By the Employment Attorneys at Garg & Associates, PC, serving The Woodlands, Spring, Houston, Conroe, Humble, Kingwood, Tomball, Cypress, Huntsville, Westchase, Southwest, Sugar Land, West Oaks, Alief, Memorial, River Oaks, Stafford, Katy, and Missouri City.

What damages are recoverable if a party breached a non-compete agreement?

If an employee is found to have breached a non-compete agreement, the employer can recover actual damages – those damages actually incurred. If the agreement is reformed, the employer cannot recover any damages due to the breach incurred before the reformation. The employer may recover economic damages in the form of lost profits. Additionally, the employer may recover profits earned by the new employer who hired the employee. The employer cannot recover exemplary damages unless “a separate intentional tort is alleged and proved in connection with the suit on the covenant and the employer suffered actual damages.”

An employer can recover equitable relief in the form of injunctive relief (permanent and temporary) and reformation of the covenant. An employer cannot recover attorney fees in prosecuting a suit against an employee in a breach of a covenant not to compete. However, an employee may recover attorney fees in defending a suit to enforce an overbroad covenant.

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