from someone well-versed in employment law, so you can seek clarification on any issues that are confusing or vague. You may also want to try to negotiate a better deal, letting your employer know you might be willing to sign for a certain exchange, for instance.

There's no definite answer as to whether or not it is a good idea to sign a non-compete agreement because it might be a good decision in one situation but not so good in another. By arming yourself with pertinent legal information and knowing where to seek support if a problem arises, you should be able to avoid major problems.

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