You hardly need to be reminded as a North Texas business principal in the Dallas-Fort Worth Metroplex or a surrounding area that your daily to-do list is – as usual – lengthy and diverse. In fact, it’s probably replete with bullet points.
That’s for two primary reasons.
First, company owners don’t forge successful commercial entities by passively waiting for good things to happen and issues to be resolved. Top-tier decision makers are invariably multi-faceted individuals who focus and timely act upon myriad key matters routinely.
And, second, challenges demanding creative strategies and a proactive response emerge constantly in the business world. They range across issues linked with company formation matters, contract negotiation/execution, regulatory compliance, transactional complexities, conflict resolution and more.
A distinct company challenge: protecting business assets
One key concern for many Texas companies is the continued protection of propriety data and goodwill. A given enterprise might be duly concerned with keeping trade secrets and other intellectual property tightly safeguarded from disclosure to rivals. An established business firm has likely built a positive image over the years with customers, vendors, suppliers, lenders and other parties, and it understandably wants to keep it intact.
One way that companies seek to promote those important goals is through contract execution with select employees who might eventually cut ties. Some key workers establish rival companies that compete with former employers. Other assume new positions with competitors.
Understandably, company managers want to ensure that their business is not harmed in the process as a former employer whose inside information is being detrimentally disclosed.
One common way they guard against that outcome is through a noncompetition agreement executed with an employee before that worker terminates employment and commences work elsewhere.
Some basics surrounding noncompetition agreements
Noncompetes are legal in Texas, but courts scrutinize them intently. Judges demand that they be reasonable and not operating as an overly coercive restraint against a worker’s right to pursue a livelihood. A noncompetition pact must clearly be seen as protecting a legitimate company interest.
The reasonableness mantra: a focus on enumerated factors
A close judicial look at a noncompete agreement will zero in prominently on three specific factors. Enforceability of a contract will often hinge on reasonableness linked with these matters:
- Scope (consideration whether sought limitations are fairly limited or overbroad)
- Time (Does a clause seek to limit an ex-employee for a year or for a lifetime?)
- Geography (Does attempted curtailment apply over only a locale where a former company does business or across a much broader area?)
An element of subjectivity will always apply to any reasonableness standard, of course. Company managers justly focused on careful contract drafting and future enforcement can secure peace of mind by enlisting timely input from a proven business law legal team.