Company Ordered to Pay $750,000.00 in Attorneys' Fees for Trying to Enforce Overly Broad Texas Noncompete Agreement

Over the last few years, the Texas Supreme Court has issued several rulings making noncompete agreements more enforceable in Texas than they have been for many many years.  But with an increase in the general enforceability of such agreements has come an increased attention to whether the agreements are reasonable in geographic, temporal and subject matter scope.

The increase in litigation on the the issue of scope has led many employers to learn the unhappy fact that if they seek to enforce an overly broad agreement against an employee, the Court may reform the noncompete to more reasonable restrictions and then award the employee his or her attorneys' fees incurred at the end of the litigation.  This is especially true if the employer has crafted a noncompete that is obviously overly broad from the beginning. Sentinel Integrity Solutions, Inc. v. Mistras Group, Inc. is just such a case.

In Sentinel, there was a good deal of evidence at trial suggesting that the employer knew that the noncompete agreement it required its employees to sign was overly broad with respect to the scope of activity to be restrained. Also, there was evidence that the employer attempted to enforce the noncompete agreement to an unreasonable extent. After a jury a full jury trial, the trial court assessed $750,000 in attorneys’ fees against the employer.

This situation is more common than one might think.  For years employers have forced employees to sign stock noncompete agreements that contain incredibly broad language and geographic constraints that would effectively prevent an employee from working anywhere in the industry for years. In the past these provisions were largely ignored because the courts were more concerned with general issues of enforceability.  Now that such issues have largely been mooted, however, scope is back in play. And, an employer that requires its employees to sign unreasonable noncompete agreements and tries to enforce it can face some serious liability, as the employer in Sentinel found out the hard way.

To learn more visit our main firm website: Texas Noncompete Lawyer