Texas Non-Compete Agreements: Enforcement and Defense

By Catherine A. Keith · Last updated July 15, 2026

A Texas non-compete dispute almost never moves slowly. The employer’s trade secrets are walking out the door. The customer relationships that took years to build are being courted by the same person who built them. The departing employee is talking to your sales team about following them to the new venture. Every day of delay is a day the damage compounds.

The statute, the case law, the reasonableness analysis, and the current status of the federal FTC rule that briefly threatened to ban non-competes nationwide all run through what follows. It is written for both sides. The employer trying to enforce a covenant and the employee trying to defeat one need the same understanding of the same framework.

The companion page for defendants is Defending Against a Non-Compete Lawsuit. The cluster’s overview is Non-Compete and Trade Secrets.

The Texas Covenants Not to Compete Act

Texas non-competes are governed by the Texas Covenants Not to Compete Act, codified at Texas Business and Commerce Code sections 15.50 through 15.52. The statute sets the framework that controls every Texas non-compete case.

Under section 15.50, a covenant not to compete is enforceable if two requirements are met:

The covenant is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made.

The covenant contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.

These two requirements, the ancillary requirement and the reasonableness requirement, are the entire framework. Every Texas non-compete case turns on one or both.

The ancillary requirement and Marsh USA

The ancillary requirement means the non-compete cannot stand alone. It has to be part of a broader agreement that gives the employer a legitimate business interest worth protecting.

For decades, the Texas Supreme Court applied a strict reading of this requirement, demanding consideration that “gave rise to the employer’s interest in restraining the employee from competing.” Continued at-will employment was not enough. The employer had to give the employee something specific, confidential information, trade secrets, specialized training, that the non-compete protected.

In Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011), the Texas Supreme Court softened the ancillary requirement substantially. The Court held that consideration for the non-compete need only “be reasonably related to an interest worthy of protection.” Stock awards in exchange for the non-compete were enough. The decision opened up non-compete enforcement in Texas considerably.

After Marsh, the ancillary requirement is met when the employer provides something of value, stock, trade secrets, customer relationships, specialized training, goodwill, that the non-compete reasonably relates to protecting. Continued at-will employment alone still does not suffice as the sole consideration, but the bar is substantially lower than it was before 2011.

The reasonableness requirement

The second statutory requirement is that the non-compete contains limitations on time, geographic area, and scope of activity that are reasonable and no greater than necessary to protect the employer’s legitimate business interests.

Time. Reasonable durations in Texas typically range from six months to two years, with one year being the most common reasonable starting point. Longer periods are enforceable in industries with longer sales cycles or particularly sticky customer relationships, but the further above two years a non-compete reaches, the harder it is to defend.

Geographic area. Reasonable geographic limitations are tied to where the employee actually worked or where the employer actually competes. A nationwide non-compete on an employee who worked only in North Texas is overbroad. A statewide non-compete on a salesperson who covered five states may be too narrow to protect the employer or too broad if the employee never set foot in some of them. The fit between the geographic restriction and the actual business activity is the question.

Scope of activity. Reasonable scope limitations are tied to the employee’s actual role and the employer’s actual business interests. A non-compete preventing a software engineer from working in any “technology-related field” is broader than what the engineer’s actual role justifies. A non-compete preventing the same engineer from working specifically with the products and customers they handled is defensible.

Reasonableness is fact-specific. The same time limitation may be reasonable for a senior executive and unreasonable for a production-line employee. The reasonableness analysis runs through every contested non-compete case.

Reformation by Texas courts

When a Texas non-compete is overbroad as to time, area, or scope, the court does not throw the entire agreement out. Section 15.51(c) of the Business and Commerce Code requires courts to reform the agreement to the extent necessary to make it reasonable and to enforce it as reformed.

That is unusual. Many states declare overly broad non-competes entirely unenforceable. Texas reforms them. The court rewrites the time, geographic, and scope limitations to a reasonable level and enforces the reformed agreement.

There is a significant catch for employers. Under section 15.51(c), the employer who drafted the overly broad covenant generally cannot recover damages or attorney’s fees for any breach that occurred before the court reformed the agreement. The employer is entitled to go forward on the reformed terms but loses backward-looking remedies. This creates a real incentive to draft reasonable non-competes from the start rather than relying on judicial reformation.

The remedies that actually matter

The most valuable remedy in a Texas non-compete case is almost always the injunctive relief, the temporary restraining order, the temporary injunction, and ultimately the permanent injunction that stops the departing employee from violating the covenant.

Money damages are available for past breaches but rarely make the employer whole. The harm from a former employee working for a competitor, soliciting the employer’s customers, or sharing the employer’s confidential information is not the kind of harm that money easily fixes. Once a competitor has the customer list, the relationship, or the trade secret, those things are out the door.

This is why non-compete cases are litigated through the lens of emergency injunctive relief. The TRO has to be filed quickly, often within days of when the employer learns of the breach. The temporary injunction hearing follows within fourteen days. The case is won or lost on the early emergency motion practice, not on damages testimony at a trial that will not happen for two years.

For the procedural mechanics of obtaining a TRO and temporary injunction in Texas, see TROs in Texas Business Cases and Temporary Injunctions.

Expedited discovery is often part of the package. The employer needs to develop evidence of the violation, the trade secrets at issue, and the harm, quickly, to support the temporary injunction. See Expedited Discovery in Texas Business Cases.

The FTC non-compete rule: currently dead

The Federal Trade Commission issued a rule in April 2024 that would have banned most non-compete agreements nationwide as unfair methods of competition under Section 5 of the FTC Act. The rule was scheduled to take effect September 4, 2024.

It never did. In August 2024, the United States District Court for the Northern District of Texas, in Ryan, LLC v. FTC, 2024 WL 3879954 (N.D. Tex. Aug. 20, 2024), granted summary judgment to the plaintiffs and held that the FTC exceeded its statutory authority in issuing the rule. The court enjoined the rule with nationwide effect.

The FTC initially appealed the decision to the Fifth Circuit. After the change in administration in early 2025, the Trump-era FTC reversed course. On September 5, 2025, the FTC voted 3-1 to dismiss its appeal and accede to vacatur of the rule. The Fifth Circuit dismissed the appeal three days later. The FTC formally completed the rescission of the rule in February 2026.

What this means for Texas employers and employees: the federal nationwide non-compete ban is not in effect, is not being defended by the FTC, and is not coming back through this rulemaking. Texas non-compete law under the Covenants Not to Compete Act controls.

The FTC has signaled it will continue case-by-case Section 5 enforcement against specific non-compete arrangements it considers anticompetitive, including a settled action against a pet cremation company in 2025, but there is no general federal rule barring Texas employers from using or enforcing non-competes.

Strategy for employers

The most important employer-side decisions in non-compete litigation are made before the dispute starts.

Draft reasonable covenants. A non-compete drafted at reasonable time, geographic, and scope limits will be enforced as written. An overly broad covenant gets reformed by the court, and the employer loses the right to recover damages or fees for pre-reformation breaches. Reasonable drafting is cheaper than reformation.

Build the consideration into the agreement. The ancillary requirement still has to be met. Stock awards, trade secret access, specialized training, customer relationship development, all of these can satisfy the consideration requirement post-Marsh. Make the consideration explicit in the agreement so it is hard for the departing employee to deny it.

Move fast on breach. Non-compete cases are won at the TRO and temporary injunction stage. An employer that waits weeks to file after learning of a breach has weakened its irreparable harm argument. Time is part of the remedy.

Preserve the evidence. Forensic preservation of the departing employee’s electronic devices, emails, and customer contact records is critical. Document destruction during the post-departure period often becomes a separate claim.

Strategy for defending employees

The employee on the receiving end of non-compete enforcement has multiple defenses to evaluate.

Enforceability. Was the agreement ancillary to consideration? Are the time, geographic, and scope limits reasonable? An overly broad covenant may still be enforced after reformation, but the reformed version may be narrow enough to permit the employee’s new role.

Breach. The employer has to prove the employee actually breached the covenant. New employment in a different role, at a different geographic location, or in a different industry niche may not be a breach.

Defenses going to consideration. Was the consideration actually provided? Did the employee receive the promised stock, training, or information that supports the ancillary requirement? If the employer never delivered what was promised, the consideration is missing.

Defenses going to remedies. Even if the covenant is enforceable, the irreparable harm requirement for injunctive relief is a real hurdle. The employer has to prove harm that money damages cannot fix.

For the full defense playbook, see Defending Against a Non-Compete Lawsuit.

Where these cases overlap with other claims

Non-compete cases rarely stand alone. The same facts often support related claims:

• Trade secret misappropriation. Most non-compete violations involve some form of trade secret misappropriation. See Trade Secret Misappropriation Under TUTSA and Defend Trade Secrets Act Claims.
• Breach of fiduciary duty. A departing executive or officer may have breached fiduciary duties before, during, or after departure. See Fiduciary Duty Litigation.
• Tortious interference. A new employer that knowingly hired a bound employee may have tortiously interfered with the existing non-compete. See Tortious Interference with Contract.

A well-built non-compete case usually pleads several theories together. The trade secret claim travels alongside the non-compete claim almost by default, both because the facts usually overlap and because the Texas Uniform Trade Secrets Act offers fee shifting and damages provisions that the non-compete claim does not.

The covenant case, start to finish

A non-compete case that drags is a non-compete case that loses. So we move at the speed the case demands: the TRO filed promptly, the temporary injunction argued well, with expedited discovery developing evidence on the timeline the court will allow. Where the facts support both, we bring trade secret claims alongside the covenant, because TUTSA fee shifting, treble damages for willful misappropriation, and federal DTSA jurisdiction add leverage the covenant alone does not. We preserve the departing employee’s electronic records early, coordinating with forensic vendors at the outset, because those records are often the difference between a successful injunction and a failed one. And we tell employees the truth about exposure. Some of these cases are defensible and some are not; an employee who pays for a candid read before signing on elsewhere or launching a venture saves both money and risk.

On a Texas non-compete, the calendar is the adversary. The covenant runs for a fixed period, and every week spent deciding whether to act is a week of that protection spent for nothing.