§ 1. Governing Statutory & Common Law Authority
The enforceability of non-competition agreements in Texas is governed by Tex. Bus. & Com. Code § 15.50-.52. Non-competes enforceable under the Texas Business & Commerce Code if ancillary to an otherwise enforceable agreement and reasonable. Must be supported by consideration (e.g., access to trade secrets, confidential info, specialized training).
Recent legislative developments: September 2025: expanded healthcare worker protections to include dentists and nurses (previously only physicians).
§ 2. Compensation Threshold Requirements
Texas does not impose a minimum salary threshold for non-compete enforceability. This means non-competes may be enforced against employees at any income level, including hourly and part-time workers.
§ 3. Temporal Limitations on Post-Employment Restrictions
Texas does not codify a maximum duration. Courts look at reasonableness; typically 1-2 years. In practice, 1-2 years is generally considered the outer limit of reasonableness, though outcomes vary significantly based on the employee's role and access to trade secrets.
§ 4. Judicial Modification (Reformation Doctrine)
Texas follows the reformation doctrine, granting courts broad authority to rewrite overbroad non-compete terms. This is the most employer-favorable approach — even a poorly drafted agreement may be reshaped into an enforceable restriction.
§ 5. Statutory Exemptions & Carve-Outs
Texas law exempts certain workers from non-compete enforcement:
- Physicians (Tex. Bus. & Com. Code § 15.50(b)): non-competes allowed but physician must be able to buy out at reasonable price. Effective Sept 2025: expanded to dentists and nurses.
§ 6. Consideration & Contract Formation
Must be ancillary to an 'otherwise enforceable agreement' — typically must involve access to trade secrets, confidential info, or specialized training. Continued employment alone is NOT sufficient. Whether this is legally sufficient — especially for agreements presented mid-employment rather than at hiring — is frequently contested.
§ 7. Effect of Involuntary Termination
Courts consider, but statute does not automatically void. Courts may apply heightened scrutiny when the employer initiated the termination, particularly for termination without cause or mass layoffs.
Practitioner Notes
The 'ancillary to an otherwise enforceable agreement' requirement is the key. If there is no underlying agreement giving access to trade secrets or confidential info, the non-compete may fail.