Non-Compete Agreement Violation in Houston
Enforcing and Defending Claims in Non-Compete Agreement Disputes
Businesses depend on non-compete agreements to protect their proprietary information and prevent former employees, vendors, or contractors from using that information to compete against them for a reasonable length of time.
Whether you are a business owner watching in alarm as a former employee or supplier sets up competition against you, or a former employee facing allegations of a breached non-compete agreement, the Houston-based, non-compete litigation attorneys at Hendershot Cowart P.C. can help you. We are seasoned litigators skilled at defending and enforcing non-compete agreements.
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To schedule a consultation with our team, contact us online or via phone at (713) 909-7323.
Is a Non-Compete Agreement Enforceable in Texas?
To be enforceable in Texas, a non-compete agreement must be included with another
agreement (such as an employment offer), and be in exchange for “consideration”
(i.e.
something in return, such as specialized training or confidential information).
Additionally, it must stipulate specific limitations and restrictions pertaining to:
- Scope of activity
- Duration
- Geographic area
Courts will only enforce non-compete agreements that are
reasonable
in terms of geographic limitations, the length of time restrictions will be in place,
and the scope of prohibited work and activities. Courts also closely scrutinize
non-competes
to ensure they are not overly burdensome to an individual and
their
professional
future. They must also be specifically tailored to the
specific employee
and designed to
protect legitimate business interests
(i.e.
trade secrets, confidential information, and business goodwill).
What Type of Relief or Damages Can I Pursue for Breach of a Non-Compete Agreement?
Employers enforcing a non-compete may
seek injunctive relief
in the form of prohibiting a former executive or employee from acting in violation
of the non-compete agreement letter.
Beyond injunctive relief, you may also pursue various types of compensation to recover
damage to your business. These include:
- Seeking monetary or compensatory damages to regain capital lost from the non-compete
violation if the case involves a breach of fiduciary duty, misappropriation
of
trade
secrets, or another
contract breach;
- Seeking punitive damages if the individual violated the non-compete maliciously;
- Seeking liquidated damages if the contract owner stipulated a cost to violating the
non-compete in the initial contract, and;
- Seeking compensation for court costs and attorney’s fees, if the court rules in favor
of the contract owner.
My Employee Did Not Sign a Non-Compete – Can They Still Be Stopped From Competing
Against Me?
There are two specific situations in which an employee may be stopped from competing
with his former employer by the courts. First – even in the absence of a written
agreement – an employee owes a fiduciary duty of loyalty to his or her employer.
If the employee attempts to take confidential, proprietary information or
misappropriate
trade secrets (such as recruiting customers while employed),
then the employer may
be able to bring a suit for breach of these fiduciary
duties. Second, an employee
cannot take and use the trade secrets of a former
employer. That said, employers
are advised to require that employees sign
confidentiality agreements and not solely
rely upon these common law duties.
Preparing for Non-Compete Agreement Litigation
If you suspect an employee or former employee is violating their non-compete agreement, you must act quickly. Start by gathering the facts and consulting an attorney to ensure you have legal grounds for your claim.
- Documents: Make sure you have a copy of every document the employee in question signed. If your employee signed a non-compete agreement in exchange for benefits, gather records of the benefits awarded as well.
- Witness Interviews: You and your legal team will also need to conduct witness interviews. Coworkers may have witnessed the employee’s violation of the non-compete agreement, and clients and customers can confirm suspected violations. Before asking a customer or client to provide an affidavit, consider how your request may impact the business relationship. Your lawyer can help you balance the interests of your business with the interests of your case.
- Electronic Evidence: Another way to gather evidence is to search the employee in question’s computer. Often, employers can preserve electronic evidence by determining which files an employee accessed, transferred, printed, or deleted. If you suspect an employee is violating their non-compete agreement, preserve their emails and hard drives immediately, confiscate employer-provided equipment (like work laptops and cell phones), and remove their access to any shared computer systems or drives. These steps can also mitigate the damage of a non-compete violation.
- Enforceability: Once you have evidence of the violation, you will need to ensure your non-compete agreement is enforceable and review the state laws for enforcement. Your attorney can help you evaluate enforceability under state law.
Remember that litigation should always be the last resort. Try sending a cease-and-desist letter before initiating legal action and weigh the pros and cons of litigation before filing a claim. Preparing ahead of time will help you keep up with the fast pace of non-compete litigation. Start your preparation today with Hendershot Cowart P.C.
Can Texas Courts Void or Modify Non-Compete Agreements?
Enforcing a non-compete agreement is not always an all-or-nothing decision. In Texas,
a court has the ability to modify – or even nullify – the non-compete if the
court
determines that it is not reasonable. The courts are given wide latitude
to reform
a non-compete if the court believes the scope of activity, duration,
or geographic
area are too restrictive.
Courts also have the power to order a person or entity seeking to enforce the non-compete
to pay the other side's legal fees if the court finds that an employer knew
the
non-compete
was overly broad and still sought to enforce it.
How Do I Get Out of a Non-Compete Agreement in Texas?
If you are considering other employment or starting your own enterprise, you may
want to seek an end to your agreement with your current or former employer.
To get out of a non-compete agreement in Texas, you will need to demonstrate one
(or more) of the following:
- The contract owner failed to provide or uphold consideration, which may impact the
legality of the agreement
- The contract owner engaged in unethical or unlawful conduct,
or has a record of failing to consistently enforce the terms of non-compete agreements
- The actions you have taken since disengaging with the contract owner have not actually
violated the terms of the non-compete
- The non-compete does not protect a legitimate business interest. Companies often
require all of their employees to sign a non-compete. However, if you work
in a
position
that doesn’t involve interacting with trade secrets or other
propriety
interests
(working as a receptionist, for example), you can argue
that your non-compete
didn’t
protect any legitimate interests, and is invalid.
- The terms of the non-compete (concerning geography, duration, and scope of activity)
are unreasonable
- You never signed a non-compete agreement in the first place
Proving one or more of the above points may help release you from the restrictions
of a non-compete agreement. An attorney who specializes in business contracts,
like
the attorneys at Hendershot Cowart P.C., can review any written agreements
you signed
and advise you of your options.
Non-Compete Violation Defense Strategies
If you violate the terms of a legally enforceable non-compete agreement, you may face a lawsuit. Fortunately, you will also have the opportunity to defend
yourself, and there are
many effective defenses to non-compete violations, including:
- The language in the non-compete agreement does not specifically prohibit the conduct
you are engaging in
- The non-compete agreement is not enforceable, according to state law
- You left your job due to harassment, discrimination, or illegal activities at the workplace
- Your employer is not protecting a “legitimate business purpose”
- The non-compete agreement is unreasonable in terms of time, geography, or activities
- Your employer has already breached the underlying employment agreement
- Your employer talked you into signing the non-compete agreement via fraudulent inducement
- The non-compete agreement is invalid under existing law
Non-compete agreements cannot be used to control or punish current or former employees,
and employers can only enforce specific and reasonable non-compete agreements. In
addition, a non-compete that promotes monopolies or keeps crucial goods and services
from the public may not be enforced.
Whether you want to work for a competitor, start your own business, or otherwise
make a career move that is restricted by a non-compete agreement, discuss your rights
and legal options with our experienced attorneys beforehand. We can also help you
defend yourself from any lawsuit your employer may file.
Additional Non-Compete Considerations for Physicians
Because physician non-compete agreements can impact doctor-patient relationships,
Texas law has special requirements above and beyond the elements of an executive
non-compete agreement.
Specifically, physician non-competes must allow doctors:
- Access to a list of patients treated within the year preceding the separation from
the practice
- Reasonable access, upon patient consent, to relevant medical records
- To provide for patients who need acute care even after the contract or employment
has been terminated
- To buy out of their agreement, if they choose, at a reasonable price, or, upon mutual
consent, for a price set by a neutral third party
How Can the Team at Hendershot Cowart Help?
At Hendershot Cowart, we represent both employers and employees in non-compete agreement
disputes. When you bring us on-board for your case, we will examine the terms and
conditions of the agreement. Then, we will work with you to identify the best path
forward whether you are pursuing or defending a non-compete violation claim.
We also work with business owners and executives to draft legally sound and enforceable
employment contracts and non-compete agreements. With any non-compete matter, our
goal is to empower you with information and the benefit of our years of experience,
so you can make the best decision for your business or health care practice.
At Hendershot Cowart P.C.,
business law
and
contractual matters
are a cornerstone of our practice. This expertise translates to an efficient and
comprehensive resolution to your non-compete agreement dispute.
Our award-winning business lawyers are ready to work with you.
To speak with a member of our team about your needs, call us for an initial consultation.
NLRB to Employers: Make Sure Non-Competes Are Lawful, Or Compensate Employees For Financial Harm
