Non-Compete Agreements

Rob Wiley: My name is Rob Wiley and I'm going to be talking today with Austin employment lawyer Colin Walsh about non competition agreements. Now Colin, of all of the things that I despise about Texas employment law, non competes have to be at the top of my list. What are non compete agreements?

Colin Walsh: It's an agreement between an employee and an employer that they will after the employment relationship separates they won't go out and compete against that employer.

Rob Wiley: And that is that the employee even though they may have education, experience, skills and things like that, they can't go out and work. They're going to have to find a job in a different area or sit on the couch and collect unemployment, but they're not going to be able to ply their trade. I am upset about non competes because I think that that is an incredibly inefficient waste of time and resources and talent. Are there restrictions on what a non compete can say? Are there limits on how long it can last or how expansive it can be?

Colin Walsh: There are restrictions on all of those things and that's why it's a good idea if you do have a non compete in your employment agreement to contact an employment attorney who is going to be able to explain all of the restrictions and the details of your non compete; whether it's enforceable, whether there's ways around it. Because the Texas Constitution basically says you cannot have a non compete unless certain circumstances are met. And so an employment lawyer is going to be able to help you determine whether or not you really are prevented from going out and doing your job.

Rob Wiley: And typically you see limitations like time: 2 years. You would see limitations in geographic area or you might see limitations in the scope but at the same time I would say since the early nineties the Supreme Court of Texas has never seen a non compete that they didn't like and so they are, I think, very restrictive. You know, having our presence here in Austin, we have so many folks that graduate from UT or come to our area that are part of the tech boom that are taking these jobs with companies like Apple and Dell and things like that and you look at Silicon Valley in California where non competes are generally illegal and it's a hotbed of innovation. I mean if you don't like your job you can start the next big thing there in your garage. And here in Texas where you have non competes so much of that innovation is stifled. But I agree that's probably one of the most technical areas where you've just got to sit down with an attorney with your non compete and see if there is something that, that can be done because it's such a technical area of law.

Colin Walsh: Yes, I would definitely agree with that and I would say one of the ways that a lot of employers mess that up is in the geographic restriction. So what you'll see is employers trying to restrict you from working anywhere in the country basically doing what you did right here in Austin, Texas and that is going to be usually unlawful under the restrictions required for non competes. The scope as well is another way that employers will mess up and that's because they will try to restrict you from doing just about anything that your former employer did. But the law is pretty clear that you can only be restricted from doing what you did there and only for a certain amount of time and in a certain area.

Rob Wiley: And sometimes you're able to resolve these non compete type issues without litigation simply by contacting the employer and finding out what exactly it is they want to protect because the non compete agreement will be incredibly broad. I mean so much so that you can't really get back to work but maybe the employer is really only focused on this one particular project or on a particular competitor that they don't want competing against. Thank you Colin.

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