TexLaw Today

The Crossroads of Business & Law in North Texas

Is Non-Compete Worth It?

By now, most business people are coming to realize that Texas courts regularly enforce non-compete agreements.

Assuming the non-compete has reasonable limits, such as to time and scope, it will likely pass muster.  That being said, as a business owner, it should be considered whether the non-compete is worth it.  A little over a year ago, restaurant chain Jimmy John’s came under scrutiny for requiring all employees, even entry-level sandwich makers, sign non-compete agreements.  Moreover, it was reported these multi-year non-competes prohibited Jimmy John’s employees from working for any business which made 10% or more of its revenue off sandwich sales within three miles of any Jimmy John’s location.

This set off a fire storm and made national headlines – it even drew boycotts of the chain and a congressional investigation.  A question to ask is: what was Jimmy John’s seeking to protect with these non-competes?

Was this just a misguided blanket inclusion in their hiring process…

With executives and other workers that are exposed to protected business information, the need for a non-compete is easy to see.  For entry level workers far removed – not so much.  Even if the restriction could ultimately be enforced in court, the lesson here is to use caution when placing such restrictions on all your workers – does it protect a legitimate interest of your business, and is it worth it?

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Business. Construction. Real Estate.

TexLaw Today is authored by Mark L. Hill (@markhilltx), Partner with the commercial law firm of Scheef & Stone, LLP. Offices in Dallas, Texas and Frisco, Texas.

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