b'Covenants Not to CompeteWho, What, Why . . . Who does it apply to: Any employer who fears its employeesWhat do I have to give my employee in exchange for the non-might go out and start a competing business or work for acompete: Youhavetogivetheemployeesomethingthatis competitor and share the employers secrets. worthy of preventing them from competing with you. Examples that are acceptable include sharing trade secrets, confidential Whatisacovenantnottocompete:Non-competes,alsoinformation,and/orspecializedtraining.Asmuchassome known as non-competition agreements, are a specially designedemployers might like to do so, you cannot buy an employees type of contract creating an obligation with current and formeragreement not to compete.employees not to go into competition with your business within a certain geographic area for a certain period of time, or to selectCan I have a non-compete with an at-will employee: At-will your customers for a new business.employees are those you can fire anytime you like and that can quit anytime they want. While it is a little more difficult to make Are non-compete agreements legal: Several years ago non- a non-compete agreement with an at-will employee as opposed compete agreements were on the verge of extinction. The wayto a term contract employee, it can be done.the Texas Supreme Court interpreted the law made it almost impossibleforanemployertosuccessfullycreateanon- What does the agreement look like: Unless the non-compete is compete that a court would uphold. Then, in 2006, the Court didpart of a contract for a term of employment, it will usually be the an about-face pushing covenants not to compete back into thesubject of a specialized stand alone contract. In the agreement, limelight and making them enforceable again. the employer promises to provide the employee with secrets and training, etc., and the employee promises in turn not to How long can I prevent a former employee from competing:compete for a period of time after leaving the company. You Generally, Texas courts will uphold non-compete agreementsand the employee can negotiate the geographic area and length up to two years, but the court will examine the time to determineof prohibition in the agreement. Non-compete agreements are whether it is reasonable in the particular situation. It is best tousuallydraftedbyanattorneybecausecourtsaresopicky get it right the first time, but the court can adjust it and leaveabout enforcing them (even after the Supreme Courts change the non-compete in place if the time you choose is determinedof position).unreasonable.Common Situations:HowwideofanareacanIpreventcompetitionin:TheFired employee: After 15 years of loyal service, Joe Sixpack appropriate geographic scope depends largely on the area inis fired from his job. He begins looking for a new position but which it is reasonably necessary to prevent competition. If youis asked by many prospective employers whether he has a have an employee who works nationally, you will have a hardnon-competewithhisformeremployer.Joeexplainsthat time getting a Texas court to send him to Canada to make ahe does not, thinking that the non-compete that he signed is living.In that case, you should look at only restricting the formerunenforceable because he was fired. Is he right? No. Covenants employee from soliciting existing customers of your businessnot to compete are enforceable even if the employee is fired.wherever he lands a new job. If your business draws customersThink about it. If firing an employee would invalidate the non-from a 10-mile area, that is what the geographic area should be. compete, anyone who wanted to get out of their non-compete Like the timeframe, the geographic area can be adjusted by acould just steal money to get out of it.court and the agreement may still be enforced.17'