Posted by: May 12, 2023

What Happens If You Break a Non-Compete

Many employers require their employees to sign non-compete agreements as a condition of employment. If you break a valid non-compete agreement in Texas that you signed at work, your employer can go to court for an injunction to stop you. In addition, they may sue you for damages caused by violating a non-compete agreement. 

But just because your employer takes you to court doesn’t mean they will win. The non-compete agreement must be valid to be enforceable. Non-compete agreements must meet specific requirements under Texas law. An attorney can help you determine whether the non-compete you signed meets these requirements and answer any questions you may have about what happens if you break a non-compete. Don’t hesitate to contact The Curley Law Firm today.

What Is a Non-Compete Agreement? 

A non-compete agreement is a contract between an employee and an employer that prevents the employee from competing against the former employer while they are employed and for some period of time after their employment has ended. For example, it can prevent you from working for a competitor or starting a new company in the same industry after leaving the employer. A non-compete is typically entered into at the start of an employee-employer relationship.

When Is a Non-Compete Agreement Enforceable in Texas?

Texas has four requirements for a non-compete agreement to be enforceable. It must be:

  • Ancillary to another valid agreement. There needs to be a valid agreement between you and your employer. To be enforceable, you needed to have received something of value from the employer, known as consideration. The consideration must be reasonably related to the need to restrain competition. Consideration can be a signing bonus, stock options, access to confidential information, or another thing of value. 
  • Reasonable in scope. What is restricted by the agreement must be reasonable based on the employment. For example, a valid non-compete can prevent you from starting your own business of the same type as your former employer or working for a direct competitor. Generally, Texas courts disfavor agreements that prevent you from working in your field completely.
  • Reasonable in geographic area. Reasonableness depends on where your employer operates, the employee’s role, and the industry. A restriction that prevents you from taking a job outside the area where your employer operates would likely be unreasonable.
  • Reasonable in duration. The court will also examine whether the non-compete is for a reasonable time. Texas courts have routinely upheld restrictions ranging from two years to five years. A perpetual non-compete is not enforceable in Texas. The reasonableness ultimately depends on the industry and the role of the employee.

A skilled Texas non-compete attorney can analyze your agreement and assess whether it meets these requirements. 

What Happens If You Violate a Non-Compete Agreement?

If you are violating a non-compete, you risk being sued by your previous company. There are three main remedies an employer may be able to get:

  • Injunction. The employer can ask for a court order preventing you from working for a competing company or operating a competing business.
  • Liquidated damages. Sometimes a non-compete agreement will specify a certain amount of damages the employer can recover if they prove you breached the agreement.
  • Actual damages. If the employer can prove that they suffered losses because you breached the contract, you may have to pay them compensation. For example, if the competing business you started has lured clients away from your old employer, they could sue you for profits they lost as a result.

Your attorney can give you a better idea of what might happen to you based on your individual circumstances.

Will I Get Sued for Breaking a Non-Compete Agreement in Texas?

Just because a company can sue you does not mean it will. Many factors, including the cost of litigation and the likelihood of success, can deter a former employer from taking legal action against you.

Nevertheless, the risk of getting sued is a very important consideration. If you’re concerned that taking a job or starting a business will violate your obligations under a non-compete agreement, you should consult a skilled attorney. They will be able to assess the industry and the agreement and provide insight into the potential for legal action. However, there is no way to know for sure whether your former employer will sue you. 

What Other Exceptions Are There to Enforceability in Texas?

Even if the agreement meets the general enforceability requirements for a non-compete, there may be other grounds to avoid its enforcement. For example, if you had an employment contract, the employer could have breached the agreement first by firing you without cause.

In addition, there could have been general problems with the formation of the contract, such as it not being signed by all the parties.

There also are different requirements under Texas law for physicians. These require that the agreement:

  • Give the physician the opportunity for a buyout;
  • Provide the physician with continued access to medical records (with patient consent); 
  • Give the physician access to a list of patients from the previous year; and
  • Allow for continuity of care with patients with acute illnesses.

If you are a physician breaking a non-compete agreement or are considering doing so, speaking with an attorney as soon as possible is advisable.

Contact a Non-Compete Attorney to Discuss Your Options

If you signed a non-compete and are considering breaking it or have already broken it, speaking with a skilled non-compete attorney is a good idea. Adam Curley of The Curley Law Firm is an experienced attorney with over a decade in practice. He has worked extensively in business law and is very knowledgeable about non-compete agreements. Contact the Curley Law Firm today to thoroughly discuss your employment situation.