Background
The enforceability of noncompetes has been under scrutiny on a federal and state level over the past few years. In 2024, the Federal Trade Commission (FTC) issued a now-invalidated order limiting noncompetes to a very narrow scope of senior executives making a certain salary threshold. Despite several courts upholding challenges to the federal FTC ban on most noncompetes, some states have taken matters into their own hands – some significantly limiting use of noncompetes to certain employee classes, and some banning noncompetes outright. Texas is not one of these states; however, they maintain the general constraints that a non-compete agreement must be reasonable in time, geography, and scope of restricted activities [1] and that any geographic restriction must be directly tied to the location where the employee worked or had operational authority rather than a broad restriction based on where the company itself operates or has customers. [2] Such limitations are to ensure an employer does not restrict the employee more than necessary to protect the employer’s legitimate business interests. [3] If a noncompete is too restrictive, courts generally use the “blue pencil doctrine” to reform the scope or nature of the noncompete to make it reasonably restrictive to protect the employer’s legitimate business interests. [4]
2026 Updates to Noncompetes
Federal. While the FTC’s attempt to significantly curb the number of valid noncompete agreements via a blanket ban was ultimately rescinded, [5] its legal fight to restrict noncompete agreements continues. In April 2026, the FTC filed action against Rollins, Inc., the parent company of many major pest control companies including Orkin, ordering the company to stop enforcing noncompetes against more than 18,000 of its employees. [6] In its public statement, the FTC argues that the imposition of noncompetes on nearly all of its employees, prohibiting them from working in the pest-control industry for two years within a 75 mile radius of one of the company’s 700+ locations is an unfair restriction on “the freedom to pursue new job opportunities and better pay,” especially for low wage workers. [7] The main concern is such low wage workers’ inability to review or negotiate such agreements and the failure of Rollins to provide additional compensation or consideration for signing the noncompete agreement.[8]
Texas. Unlike other states, the legislature and courts of Texas are not currently showing any interest in banning or significantly limiting noncompetes. Rather, the newly formed Texas Business Courts are focusing on clarifying the parameters of the scope of restrictions on the nature of employment an employee can seek during the restricted period. In the recently decided Galderma Laboratories, L.P. v. Erick Brenner, the court revised a noncompete agreement between the company and Erick Brenner, a former Galderma General Manager, whose original noncompete restricted employment or provision of services in any role to any competitor of Galderma involving any competitive activity on a global level. [9] Brenner, who worked in the company’s Injectable Aesthetics division, sought permission from Galderma to accept employment as a board member for a Canadian injectable aesthetics company, Prollenium; Galderma withheld permission, stating such role would be in violation of Brenner’s noncompete. [10] The court determined that the noncompete was unreasonable for two reasons: (1) the global restriction was too broad for a geographic scope and (2) the “in any role” language was far too restrictive on Brenner’s ability to seek future employment. [11] The court reduced the noncompete’s scope to a restriction only on employment in the United States and prohibiting Brenner from obtaining any employment positions that would provide services which are the same or substantially similar to the General Manager position he held in Galderma – for example, a position in an injectable aesthetics company if the position would entitle Brenner to control of said company’s injectable aesthetic services market in the United States. [12] While the court ultimately enjoined Brenner from performing any activity in the United States, the court did not determine employment as a board member of Prollenium would violate the new parameters of Brenner’s noncompete with Galderma. [13]
Takeaways
Based on the current 2026 activity, noncompetes are not likely to be going anywhere soon. That said, employers using noncompetes must proceed with caution when drafting noncompetes to ensure they are reasonable in (1) duration, (2) geographic scope, and (3) scope of activity restricted, and should be limited to employees whose exit or future activity could have the most impact on the company’s legitimate business interests. Further, the employer should reflect on the exact business interests it seeks to protect by using the noncompete so that it has a justification to provide in the event an employee challenges the noncompete’s validity. If an employer has concerns that a noncompete would not adequately cover its business interests, there are other restrictive covenants to explore – a confidentiality agreement (also known as a nondisclosure agreement) to prevent disclosure of sensitive information, including trade secrets and client lists; a non-solicit clause to prevent an exiting employee from taking other employees, customers, or contractors with them; and a non-disparagement clause to prevent a former employee from making harmful statements or social media posts that could harm the company’s reputation.
ABOUT THE AUTHOR: Kendra Robbins is an Associate at Rapp & Krock, PC in the Business Transactions group and focuses on business and transactional law matters, including entity choice and formation.
Rapp & Krock, PC presents the information in this article for general educational purposes only. Although this article discusses legal issues, it is not legal advice. The law and the content of any linked website may have changed since this article was written, and Rapp & Krock, PC makes no warranty or guarantee about the continuing accuracy of the information presented. Use of this article does not create an attorney-client relationship, and Rapp & Krock, PC does not represent you unless and until we are expressly retained in writing.
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[1] See Tex. Bus. & Com. Code Ann. § 15.50 (2025).
[2] See Hipps v. CBRE, Inc., No. 05-24-00056-CV (Tex. 5th App. 2024).
[3] Id.
[4] See Tex. Bus. & Com. Code § 15.51(c).
[7] Id.
[8] Id.
[9] See Galderma Laboratories, L.P. v. Erick Brenner, No. 26-BC08B-0003, pg. 4 (Tex. Bus. Court 8th Div. 2026).
[10] Id. at pg. 8.
[11] Id. at pgs. 19-21.
[12] Id.
[13] Id. [1] Id at pgs. 22-23.