Non-Compete Agreements: Senate Committee on Business & Commerce

The Legislature should limit its intervention to empowering Texans with more information that promotes personal responsibility when negotiating employment contracts.

A non-compete agreement or covenant not to compete, sometimes simply called “a noncompete,” is an agreement between an employer and an employee under which the employee agrees not to compete against the employer within a certain geographic location for a fixed period of time after the employee leaves the employer. Under Texas law, noncompetes must be reasonable and limited in scope, duration, and geography. In addition, they must not “impose a greater restraint than is necessary to protect the goodwill or other business interest of the [employer]."

Non-compete agreements have been used by employers for a very long time but have generated growing criticism in the past 20 years and calls for reform, the most significant of which has been the recently released Federal Trade Commission rule to (mostly) ban them.

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Committee Alert- Senate Business & Commerce (Noncompetes)[16].pdf

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