Nationwide, businesses have used noncompete agreements to prevent former employees from turning into competitors. Many consider these agreements critical to maintaining their position in a marketplace that is already highly competitive. However, there is a legislative tide turning and state legislatures, as well as some employers, around the country are beginning to question this practice. Will Texas be far behind?
Why Are Noncompete Agreements At Risk?
According to an article from The Economist, noncompete agreements are not necessarily negative for employees, provided the employee is compensated fairly for giving up the right to pursue work for a competing business. Experts argue, however, that such compensation is not being provided across the board.
Furthermore, there are statewide impacts. One study found that, while states where noncompete agreements are legally enforceable tend to invest more in equipment and training, those states are also lacking when it comes to development of new technology businesses and businesses in other highly skilled sectors. The article posits that the growth of California's Silicon Valley was in part the result of that state's anti-noncompete agreement stance. Noncompete agreements may hinder the necessary flow of ideas.
Businesses Need To Take Care With Noncompete Agreements
For now, noncompete agreements are still enforceable in Texas, provided they are properly constructed. Businesses considering making employees sign these agreements must take care to ensure that the agreements created are legally enforceable in Texas and to be aware of whether or not they are enforceable in other states. An experienced attorney can draft and review effective noncompete agreements in tune with current law.