Texas non-compete enforcement

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Short answer: Texas non-competes are enforceable under Tex. Bus. & Com. Code § 15.50 if they are ancillary to an otherwise enforceable agreement, supported by consideration, and reasonable in scope. The consideration must be something more than mere continued at-will employment. Customer non-solicits and confidentiality agreements are generally easier to enforce than non-competes. Courts may reform overly broad agreements rather than void them.

The Texas framework

Texas non-competes are governed by the Covenants Not to Compete Act, codified at Tex. Bus. & Com. Code §§ 15.50-15.52. Under § 15.50, a non-compete is enforceable if it:

Is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made
Contains limitations as to time, geographic area, and scope of activity to be restrained that are reasonable
Does not impose a greater restraint than is necessary to protect the goodwill or other business interest of the employer

This three-part framework places Texas in the middle of the enforcement spectrum. It is more permissive than California or Minnesota but more restrictive than Florida.

The ancillary agreement requirement

The "ancillary to an otherwise enforceable agreement" requirement is the most distinctive feature of Texas law. A standalone non-compete signed in exchange for nothing else is not enforceable. The non-compete must be tied to some other enforceable agreement.

In employment contexts, the typical ancillary agreements are:

A confidentiality or trade secret agreement
A stock option or equity grant
A specific bonus or other consideration that creates an enforceable agreement
A separate employment agreement with specific duties beyond at-will employment

The Texas Supreme Court clarified in Marsh USA Inc. v. Cook, 354 S.W.3d 764 (2011) that an agreement giving the employee stock options or other equity is sufficient as an ancillary agreement. This is the most common modern structure.

Consideration in Texas

Closely related to the ancillary agreement requirement, Texas demands consideration that goes beyond mere continued at-will employment. The consideration must be something the employer was not already obligated to provide.

Acceptable forms of consideration include:

A signing bonus
Stock options or equity grant
Promotion to a position with new duties
Access to confidential information not previously provided
A pay raise specifically tied to signing
Specialized training the employer provides

Continued at-will employment alone is not sufficient. This rules out mid-employment non-competes that are not paired with new consideration.

Scope reasonableness

Texas courts apply a reasonableness review to:

Duration: 6 months is generally fine; 12 months is common and typically upheld; 24 months is scrutinized; 36 months or more is rarely enforced for ordinary employees.

Geographic scope: The geography must align with the area where the employer actually does business and where the employee performed services. National geographic scope is enforceable only when the employee had national responsibility.

Activity scope: The restriction must be tied to the specific competitive activity the employee performed. Industry-wide bans are typically reformed.

Customer scope: If the restriction is customer-based, it must be limited to customers the employee actually had contact with or could harm through misuse of confidential information.

Reformation vs voiding

Section 15.51 directs Texas courts to reform overly broad non-competes rather than void them entirely. If the scope is unreasonable, the court is to limit the restraint to what is reasonable.

This makes Texas relatively favorable to employers compared to states with strict blue-pencil rules. An employee challenging an overly broad agreement typically faces narrowed enforcement rather than full voiding.

The flip side: reformation often substantially narrows the agreement. A 36-month, nationwide non-compete reformed to 12 months in the employee's actual territory is a dramatic narrowing in practice.

Customer non-solicits

Customer non-solicits in Texas are generally easier to enforce than full non-competes. They tend to be tied directly to the protection of customer goodwill and confidential customer information, which Texas courts readily recognize as legitimate business interests.

Customer non-solicits are nonetheless subject to reasonableness review on duration and customer scope. Typical enforceable terms: 12-24 months, limited to customers the employee directly serviced in the preceding 12 months.

What to do next

If you're a Texas employee under a non-compete, the diagnostic is: (1) Is the non-compete tied to an ancillary enforceable agreement? (2) Did you receive consideration beyond continued employment? (3) Is the scope (duration, geography, activity) reasonable in light of your actual role?

If you want a delivered analysis of your specific Texas agreement, with case law citations and a realistic enforcement assessment, we deliver one in 24 hours for $199. See Non-Compete Review.

Sources

Tex. Bus. & Com. Code §§ 15.50-15.52
Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011)
Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642 (Tex. 1994)
Sheshunoff Management Services, L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006)

Get your contract reviewed

If you want a delivered review of your specific document with cited authority and counter language, see https://trycounteroffer.com/non-compete.

Last updated: Sun May 31 2026 00:00:00 GMT+0000 (Coordinated Universal Time)

Counteroffer is a contract analysis service, not a law firm. This page is informational, not legal advice.