My employment was terminated. That means my non-compete agreement goes away, right?
I am often contacted by folks whose employment has been terminated. They reasonably assume that their non-compete agreement is no longer enforceable. In reality, that’s not always the case.
There is no rule in Texas stating that if an employee is terminated, rather than quits, a noncompete agreement that he signed goes away. The reason for this is simple: the consideration for the noncompete isn’t mere employment.
If a noncompete is enforceable, it’s not so because the employer hired the employee. Rather, it’s enforceable for other reasons, such as the employer sharing trade secrets with the employee. Thus, the fact that the employer fires the employee doesn’t mean the agreement goes away.
Being fired can complicate the employer’s argument that your non-compete must be enforced
That said, the fact that the employee was fired may carry some weight in court. An employer who fires an employee may have a tough time subsequently contending, “This guy is so important, and he knows so much about my business, that he must be prevented from competing.”
So, technically speaking, the fact that the employee was fired doesn’t mean that the employer can’t enforce the noncompete. Practically speaking, though, it may complicate an employer’s attempt to do so.
Of course, as with many things in this area of law, there is no bright-line rule. Each situation must be judged on its own unique set of facts.
- No, the Biden Administration Has Not Banned Non-Compete Agreements (4/24/2023)
- Are Non-Compete Agreements Enforceable in Texas in 2023? (4/12/2023)
- Sample Texas Noncompete Agreement (and Why Using a Free Template Is a Bad Idea) (3/2/2023)
- Calculating a Noncompete’s Geographic Scope: By Driving Distance, Or “As The Crow Flies”? (3/1/2023)
- Do Texas noncompete agreements apply to independent contractors? (3/7/2022)
- Do I need to have my employees sign non compete agreements? (10/6/2017)
- Can A Noncompete Be Extended If It Is Violated? (2/3/2017)
- Who Can Get Attorneys’ Fees in a Non-Compete Action? (1/25/2017)
- Geographic Limitations on Texas Non Competes? (10/17/2016)
- Possible Tort Claim Not Sufficient Consideration for Noncompete in Texas (3/2/2016)