Texas Non-Competes: The Tables Have Turned

Until now, most non-competition agreements in Texas were considered unenforceable because they required a contemporaneous exchange of confidential information from the employer at the exact time the agreement was made, which almost never happened. On October 20, 2006, after considering the issue for almost three years, the Texas Supreme Court changed direction by holding that an at-will employee’s non-competition agreement becomes enforceable if the employer imparts confidential information to the employee at some point during employment. Sheshunoff Mgmt. Servs., L.P. v. Johnson; No. 03-1050, slip op. at 1 (Tex. 2006). As a result of this opinion, the Texas Supreme Court has resurrected the enforceability of non-competes in Texas. (1)