Drafting Enforceable Non-Competes Under Texas Law: A Dallas Business Law Attorney’s Guide to the Light v. Centel Framework in Practice

Texas non-competes look simple on paper and rarely are in practice. Most agreements landing on a Dallas business law attorney’s desk fall into one of two camps: drafts that fail because the employer didn’t understand what “ancillary to an otherwise enforceable agreement” actually requires, and ones that fail because the restrictions are too broad to survive Texas’s reasonableness test. Both are fixable. The challenge is that “fixing it later” usually happens in court, after the employee has already started working for a competitor.

Texas law on covenants not to compete lives in Tex. Bus. & Com. Code § 15.50, with reformation and remedies under § 15.51. The statute is short. The case law interpreting it is not.

The Light v. Centel Framework and What Survives Today

Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642 (Tex. 1994), set the framework that drove Texas non-compete litigation for more than a decade. The court held that an at-will employment relationship, by itself, is not an “otherwise enforceable agreement” sufficient to support a non-compete. There had to be something more, a return promise by the employer that gave rise to its interest in restraining competition.

For years, the most common way to satisfy Light was a promise by the employer to provide confidential information, paired with the employee’s promise not to disclose it. The trick was that the employer’s promise had to be performed, or the structure collapsed as illusory.

Two later Texas Supreme Court decisions softened Light. In Alex Sheshunoff Management Services, L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006), the court held that a unilateral promise to provide confidential information becomes enforceable once the employer actually provides the information. In Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011), the court rejected Light’s requirement that the consideration “give rise to” the need to restrain competition. Stock options now support a non-compete because they align the employee’s interest with the company’s goodwill.

Light is still cited. What survives is the framework: a non-compete must be ancillary to or part of an otherwise enforceable agreement, and that agreement cannot be illusory.

Consideration That Actually Works

Texas courts have accepted several types of consideration. What unites them is performance, not just promise.

• Confidential information actually disclosed during employment. A promise that goes unfulfilled does not satisfy the requirement.
• Specialized training that goes beyond what is generally available in the industry.
• Stock options and equity grants, validated by Marsh USA, with terms tied to the company’s goodwill.
• Access to customer relationships and goodwill, where the employee builds those relationships on the company’s behalf using its resources.
• Signing bonuses or other payments tied specifically to the non-compete obligation.

What does not work is at-will employment alone, or generic language about “such confidential information as the company may share.” The connection has to be real.

Reasonable Limits on Time, Geography, and Scope

Even an agreement that clears the ancillary requirement still has to be reasonable. § 15.50(a) requires that restrictions not impose a greater restraint than necessary to protect the employer’s goodwill or other legitimate business interest.

Texas courts often uphold time restrictions of one to two years for ordinary employees. Three years is possible for senior personnel with significant access to confidential information or customer relationships. Anything beyond that invites trouble.

Geography has to be tied to where the employer actually does business or where the employee actually worked. A statewide restriction for an employee who served only Dallas-Fort Worth customers is vulnerable. So is a national restriction for a regional sales role. Precise definitions by county, ZIP code, or customer list hold up better than vague references.

Scope of activity should match what the employee actually did, not a hypothetical version of the role. Restricting an employee from “any work in the industry” is rarely enforceable as written.

Reformation and the Cost of Overreaching

Texas allows courts to reform overbroad covenants under § 15.51(c). This is sometimes called the statutory blue pencil. It lets a court rewrite the restriction to make it reasonable rather than invalidating the whole clause.

Reformation is not free. If the original agreement was overbroad, the employer cannot recover damages for the period before reformation. The employer may also be ordered to pay the employee’s reasonable attorney’s fees if the court finds the employer knew the restriction was overbroad when it tried to enforce it. Drafting just shy of what’s reasonable beats drafting broadly and counting on a court to clean it up.

Common Drafting Mistakes That Sink Otherwise Enforceable Agreements

Several patterns repeat in agreements that fail:

• Promised confidential information that was never actually provided or documented as provided.
• Geographic scope wildly broader than the employee’s actual territory.
• One template used for every employee regardless of role, ignoring the different protections needed for sales personnel, executives, and entry-level workers.
• Non-solicitation language written as broadly as the non-compete itself, when narrower non-solicitation clauses often hold up better and protect what actually matters.
• Templates that haven’t been updated since before Sheshunoff and Marsh USA changed the landscape.

Each is fixable on the front end. None is cheap to litigate around later.

When to Bring in a Dallas Business Law Attorney

Texas non-compete law rewards careful drafting and punishes shortcuts. A short engagement to update template agreements, document the consideration actually provided, and tailor restrictions to each role pays for itself the first time enforcement is needed.A Dallas business law attorney who works with § 15.50 regularly can evaluate where current agreements stand, identify the ones most likely to fail enforcement, and rebuild them around what Texas courts actually respect today. The goal is not a perfect agreement. It’s an enforceable one, tied to a real business interest, that a court will uphold when it matters.