A departing employee who joins a direct competitor and immediately reaches out to former clients can cost a Texas business significant revenue within weeks. Non-Compete Enforcement in Texas depends on strict statutory requirements, and a covenant that looks solid on paper does not always hold up in court. Kretzer & Arnett, a Houston litigation firm reachable at (713) 600-5190, reviews what businesses need to know before pursuing or defending a non-compete claim in 2026.
How do Businesses Enforce Non-Compete Agreements in Texas?
Businesses enforce non-compete agreements in Texas by filing a breach of contract claim against the former employee and, in urgent situations, seeking a temporary restraining order or injunction to stop the competing conduct while the case proceeds. Before any of these remedies are available, however, the covenant itself must satisfy the requirements set out in Texas Business and Commerce Code Section 15.50.
Summary of Business Agreements and Non-Compete Enforcement in Texas
Non-compete enforcement in Texas depends on whether a restrictive covenant satisfies the requirements of Texas Business and Commerce Code Section 15.50 and is reasonable in scope, duration, and geographic reach.
- A Texas non-compete agreement generally must be ancillary to an otherwise enforceable agreement, supported by valid consideration, and reasonably tailored to protect legitimate business interests such as trade secrets, confidential information, or customer goodwill.
- Businesses frequently enforce non-compete agreements by filing breach of contract lawsuits while seeking temporary restraining orders or injunctions to stop ongoing competitive conduct during litigation.
- Texas courts may reform overly broad non-compete agreements rather than declare them entirely unenforceable, but businesses remain in a stronger position when restrictive covenants are narrowly drafted from the outset.
Kretzer & Arnett represent businesses throughout Houston and across Texas in non-compete disputes, breach-of-contract litigation, injunctive relief proceedings, and other commercial litigation matters.
Texas Requirements For A Valid Non-Compete Agreement
Texas law does not treat every non-compete as automatically valid. Texas Business and Commerce Code Section 15.50 sets the standard a covenant must clear before a court will enforce it, requiring the agreement to be ancillary to or part of an otherwise enforceable agreement and to contain limitations on time, geographic area, and scope of activity that are reasonable. Texas courts apply this standard as a two-part inquiry. The first question is whether the underlying agreement, such as an employment contract or equity grant, was itself supported by consideration at the time it was made. The second question is whether the restriction goes no further than necessary to protect a legitimate business interest, such as trade secrets, confidential information, or client goodwill.
A covenant that fails either part of this test is at risk of being narrowed by the court or thrown out entirely. Texas judges have the authority to reform an overly broad non-compete rather than void it outright, but a business cannot count on reformation to save a poorly drafted agreement once litigation has already begun. Reasonableness is evaluated on a case-by-case basis, and a restriction that courts have accepted for a senior executive with access to company-wide strategy may be viewed very differently when applied to an entry-level employee with little access to sensitive information.
Time, geography, and scope work together in this analysis rather than as separate boxes to check. A one-year restriction covering a narrow service area may be reasonable for a sales role built on local client relationships. By contrast, the same same one-year term applied nationwide could be viewed as broader than necessary. Businesses that draft covenants with the specific role and market in mind, rather than relying on a generic template, generally have a stronger position if enforcement ever becomes necessary.
New Texas Limits on Health Care Non-Competes (Effective September 1, 2025)
Businesses in the medical and health care space should be aware of a significant 2025 change. Senate Bill 1318, effective September 1, 2025, amended Section 15.50 and added Section 15.501 to the Texas Business and Commerce Code, placing new limits on non-competes for physicians and, for the first time, other licensed health care practitioners, including dentists, professional and vocational nurses, and physician assistants.
For covered practitioners, a non-compete entered into or renewed on or after September 1, 2025, generally may not exceed one year in duration, must be limited to a five-mile radius of the practitioner’s primary practice location, and must cap any buyout of the covenant at the practitioner’s annual salary and wages at the time of termination, with those terms stated clearly and in writing. Health care employers relying on older non-compete forms should have them reviewed to confirm they comply with these new requirements.
Common Legal Tools Used in Non-Compete Enforcement
A business seeking to stop a former employee or contractor from violating a non-compete generally has several overlapping remedies available under Texas law. The following tools are the ones most frequently used in these disputes:
- A breach of contract lawsuit seeking damages for lost profits or diverted business caused by the violation.
- A temporary restraining order, used to halt ongoing competitive conduct on an emergency basis while a case is filed.
- A temporary or permanent injunction, used to prevent further violations for the remaining duration of the covenant.
- A trade secret misappropriation claim, often filed alongside a breach of contract claim when confidential information was taken.
Because injunctive relief is often the most urgent piece of a non-compete dispute, businesses frequently pursue a temporary restraining order or emergency injunction at the same time a lawsuit is filed, rather than waiting for the case to reach trial. Courts generally expect a business to act quickly once a violation is discovered, since a long delay in seeking relief can undercut the argument that immediate harm is occurring.
Kretzer & Arnett Represents Businesses in Non-Compete and Injunctive Relief Matters in Houston, Texas
Litigation firms in Houston, Texas, regularly handle non-compete disputes as part of a broader breach-of-contract or commercial litigation practice, since these cases typically combine a contract claim with a request for emergency court intervention. A business evaluating whether to pursue Non-Compete Enforcement against a former employee should weigh the strength of the underlying covenant, the urgency of the competitive harm, and the practical likelihood of collecting damages before committing to litigation.
Kretzer and Arnett have written additional guidance on breach of contract claims in Texas, including how non-compete provisions are evaluated alongside other contractual disputes. Businesses considering a new non-compete agreement, or reviewing an existing one after a key employee resigns, often benefit from confirming that the covenant still meets current statutory requirements before relying on it in a dispute.
Recent Federal Developments Affecting Non-Compete Agreements
Federal regulation of non-compete agreements changed in early 2026 after federal courts blocked the Federal Trade Commission’s Non-Compete Clause Rule from taking effect nationwide, and the FTC formally removed the rule from the Code of Federal Regulations. As a result, the enforceability of non-compete agreements once again depends primarily on state law, leaving Texas businesses and employees subject to the standards set out in Section 15.50 of the Texas Business and Commerce Code. Even so, the FTC has indicated it may still challenge specific non-compete practices case by case under Section 5 of the FTC Act, so federal scrutiny of non-competes has not disappeared entirely.
What Happens When a Former Employee Violates a Non-Compete
A business that discovers a non-compete violation typically begins with a cease-and-desist letter demanding that the competing conduct stop immediately. If the conduct continues, the next step is often a request for emergency injunctive relief paired with a lawsuit for breach of contract, particularly when the former employee has taken clients, pricing information, or other competitive advantages to a rival business.
Courts evaluating a request for injunctive relief will weigh the likelihood that the business will win on the merits of its claim, the harm the business faces without an injunction, and the hardship an injunction would place on the former employee. A well-drafted covenant that meets the requirements of Section 15.50 significantly improves the odds of success at this stage, which is one reason many disputes are resolved once a court signals how it is likely to rule on a request for emergency relief.
Speak With a Houston Business Litigation Attorney
Non-compete disputes move quickly, and delay can make it harder to stop a competitor from benefiting from a violation. Call (713) 600-5190 to schedule a confidential consultation with Kretzer & Arnett about a pending or anticipated non-compete matter.
Helpful FAQs About Business Litigation, Non-Compete Agreements, and Legal Strategy
The following FAQs can help clarify common misconceptions regarding Texas non-compete agreements.
Are Non-Compete Agreements Enforceable in Texas?
Non-compete agreements may be enforceable in Texas when they satisfy the requirements of Texas Business and Commerce Code Section 15.50 and contain reasonable restrictions on time, geographic area, and business activities. Courts evaluate each agreement based on its specific facts and business purpose.
What Makes a Texas Non-Compete Agreement Valid?
A valid Texas non-compete agreement generally must be part of an otherwise enforceable agreement, supported by adequate consideration, and reasonably tailored to protect legitimate business interests. Restrictions that extend beyond what is reasonably necessary may be subject to judicial review.
What Legal Remedies Are Available for a Non-Compete Violation?
Businesses may pursue several legal remedies after a non-compete violation, including breach of contract claims, temporary restraining orders, temporary or permanent injunctions, and trade secret misappropriation claims when confidential information has been improperly used or disclosed.
Can a Texas Court Modify an Overly Broad Non-Compete Agreement?
Yes, Texas courts may reform an overly broad non-compete agreement by narrowing unreasonable restrictions rather than declaring the entire covenant unenforceable. Whether reformation is appropriate depends on the specific facts and applicable law.
What Happens When a Former Employee Violates a Non-Compete Agreement?
A business often begins by sending a cease-and-desist letter demanding compliance with the non-compete agreement, and, if necessary, pursuing litigation. When immediate competitive harm exists, a business may also seek emergency injunctive relief while the lawsuit proceeds.
Do Federal Laws Affect Texas Non-Compete Agreements?
Federal developments may influence non-compete litigation, but the enforceability of Texas non-compete agreements primarily depends on Texas law and the requirements of Texas Business and Commerce Code Section 15.50.
Are Health Care Non-Competes Treated Differently in Texas?
Yes. Effective September 1, 2025, Senate Bill 1318 imposes additional limits on non-competes for physicians and other health care practitioners, including caps on duration, geographic scope, and buyout amounts. Agreements entered into or renewed on or after that date must comply with these heightened requirements under Texas Business and Commerce Code Sections 15.50 and 15.501.
How Can Kretzer & Arnett Help With a Texas Non-Compete Dispute?
Businesses involved in a Texas non-compete dispute may consider visiting with an experienced attorney at Kretzer & Arnett to better understand available legal options and litigation strategies. Kretzer & Arnett represent businesses throughout Houston and across Texas in non-compete litigation, injunctive relief matters, breach-of-contract claims, and commercial disputes.