Are non-compete agreements enforceable in Texas?
Yes, within limits Texas states plainly. The failure is almost always the ancillary requirement, not the time period.
Last updated: August 02, 2026
Direct Answer
Yes, with conditions. Texas enforces non-compete agreements that are ancillary to an otherwise enforceable agreement and contain reasonable limits on time, geographic area, and scope of activity, no broader than necessary to protect legitimate business interests such as confidential information, trade secrets, and goodwill. Continued employment alone is generally not enough: the employer must give something of value, most commonly access to confidential information, that gives rise to the interest being protected.
Controlling authority: Tex. Labor Code ch. 101 (right to work), Tex. Bus. & Com. Code sec. 15.50 (non-competes), and the Texas Guidebook for Employers.
What Makes a Texas Non-Compete Hold Up
The structure matters more than the signature. A Texas non-compete needs consideration tied to the restraint: the classic pattern is the employer promising and actually providing confidential information, training, or customer relationships, and the employee promising not to use them unfairly after leaving. An agreement signed on day one and never followed by any confidential access protects little.
Reasonableness is measured in three dimensions. Duration of six months to two years is commonly enforced. Geography should track where the employee actually worked or sold. Scope should restrict the activity the employee performed, ordinarily against the customers the employee touched. Statewide bans on working in an entire industry, applied to a rank-and-file employee, are how employers lose these cases and pay the other side's fees.
| Requirement | What the statute demands | Where they fail |
|---|---|---|
| Ancillary to an otherwise enforceable agreement | The covenant must be part of, or ancillary to, another enforceable agreement at the time the agreement is made | A standalone non-compete signed years into employment, with nothing given in exchange. |
| Consideration | The underlying agreement must be supported by consideration | Continued at-will employment alone is a weak foundation; confidential information or specialised training is stronger. |
| Reasonable time | Limited, and no greater than necessary | One to two years is commonly defensible; longer periods draw scrutiny. |
| Reasonable geographic area | Tied to where the employee actually worked | “Anywhere the company does business” is the classic overreach. |
| Reasonable scope of activity | Limited to the work the employee actually performed | Barring an entire industry rarely survives. |
| Protects a legitimate interest | Goodwill or another business interest of the promisee | Preventing ordinary competition is not a protectable interest. |
| Practical point | Texas is comparatively permissive by state standards | Which makes overreach more tempting, and more visible when tested. |
The ancillary requirement is where covenants fail
Overreach carries a price in Texas. Courts can reform an overbroad agreement to reasonable limits, but an employer seeking to enforce an agreement it knew was unreasonable can face consequences, including losing the fee award and paying the former employee's attorney fees in some circumstances. Drafting tight beats drafting scary.
For most small employers, non-solicitation and confidentiality agreements do the real work. Preventing a departing employee from raiding your customer list and staff, and from taking your data, addresses the actual harm without the enforceability fight a broad non-compete invites. Physicians have special statutory rules, and the enforceability landscape for lower-wage workers continues to tighten nationally, so agreements deserve periodic review.
Restrictive Covenant Risks to Watch
The exposure runs both directions: unenforceable agreements protect nothing, and overreach creates liability. Watch for these.
- Template non-competes applied identically to executives and hourly staff
- No confidential information or training actually provided after signing
- Statewide or industry-wide restrictions on ordinary employees
- No non-solicitation or confidentiality agreement where those would suffice
- Departing employee situations handled by threat letters with no evidence gathered
| Subject | Texas position | What that means in practice |
|---|---|---|
| Employment at will | The default rule, limited only by statute, contract, and one narrow common-law exception | Sabine Pilot is the only judicially created exception. |
| Right to work | Employment may not be conditioned on union membership or non-membership (ch. 101) | Not the same thing as at-will. The two are constantly confused, including in HR policies. |
| Minimum wage | Adopts the federal rate; no state increase | The exposure is in deductions and unpaid time. |
| Overtime | No state overtime law and no daily overtime | Federal FLSA does all the work. |
| Paid sick leave | No state or local mandate | Local ordinances were struck down or preempted. Obligations come from your own policy. |
| Family leave | No state family leave statute | FMLA, ADA and PWFA are the whole framework. |
| Final pay | Six calendar days on discharge, next payday on resignation | One of the few areas where Texas is more specific than federal law. |
| Non-compete | Enforceable within statutory limits (sec. 15.50) | Texas is comparatively permissive, but the limits are real. |
| Workers’ compensation | Optional for private employers | The only state where that is true. |
Test the covenant against each statutory element
Pull your current agreement and test it against the three dimensions: is the time, territory, and scope no broader than the interest you can articulate for this employee? If you cannot name the interest, the agreement likely fails.
When someone with customer relationships resigns, preserve evidence first: device data, account access logs, and the customer list they touched. Enforcement decisions are made on evidence, not indignation.
| Level | What the record contains | What it cannot survive |
|---|---|---|
| 0 — Absent | No contemporaneous record exists. | Any challenge at all. The employer argues from memory against a document. |
| 1 — Assertive | A conclusion, without the facts behind it. “Poor attitude.” | A single question: what did the person actually do? |
| 2 — Descriptive | The facts are recorded. The standard applied is not. | “Compared to what?” This is where most organisations actually write. |
| 3 — Referenced | Facts and the standard applied are both recorded. | Comparator evidence — how the same standard was applied to someone else. |
| 4 — Reasoned | Facts, standard, comparison to prior cases, and the decision path. | Very little. This is the level a reviewer cannot easily unpick. |
Scores policy language against the obligations it is supposed to discharge.
When a covenant needs drafting or enforcing
Get help drafting before onboarding key hires, because consideration and structure are set at signing and cannot be retrofitted after the resignation.
If a former employee is actively soliciting your customers, coordinate HR evidence gathering with employment counsel immediately. We work alongside counsel; the covenant fight itself is legal work.
Get a Straight Answer for Your Situation
General rules only go so far. If this question is live in your organization right now, talk it through with a senior HR consultant before you act. One conversation now costs less than one claim later.
Contact UsThis page provides general HR information for employers and is not legal advice. For legal interpretation or representation, consult qualified employment counsel.