When you’re working for a new company, it’s fairly common that you’ll be asked to sign a non-compete agreement. Unfortunately, most people agree to this without completely understanding what the implications are for their future. While it depends on what the terms are on your non-compete, you essentially are signing away your right to work in the same industry for a competing firm, if and when you choose to look for greener pastures.

What is a Non-Compete?

A non-compete is considered an important weapon in an employer’s arsenal as it keeps employees from stealing trade secrets and client information that may be used for another company’s gain. Not every state in the United States allow non-compete covenants but in Texas, they are enforced but under specific stipulations.

Whether the non-compete would be permitted by the law or not entirely depends on the merits of the case. Usually, though, the court will allow the enforcement of a non-compete so long as it is reasonable with its time limit, geography, and restriction of activity. What is considered reasonable or not depends on the court’s interpretation and can change from one case to another. The non-compete agreement also has to be valid within the context of employment.

Still, there are times when the enforcement of a non-compete can get a little difficult especially if you’re crossing over to another state. Let’s discuss that situation down below.

Can You Enforce a Non-Compete in Another State?

Every state has different laws that govern non-compete covenants, and as such, its enforcement would depend on what state you are working in. Some states do, but others just don’t. Akin to Texas, states usually do not enforce a non-compete if they find it restrictive.

If the court finds it reasonable for the non-compete to be enforced in a new state, it will uphold this. One good example of this is if you transferred to a new state but your previous employer does business in that area, it could be grounds for the non-compete covenant to be enforced.

Texas though does not have an irrefutable say in the matter, which means courts in Texas have no authority to impact another state’s actions. For a non-compete to be enforced without any trouble, an employer must place particular guidelines within the agreement that stipulate there are exclusive jurisdiction and venue provisions.

Another state that does not enforce non-compete agreements is the state of California. The Sunshine State is home to a large volume of technology businesses, and section 16600 of the California Business and Professions Code states that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” This essentially means that in all but a very few and rare kinds of situations, non-compete agreements are not enforced in California.

While California and Texas have the authority to restrict the enforceability of non-compete agreements, this has given rise to several problems for employers outside of those states. For example, if a company is based in Minnesota but operates across the country has a provision in its non-compete that stipulates Minnesota law rules over the agreement, the courts of Texas and California have declined to uphold that provision and instead, applies laws from their states.