How to Enforce a Non-Compete Agreement in Texas After the 2023 FTC Rule Challenges
Texas employers can still enforce non-compete agreements under the Texas Covenants Not to Compete Act—even as the FTC’s 2023–2024 federal rulemaking and court challenges created uncertainty nationally. The key is proving the covenant is “ancillary to or part of” an otherwise enforceable agreement and is reasonable in scope, time, and geography. This article explains enforceability requirements, demand-and-lawsuit strategy, evidence, remedies, and drafting/enforcement tips for Texas litigation.
Why the FTC’s 2023–2024 Non-Compete Rule Challenges Matter in Texas (and why they don’t decide Texas cases)
In 2023 the Federal Trade Commission moved to issue a sweeping rule that would broadly ban most non-compete agreements nationwide. Litigation quickly followed, and multiple courts issued rulings that limited or questioned the rule’s enforceability. The practical result for Texas litigators is this: Texas courts continue to apply Texas contract and statutory law to restrictive covenant disputes, while federal rule uncertainty mainly affects risk assessment, drafting posture, and multi-state employers.
Texas non-competes are governed primarily by the Texas Covenants Not to Compete Act (“TCNCA”), Texas Business & Commerce Code §§ 15.50–15.52. Unless and until a final, operative federal rule clearly preempts state enforcement (and survives judicial review), Texas judges will typically decide enforcement motions by applying the TCNCA and related Texas case law—especially in requests for temporary restraining orders and temporary injunctions.
Texas’s Enforceability Checklist Under the Covenants Not to Compete Act
To enforce a non-compete in Texas, the starting point is not whether the employer dislikes competition; it is whether the covenant meets the TCNCA’s statutory requirements. Courts analyze enforceability with a two-part framework.
1) The non-compete must be “ancillary to or part of” an otherwise enforceable agreement
This is the gatekeeper issue. A covenant not to compete is enforceable only if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made. In practice, Texas employers most often satisfy this requirement by tying the restriction to one or more legitimate employer interests, such as:
Confidential information access. The employee receives access to proprietary information (pricing, margins, customer requirements, product roadmaps, supplier terms, strategies) and agrees to protect it.
Trade secrets. The employee is entrusted with technical data, formulas, methods, code, or other trade secrets, and the employer commits to provide access in connection with employment.
Specialized training. The employer provides training that is valuable and not generally available (and can show the training was provided and tied to the restriction).
Common litigation problem: the agreement contains a non-compete, but the “otherwise enforceable” promise is vague, illusory, or not actually performed (e.g., the contract references confidential information but the employer cannot show the employee received it or that the employer maintained it as confidential).
2) The restriction must be reasonable in time, geographic area, and scope of activity
Even if ancillary, a Texas non-compete must contain reasonable limitations and must not impose a greater restraint than necessary to protect the employer’s goodwill or other business interests.
Texas courts commonly evaluate:
Duration. One to two years is often easier to defend than longer periods, though longer terms may be justified in some contexts (e.g., high-level executives with deep strategic access).
Geography. A restriction should reflect where the employee actually worked or influenced business, or where the employer has protectable relationships. “Worldwide” or “anywhere in the United States” restrictions can be attacked if the employee’s role was local.
Scope of activity. The restriction should target competitive activities that threaten the employer’s interest. Overbroad “any position for any competitor” clauses are frequent targets; narrower provisions tied to similar services, the same market segment, or customer-facing duties are typically more defensible.
Non-Compete vs. Non-Solicit vs. Confidentiality: Enforcing the Right Tool
Employers often lump all restrictive covenants together. In court, precision matters. Texas judges are more inclined to enforce a tailored non-solicitation or confidentiality covenant than an expansive non-compete if the evidence shows the real harm is customer poaching or data misuse.
Non-solicitation (customers or employees). These provisions focus on preventing targeted raids—soliciting customers the employee serviced, or recruiting key employees. They can be powerful because they align closely with goodwill protection.
Confidentiality and trade secret claims. If the dispute involves downloaded files, forwarded emails, CRM exports, source code copying, or suspicious device activity, Texas Uniform Trade Secrets Act (TUTSA) claims may be central. Non-compete enforcement can be paired with injunctive relief requiring return/deletion and prohibiting use or disclosure.
Practical litigation point: If the non-compete is vulnerable, a well-supported request for injunction on confidentiality/trade secret grounds can still stop the most harmful conduct quickly.
Pre-Suit Enforcement Strategy: Build the Record Before You Rush to Court
Emergency relief is fact-driven. Before filing, attorneys should help clients secure, preserve, and organize evidence that supports enforceability and imminent harm.
Step 1: Confirm the signed agreement and governing documents
Obtain the executed non-compete and any related agreements (employment offer letter, confidentiality/IP assignment, incentive plan, equity grant documents). Confirm the contract’s governing law, forum selection, and dispute resolution provisions.
Step 2: Identify the protectable interests
Texas courts look for real business interests: customer goodwill, confidential information, trade secrets, and specialized training. Build a clear narrative of:
• What the employee learned or accessed
• How that information is protected (policies, access controls, labeling, limited distribution)
• How it creates competitive advantage
• Why the restriction is needed to prevent unfair competition
Step 3: Preserve digital and customer evidence
Issue litigation holds and coordinate lawful forensic collection where appropriate. Helpful evidence includes:
• CRM activity logs showing exports or unusual access
• Email forwarding or mass downloads shortly before resignation
• Texts or LinkedIn messages soliciting customers
• Customer declarations about solicitation and switched business
• Proof of the employee’s territory, accounts, or pipeline
Step 4: Send a demand letter that sets up injunctive relief
Demand letters should do more than threaten suit. They should:
• Identify the operative restrictions and the employer’s protectable interests
• Cite concrete examples of breach (not speculation)
• Demand cessation, written assurances, and return/deletion of data
• Put the new employer on notice (where appropriate) to support tortious interference theories and to deter continued breach
Filing Suit in Texas: TRO and Temporary Injunction Playbook
Many enforceable non-compete cases are won or lost in the first two weeks. If the client’s goal is to prevent immediate customer loss or misuse of information, seek prompt injunctive relief.
Temporary Restraining Order (TRO)
A TRO is designed to preserve the status quo until a hearing can be held. To obtain a TRO, the movant typically must show a probable right to relief and probable, imminent, and irreparable injury absent immediate relief.
Practice pointers:
• File a verified petition and robust supporting affidavits (not just lawyer argument).
• Attach the signed agreement and highlight the ancillary consideration (confidential access, training, etc.).
• Be specific about the requested restraints—courts are wary of vague “don’t compete” orders.
• Where trade secrets are implicated, request return, imaging, deletion, and non-use provisions.
Temporary Injunction
A temporary injunction typically follows a TRO and can remain in place through trial. The evidentiary hearing is more substantial. This is where the reasonableness of time/geography/scope becomes central, and where the employer must show the restriction is no broader than necessary.
Anticipate a reformation fight. Under Texas law, courts can reform overbroad restrictions to make them reasonable and enforce them as reformed. Employers should expect the defense to argue the covenant is overly broad and should be narrowed. Plaintiffs should prepare alternative proposed language and a record showing why a tailored restraint is necessary.
Remedies: Injunctions, Reformation, and Damages Under Texas Law
Texas non-compete lawsuits typically seek a mix of equitable and legal remedies.
Injunctive relief
The primary remedy is an order prohibiting competitive conduct, solicitation, or use/disclosure of confidential information. Courts may also order affirmative steps, such as returning devices, preserving evidence, or certifying deletion of data.
Reformation and its consequences
If the non-compete is overbroad, a court may reform it. However, employers should understand the tradeoff: certain monetary remedies may be limited when the covenant requires reformation. From a litigation-risk standpoint, that means an overreaching clause can reduce leverage and recovery, even if the employer ultimately obtains a narrowed injunction.
Damages and fee exposure
Depending on the claims pleaded and proved, damages may include lost profits, unjust enrichment, or other measures tied to diverted business. Contractual attorney’s fees may be sought when available, and some related claims (for example, certain statutory or tort claims) can also affect fee dynamics. Counsel should evaluate early whether the case is best framed as (1) contract enforcement, (2) trade secret misappropriation, (3) tortious interference against a new employer, or (4) a combined approach.
Common Defenses (and how plaintiffs can prepare)
Defendants frequently challenge enforcement on predictable grounds. Preparing for these defenses before filing increases the chance of obtaining emergency relief.
Defense: The agreement wasn’t ancillary to an enforceable promise
How to respond: Show the employer provided confidential access, specialized training, or other consideration tied to the restriction. Use onboarding records, training logs, access permissions
