Non-Compete Agreements in Texas More Enforceable than Ever

July 5, 2011

On June 24, the Texas Supreme Court made it easier for employers to enforce non-compete agreements with employees by holding that stock options can serve as consideration sufficient to support the agreement.  Before this ruling it was generally accepted that only an employer’s providing confidential information or “trade secrets” could suffice as consideration for a non-compete.

Retreating from years of previous case law, the Supreme Court stated, “Consideration for a non-compete that is reasonably related to an interest worthy of protection, such as trade secrets, confidential information or goodwill, satisfies the [statute.]”  With this ruling, it does not seem too far-fetched to conclude that cash might even serve as valid consideration.  We will have to wait and see how lower courts interpret this ruling.

A PDF copy of the Court’s opinion is available at: