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What happens during a conflict about a non-compete agreement?

On Behalf of | Dec 15, 2023 | Business Law

Many businesses require non-compete agreements when hiring professionals for well-compensated positions. Anyone who might have access to trade secrets or who plays a key role at an organization may need to sign a non-compete agreement when accepting a new job. A non-compete agreement is a restrictive covenant integrated into an employment contract that prohibits a worker from starting a competing business or going to work for a direct competitor. The business that hired them can enforce the agreement if they violate it after leaving their job.

A worker may ultimately dispute a company’s assertion that they violated a non-compete agreement in their contract. They may even try to claim that the non-compete agreement is invalid. What happens during a dispute between a company and a worker about a non-compete agreement?

The business may need to file a lawsuit

Occasionally, employees might forget about a non-compete agreement or assume that a company will not enforce the agreement. Such assumptions could lead to a worker unintentionally violating a non-compete agreement. If the company discovers the violation, they may send a warning letter to the former employee advising them of the infraction. Occasionally, people cease their unfair competition when notified of the violation. Other times, they will double down and assert that they have every right to start their own business or work for a competitor.

The company that formerly employed them must then decide between ignoring what could be a major breach and litigating. Initiating a lawsuit to enforce a non-compete agreement can be a viable solution or an organization. Judges in Texas can uphold non-compete agreements provided that they have appropriate limitations integrated and meet other necessary legal standards. The agreement should be part of a valid contract, and the worker should typically receive something of appropriate value given the concessions they have made. Although most organizations do not like the idea of suing a former employee, doing so might be the best way to prompt them into voluntary compliance.

The vast majority of business-related lawsuits settle outside of court. Someone facing litigation might agree to enter negotiations with their former employer or cease the activity that violates the terms of their non-compete agreement. If a settlement or compromise is not possible, then the worker and their former employer may each need to present their side of the case to a judge.

A Texas civil law judge can uphold a non-compete agreement. They can issue an injunction preventing future infractions or even award a business financial damages. Reviewing the contract in question with an attorney and documenting the infraction are good initial steps to take when there is a dispute about a non-compete agreement in Texas.