How Can Employers Enforce Non-Compete or Non-Disclosure Agreements?

 Posted on July 31, 2023 in Business Law

Non-compete and non-disclosure agreements are important tools that employers can use to protect their business interests. These agreements can help ensure that employees do not disclose confidential information or trade secrets, and they can prevent former employees from competing with an employer after the termination of their employment.

In Texas, non-compete and non-disclosure agreements are enforceable if they meet certain legal requirements. To enforce such agreements successfully, employers must understand these requirements and ensure they take the appropriate steps when drafting contracts. An employer can work with a business litigation attorney to determine the appropriate steps to take to address violations of these types of agreements.

The Enforceability of Non-Compete Agreements

A non-compete agreement, also known as a covenant not to compete, restricts an employee's ability to engage in work that competes with the employer’s business within a specific geographic area and for a limited period of time after leaving the company. For a non-compete agreement to be enforceable in Texas:

1. The agreement must be supported by valid consideration, such as the wages a person earned while working for the employer or the severance pay they received upon termination.

2. The restrictions imposed on the employee's work activities must be reasonable in scope.

3. The limitations regarding time, geographic area, nature of business activity restricted, and any other relevant factors must not impose greater restraints than are necessary to protect the employer’s legitimate business interests.

Enforcing Non-Disclosure Agreements

Non-disclosure agreements (NDAs), also called confidentiality agreements, prohibit employees from sharing confidential information about an employer’s business with other parties. These agreements can protect a business’s trade secrets or proprietary processes and ensure that an employer will not be harmed by unfair competition.

For an NDA to be enforceable in Texas:

1. The agreement must clearly define what constitutes confidential information.

2. The employee must have access to or receive confidential information from the employer.

3. The agreement should outline the duration of the obligation (how long the employee is required to keep the information confidential).

4. Like non-compete agreements, valid consideration must support the NDA.

5. The restrictions imposed by the NDA on an employee’s disclosure of confidential information must be reasonable.

Filing a Lawsuit for Enforcement

If an employer believes that a former employee has violated either a non-compete or non-disclosure agreement, they can file a lawsuit seeking enforcement and remedies. In such cases, it is crucial for employers to consult with an experienced business law attorney who can guide them through this complex legal process. An employer will need to show that an agreement was enforceable, and they will also need to demonstrate that they suffered financial losses or other damages as a result of the employee’s violation of the agreement.

A successful lawsuit for enforcement may result in injunctive relief, which will order the former employee to stop certain activities immediately. An employer may also receive monetary damages to address any losses incurred because of the employee’s actions.

Contact Our San Antonio Business Litigation Lawyer

If you need guidance on drafting or enforcing non-compete or nondisclosure agreements in San Antonio or the surrounding areas, contact the knowledgeable Bexar County business law attorney at Geoff Mayfield, Attorney at Law. Our firm is well-versed in matters involving contracts and litigation, and we can help you protect your business interests. For a free consultation, contact us today at 210-535-0870.

Sources:

https://legal.thomsonreuters.com/en/insights/articles/the-basics-of-non-compete-agreements

https://efte.twc.texas.gov/conflicts_secrets_non_comp_agreements.html

https://www.investopedia.com/terms/n/nda.asp