Are Texas Noncompete Agreements Enforceable if the Employee Is Fired?

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 they 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.

How Does a Layoff Affect a Noncompete Agreement?

The answer can be especially confusing when a layoff is involved, since it’s not tied to performance or misconduct. Many assume that being let go through no fault of their own automatically voids the agreement. However, that’s not how Texas law typically works.

In general, a layoff does not invalidate an otherwise enforceable noncompete agreement. Even if a termination was involuntary, the key issue isn’t why the employee was let go—it’s whether the noncompete meets the requirements of Texas law. So, do non competes hold up if fired due to a layoff? In many cases, yes.

That said, layoffs raise unique concerns. Courts may take a closer look at whether enforcing the agreement would place an unreasonable burden on the employee—especially if the employer is no longer using their services but still wants to restrict them from working elsewhere. For instance, if the noncompete severely limits the employee’s ability to find work in their field, and they were laid off due to no fault of their own, that could weigh against enforcement.

Still, there is no automatic exemption. The noncompete may still apply after a layoff if the agreement:

• Was properly tied to a larger employment or confidentiality agreement,
• Was supported by valid consideration (such as access to confidential information), and
• Contains reasonable limitations on time, geography, and scope.

The unfortunate reality is that being laid off doesn’t necessarily free you from your obligations under the agreement. Whether the employer ended the relationship amicably or not, Texas courts focus on the terms of the agreement itself, not just the circumstances of termination.

Get Clarity Before You Make Your Next Move

If you’re asking, “If you get fired does a non compete still apply?” or wondering “Do non competes hold up if fired?”—you’re not alone. These are complex questions that depend on how your agreement was written and the specifics of your role. Missteps can have serious legal consequences.

Contact attorney Robert Wood today for a confidential consultation. With decades of experience in Texas employment litigation, Robert can help you understand whether your noncompete is enforceable and guide you through your options. Don’t guess—get clear answers based on Texas law.

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