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How to Enforce a Non-Compete Agreement in Texas After the 2023 FTC Proposed Ban on Noncompetes

Texas courts can still enforce non-compete agreements under the Texas Covenants Not to Compete Act, despite the FTC’s 2023 proposed ban. The proposal has not displaced Texas law and remains tied up in federal administrative and court challenges. This article explains Texas enforceability rules, drafting and proof requirements, litigation steps, and practical strategies for employers and counsel.

Where Texas Non-Competes Stand After the FTC’s 2023 Proposed Ban

The Federal Trade Commission (FTC) proposed a sweeping rule in 2023 that would largely prohibit employers from entering into or maintaining non-compete clauses with workers. That proposal created immediate uncertainty for companies that rely on restrictive covenants to protect customer relationships, confidential information, and investment in training.

For Texas practitioners, the key practical point is this: the FTC’s 2023 action was a proposed rule and, even if a final rule were issued, it would likely face substantial litigation over the FTC’s authority, federal preemption, and retroactive reach. Texas non-competes are still governed primarily by the Texas Covenants Not to Compete Act (Business & Commerce Code § 15.50 et seq.) and related Texas case law. Employers can and do continue to enforce qualifying non-competes in Texas courts—especially through temporary restraining orders (TROs) and temporary injunctions early in a dispute.

Attorneys should counsel clients to treat the FTC proposal as a risk factor—not an automatic invalidation. Enforcement in Texas still turns on statutory elements, reasonableness, and evidence.

The Texas Legal Framework: The Covenants Not to Compete Act

Texas is not a “free-for-all” jurisdiction for non-competes; it is a statute-driven state with specific prerequisites. Under the Texas Covenants Not to Compete Act, a non-compete is enforceable only if it is:

Ancillary to or part of an otherwise enforceable agreement at the time the agreement is made; and
Contains limitations as to time, geographic area, and scope of activity that are reasonable and do not impose a greater restraint than necessary to protect the employer’s goodwill or other business interests.

“Ancillary to an otherwise enforceable agreement” in practical terms

This phrase is often the battleground. Texas courts commonly uphold non-competes tied to an agreement where the employer provides something of value that can justify the restraint—frequently:

Access to confidential information (pricing, margins, strategy, supplier terms, customer lists, product roadmaps);
Access to trade secrets (formulas, code, proprietary methods);
Specialized training that is more than general on-the-job instruction; and/or
Compensation arrangements tied to continuing obligations (in some contexts).

Drafting and enforcement both improve when the agreement explicitly connects the restriction to the protectable interest (for example, “in consideration for access to confidential information and customer relationships…”), and when the employer can prove that access was real—not theoretical.

Reasonableness Requirements: Time, Geography, and Scope

Even if the non-compete is anchored to an otherwise enforceable agreement, it must be reasonable in its restraints. Courts look at whether the restrictions exceed what is necessary to protect legitimate business interests.

Time

Texas courts frequently enforce restrictions in the range of 6 months to 2 years, depending on role, industry, and the shelf-life of information. Longer terms can be enforceable in some situations, but the employer should be prepared to justify why the protectable interest lasts that long (e.g., long sales cycles, multi-year contracts, enduring product roadmaps).

Geographic area

Geography should track the employee’s actual territory or market. A statewide or national restriction may be harder to justify for a local salesperson, but may be more defensible for an executive with statewide accounts or strategic responsibilities. If the business is remote or online, Texas courts may scrutinize geography differently; employers should consider coupling geographic limits with a narrower scope of activity.

Scope of prohibited activity

Texas courts generally favor restrictions tailored to the employee’s work. Prohibiting “any work in the industry” is riskier than prohibiting work that competes directly with the employer in the same service line or customer segment. A well-drafted clause often focuses on:

Working for named competitors (or a clear competitor definition);
Performing substantially similar duties as those performed for the employer; and
Targeting specific customer categories the employee serviced or learned about.

Reformation in Texas: Overbroad Clauses Aren’t Always Fatal

Texas provides a significant employer-friendly mechanism: courts can reform overbroad non-competes to the extent necessary to make them reasonable. This can preserve enforceability even when a clause is drafted too broadly.

However, reformation is not a “draft sloppy, win anyway” strategy. Overbreadth can:

Delay injunctive relief while the court determines proper limits;
Increase litigation costs and factual disputes;
Undercut credibility with the court; and
Limit recovery of damages for pre-reformation conduct (depending on posture and proof).

Best practice is to draft to the employee’s role and the employer’s actual protectable interests, so that enforcement is fast and clean.

How Enforcement Typically Works in Texas: From Demand Letter to Injunction

Non-compete disputes move quickly because the alleged harm—lost customers, diverted opportunities, misuse of confidential information—can be hard to unwind. Texas litigators often proceed on an emergency timeline.

1) Pre-suit triage and evidence preservation

Before filing, counsel should assess: the signed agreement version, consideration/ancillary support, the employee’s role, the new employer, and immediate risk. Evidence matters early. Common steps include:

Preserving email, CRM logs, and messaging records;
Reviewing device return and access termination records;
Auditing downloads, USB activity, or unusual account access (where lawful);
Identifying customer contacts and active opportunities the employee touched.

2) Demand letter (and sometimes a third-party notice)

A targeted demand letter can stop the conduct without litigation—especially when it offers a practical path forward (e.g., confirmation of compliance, return of data, written assurances, limited carve-outs). In some cases, employers notify the new employer of the restrictions and request preservation of evidence. Counsel should be careful about overstatements that could fuel counterclaims.

3) Suit for injunctive relief: TRO and temporary injunction

If the risk is immediate, employers commonly seek a TRO and a temporary injunction. While the exact standard varies by court and facts, the employer generally must show:

A plausible right to relief (valid covenant and likely breach);
Imminent, irreparable harm (e.g., loss of goodwill, disclosure of confidential information); and
No adequate remedy at law (money damages alone are insufficient).

Courts may order the employee to stop competing activities, cease contacting certain customers, return or certify deletion of data, and submit devices for inspection in appropriate cases. Orders often are tailored to minimize unnecessary hardship while protecting the employer’s legitimate interests.

4) Merits litigation and settlement leverage

Many Texas non-compete cases resolve after the temporary injunction stage. The injunction hearing functions as a mini-trial: witnesses testify, documents are introduced, and credibility is tested. A strong evidentiary presentation—especially proof of specific customer contacts, confidential information access, and solicitation—often drives settlement outcomes.

Common Defenses (and How Employers Can Prepare)

Employees and new employers have a well-developed playbook in Texas. Understanding likely defenses helps attorneys build the record early.

Defense: The covenant is not ancillary to an enforceable agreement

Employees may argue they never received confidential information, the employer failed to provide promised consideration, or the agreement was signed after employment began without new consideration. Employers can counter with onboarding records, confidentiality acknowledgments, training materials, and proof of actual access (CRM permissions, shared drives, pricing tools).

Defense: Overbroad time/geography/scope

Employees frequently challenge broad restrictions. Employers should be ready to justify each limitation based on role and market realities. Even when reformation is available, a narrowly tailored clause increases the odds of immediate injunctive relief.

Defense: The employer materially breached first

Claims like unpaid commissions, breached compensation plans, or constructive discharge can be raised to attack enforceability or equitable relief. Clean payroll practices, commission documentation, and prompt resolution of pay disputes reduce exposure.

Defense: No irreparable harm

To defeat an injunction, defendants argue any harm is measurable (e.g., lost profits can be calculated). Employers should be prepared to show loss of goodwill, threatened disclosure of sensitive information, or customer poaching that cannot be fully repaired with damages.

Defense: Public policy and FTC-related arguments

Some defendants cite the FTC’s 2023 proposed ban as a policy reason to resist enforcement. In Texas court, the more persuasive approach for employers is to keep the focus on the existing statute and facts: Texas law governs unless and until a valid federal rule preempts it, and courts decide enforceability based on statutory elements and reasonableness.