Do I need to have my employees sign non compete agreements?

October 6, 2017 / By Robert Wood

Do-I-need-to-have-my-employees-sign-non-compete-agreements Does your company need to have its employees sign noncompete agreements? If your company fits into any of these categories, the answer is almost certainly “Yes.”

If you answered “yes” to at least one of these, then you probably need to have your employees sign noncompete agreements. Here are some common myths/objections that keep companies from requiring employees to sign noncompete agreements:

  1. “Texas is a right-to-work state. Noncompete agreements are unenforceable here.” 

    “Right to work” is a labor union concept.  It has nothing to do with whether noncompete agreements are enforceable (they are).

  2. “I don’t want to keep people from earning a living.”

    Just because an ex-employee of yours violates a noncompete agreement doesn’t mean that you must sue them. Each situation is different, and you may decide that you only want to pursue ex-employees who do other bad things, such as soliciting your clients, hiring your employees, etc.  But you want your employees to be bound by noncompetes for two reasons:  to deter “bad” conduct (other than mere competition), and to allow you to protect your business if they engage in other conduct that may harm your company.

  3. “I’m not sure my employees will sign them.”

    If they are at-will employees, you can make the signing of the agreement a condition of continued employment.

  4. “I don’t want to give them extra compensation, or a promotion, as consideration for them signing it.”

    You do not have to. That’s not a requirement.

  5. “I don’t have money to spend on a noncompete.”

    This is definitely a situation where “an ounce of prevention is worth a pound of cure.”  If one of your ex-employees starts “stealing” your clients, you’ll wish you had a signed noncompete agreement on file. Besides, it’s not that expensive to have one drafted.

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About the Author

Robert Wood has been a Texas trial lawyer since 1993. During that time, he has represented small, mid-sized, and Fortune 100 companies in business and employment litigation matters all over Texas and the United States. He has also advised and represented hundreds of individuals in employment litigation matters. Read more about Robert Wood