How to Enforce a Non-Compete Agreement in Texas After the 2023 Covenants Not to Compete Act
In Texas, you can enforce a non-compete only if it is ancillary to an otherwise enforceable agreement and reasonable in time, geography, and scope under Tex. Bus. & Com. Code § 15.50. The 2023 Covenants Not to Compete Act sharpened how courts evaluate restrictive covenants and reinforced Texas’s policy favoring tailored, protectable interests over overbroad restraints. This article explains the post‑2023 enforcement checklist, evidence to gather, drafting fixes, and litigation strategy for Texas employers.
Texas Non-Compete Enforcement After the 2023 Act: The Legal Standard Still Starts with Section 15.50
Texas has long treated non-compete agreements as enforceable only within strict statutory limits. The governing framework remains the Texas Covenants Not to Compete Act (often discussed through Tex. Bus. & Com. Code §§ 15.50–15.52), which requires two foundational showings: (1) the covenant is ancillary to or part of an otherwise enforceable agreement; and (2) the restraint is reasonable and no greater than necessary to protect legitimate business interests (typically goodwill and trade secrets).
The 2023 update—frequently referred to as the “2023 Covenants Not to Compete Act”—did not turn Texas into a “non-compete friendly at all costs” state. Instead, it reinforced the direction Texas courts already follow: enforce what is legitimately needed, and narrow what is not. Practically, that means enforcement success increasingly turns on (a) the quality of the underlying contract and consideration, (b) a clean articulation of protectable interests, and (c) evidence supporting reasonableness and actual risk.
Step 1: Confirm You Have an Enforceable “Otherwise Enforceable Agreement”
Before filing suit, employers should stress-test the agreement itself. Under § 15.50, a non-compete must be ancillary to or part of an otherwise enforceable agreement. In practice, Texas employers most often satisfy this by tying the restriction to enforceable promises such as:
- Confidentiality/trade secret obligations supported by access to confidential information;
- Stock options, equity, or incentive compensation (with clear eligibility and vesting terms);
- Specialized training (but only if the training is actually provided, specific, and valuable, and the restriction is calibrated to it);
- Customer goodwill and relationship investments (e.g., assignment to key accounts paired with non-solicitation/non-compete terms).
Common failure point: a signed non-compete presented as a standalone restraint, without a clear exchange of value or without enforceable companion obligations. If your agreement relies on confidentiality as the “anchor,” verify that (1) confidential information is defined, (2) the employee actually received access, and (3) the confidentiality promise is enforceable and not illusory.
Practical checklist: documents to pull before sending a demand letter
- Signed agreement(s), plus amendments, offer letters, equity plans, and policy acknowledgments
- Job description and actual duties (sales territory, accounts handled, systems accessed)
- Confidentiality and trade secret policies, data access logs where available
- Training records and materials (dates, curriculum, costs, and what was “special”)
- Proof the employee received consideration tied to the restriction (bonus, equity, promotion, access)
Step 2: Identify the Protectable Interest You’re Actually Protecting
Texas courts generally recognize two primary protectable interests: trade secrets/confidential information and goodwill (especially customer relationships). Post‑2023, a successful enforcement posture usually spells this out with specificity rather than generalities like “we don’t want competition.”
Trade secrets and confidential information
If your case is trade secret driven, align the narrative with objective facts:
- What the information is (pricing formulas, margin targets, customer purchasing history, product roadmaps, source code, technical specs)
- Why it is not publicly known
- How you protected it (access controls, NDAs, limited distribution, audits)
- How the departing employee had access and how the new role could use it
In Texas, trade secret claims often travel alongside a non-compete enforcement suit. Even where the non-compete is narrowed, injunctive relief may still be available to prevent use or disclosure of protected information.
Goodwill and customer relationships
If your protectable interest is goodwill, focus on relationship facts: who introduced the customer, who paid for lead generation, which accounts the employee serviced, and whether the employee was the “face of the company.” Courts are more receptive where the employee had meaningful customer influence and could leverage it unfairly.
Step 3: Evaluate “Reasonableness” Like a Judge Will—Time, Geography, and Scope
Section 15.50 requires that limits on time, geographic area, and scope of activity be reasonable and no greater than necessary. After the 2023 developments, employers should expect closer scrutiny on tailoring—particularly for remote workforces and multistate roles.
Time restrictions
Texas courts often enforce restrictions measured in months rather than years, depending on industry and role. A restraint that is longer than needed to protect customer relationships or sensitive strategy cycles is more vulnerable to reformation and may reduce leverage at the temporary injunction stage.
Geographic restrictions in a remote-work era
Overbroad geography remains a frequent problem. A “statewide” or “nationwide” non-compete may be defensible for truly national executives, but it is harder to justify for employees with localized territories or specific account lists. Post‑2023, employers are increasingly successful when geography is tied to:
- the employee’s actual sales territory,
- the locations of customers the employee served, or
- a defined radius around identified offices or customer sites.
Scope of activity (the most litigated element)
The restriction should match what the employee did, not every line of business the company might pursue. “Any competitive activity” language can be attacked as broader than necessary. A more enforceable approach is to limit the employee from performing substantially similar services for a competitor or from working on specific competing product lines.
Step 4: Use Texas’s Reformation (“Blue Pencil”) Rules Strategically—But Don’t Rely on Them
Texas courts have authority under § 15.51 to reform overbroad covenants and enforce them as reformed. That helps employers, but it is not a free pass. Overreaching can still backfire in three ways:
- Emergency relief risk: a judge may deny a temporary injunction if the agreement is plainly overbroad and the employer’s proof is thin, leaving the business exposed while the case proceeds.
- Fee exposure limits: Texas law contains specific rules affecting recovery of attorney’s fees in reformation scenarios. Drafting narrowly improves the odds of fee recovery and early settlement pressure.
- Credibility and equities: injunctive relief is discretionary and equity-based. Overbreadth can harm the “fairness” narrative.
Practice pointer: When you must sue on an older form, consider pleading for enforcement “as written or, in the alternative, as reformed,” and present the court with a reasonable reformation proposal tied to the employee’s real territory and duties.
Step 5: Build an Injunction-Ready Record (TRO and Temporary Injunction)
Most non-compete cases are won or lost in the first 2–6 weeks, when the employer seeks immediate relief. In Texas, that typically means pursuing:
- Temporary Restraining Order (TRO) (short-term emergency relief), and
- Temporary Injunction (relief through trial).
To obtain injunctive relief, employers generally must show: a viable cause of action, a probable right to relief, and probable, imminent, and irreparable harm if the conduct continues.
Evidence that moves the needle
Courts respond best to concrete proof, such as:
- Customer emails showing active solicitation or switching
- CRM exports, download logs, USB activity, or unusual access before resignation
- LinkedIn announcements paired with customer contact timelines
- Price undercutting that matches internal pricing strategy
- Admissions in texts, exit interviews, or recruiter communications
Example: A sales manager resigns on Friday, begins with a direct competitor Monday, and by Wednesday three key accounts receive “I’m at my new company—let’s move your renewal” messages. Pair those messages with the account list the employee managed and the contractual non-solicit/non-compete terms; that fact pattern is often well-suited for early injunctive relief.
Step 6: Plead the Right Companion Claims (Not Just Breach of Contract)
Non-compete enforcement in Texas is frequently more effective when combined with related claims that align with your evidence:
- Misappropriation of trade secrets (under Texas’s version of the Uniform Trade Secrets Act)
- Breach of confidentiality and non-solicitation provisions
- Tortious interference (e.g., interference with customer contracts or prospective business relations)
- Breach of fiduciary duty (for certain officers or key employees, depending on facts)
This matters because even if the court reforms the non-compete, you may still obtain robust injunctive relief to stop solicitation or use of confidential information.
