In a recent case from the Fort Worth Court of Appeals, the court held that a provision prohibiting solicitation of employees was too broad and, therefore, unenforceable. two-to-five year restrictive period for non-solicitation is reasonable. Category: Non-Solicitation Agreements in Texas Not infrequently, non-solicitation agreements that employers require their employees to sign are extremely broad. Your employees have a common-law duty not to disclose your companys trade secrets and proprietary information, but it is still a good idea to reinforce this with a formal non-disclosure agreement (NDA). /Range[0 1 0 1 0 1 0 1] "I did not solicit her, she solicited me:" Taking a closer look at Non /SM 0.001 Just like a non-compete provision (which keeps an employee from having a certain type of job), anon-solicitation provision(which keeps an employee from soliciting his former employers clients), to be valid under Texas law, must comply with the statutory requirements. The usual gamut of post-employment covenants includes non-compete restrictions, non-solicitation of customer restrictions, confidentiality restrictions, and in many cases the anti-raid provision designed to keep a departing employee from hiring away a former employer's employees and contractors. To maximize the likelihood of enforceability, non-solicitation provisions (as well as non-compete agreements in general) should largely focus on the activities of the employee (e.g., the customers with whom the employee dealt). Texas non-solicitation provisions (aka. Are you an employee, employer, or a physician? I'm Attorney Robert Wood and I've handled matters involving Texas non-compete agreements for nearly 30 years. The court held that these provisions were too broad because they applied to all of the Companys employees. A Texas non-solicitation agreement is a contract between an employer and an employee that prevents the employee from using connections forged during their period of employment to solicit customers or business from the employer upon leaving the company. /Width 526 The defendant obtained the trade secret due to improper discovery or the breach of a confidential relationship (whether there was an NDA in place or not). . Complete this short form* or call 469-754-2812 to contact attorney Robert Wood about your non-compete matter. A customer non-solicitation clause can look something like this: The Executive recognizes the Corporations legitimate interest in protecting, for a reasonable period of time following the termination of the Executives employment, those Corporation accounts with which the Executive will be associated during his employment. Client non-solicitation agreements can be used in addition to the non-competition restraints or instead of them. The law in this area can be incredibly confusing and/or detailed so this blog is merely meant to provide a very basic and general overview for employers. A Texas Standard Clause limiting an employee's solicitation of employees and customers during the term of the employee's employment and for a specified period after the employment relationship ends. For eighteen (18) months following your termination of employment, for whatever reason, you will not, whether initiated by you directly or on behalf of your employer, or a third party, recruit, lure or entice away, or in any other manner persuade an employee to terminate their employment with the Company. The court essentially confirmed this truism: Competition for clients and workers is fair competition unless it is somehow unfair. So, what might convert otherwise fair competition into an unfair competition? Under Texas law, a provision prohibiting an individual from soliciting a former employer's customers or clients is treated as a non compete agreement. 4 0 obj That approach includes consideration of the following two points: This determination is a subjective one and it often depends on how much sensitive information the employee had access to, and what type of position was involved. When it is necessary, your company can ask the courts to enforce your employee agreements, including covenants not to compete, non-solicitation agreements, non-disparagement agreements, non-disclosure agreements (NDAs), or provisions of the employees severance agreement. But like non-compete agreements, they must comply with the statutory requirements against unlawful restraints on trade. Non-Solicitation Agreements | Smooth Transitions To understand why, let's back up a bit. means: To appeal to (for something); to apply to for obtaining something; to ask earnestly; to ask for the purpose of receiving . In this case, former employees accused of violating a non-solicitation clause argued that it was unreasonable under the Texas Covenants Not to Compete Act and, therefore, was invalid. We also remain available to help you with all your general business, corporate, and estate planning needs. Legal actions to protect our clients interests against former employees and others who engage in unfair competition through misappropriation of trade secrets, trademark and copyright infringement, or other methods. When composing non-compete and non-solicitation agreements, its best to seek the counsel of skilled employment law attorneys. That approach includes consideration of the following two points: Circumstances for the non-compete - Why did the employer ask for the restrictive covenant? Answers to questions can be compared across a number of jurisdictions (see Non-Compete Laws: State Q&A Tool). /Height 1276 Non-Solicitation Agreements in Texas - North Texas Legal News This has made it somewhat easier for employers to defend their agreements. Failure to ensure that your nonsolicitation or noncompete provisions are reasonable can result in them not being enforced. stream I use this blog to help employers and workers understand the complexities surrounding the enforcement of non-competes. This Legal Update addresses the use of non-solicitation (non-poaching) clauses in confidentiality or non-disclosure agreements (NDAs) entered into between parties discussing or exploring a potential business transaction. 17 Oct 2019 Jordan Rothman Commercial Disputes Non-solicitation agreements are commonplace in many industries. endstream . One court defined it this way: Solicit . Local law may impose additional or different requirements. /Filter/DCTDecode A Federal Court in Texas Upholds Employee Non-Solicitation Clause Obviously, it would be too simplistic to say that a non-solicitation provision narrowly tailored to the customers serviced by the employee in question is automatically enforceable. Sometimes, the provisions also preclude the employee from soliciting her former employer's potential customers. Is a Non-Solicitation Agreement a Non-Compete? - Zach Wolfe Law Firm Employees in Texas are not entitled to severance pay unless it was promised to them in a prior written agreement. Are you an employee, employer, or a physician? The trend seen in the Texas Supreme Court suggestsa two-phased approach in ruling on non-compete agreements. Texas employment agreements frequently contain non-solicitation provisions, along with non-compete provisions and non-disclosure provisions. JFIF Adobe e C 2 0 obj Because the injunction in this case did not do so, the injunction was void. This was confirmed by the Texas Supreme Court case in its 2011 Marsh USA opinion, in which the court noted, Covenants that place limits on former employees professional mobility or restrict their solicitation of the former employees customers and employees are restraints on trade and are governed by the Act. The Act is the Texas Covenants Not to Compete Act, which imposes mandatory requirements upon contracts that restrict trade. /Domain[0 1 0 1 0 1 0 1] Our employment law attorneys at Murray Lobb routinely advise clients on unfair competition issues, including how to prevent unfair competition issues from arising and how to take legal action to protect your companys interests. XK Agreements that describe a more specific scope of activity are more likely to be enforceable. Depending on the nature of your business, this may be necessary to protect your trade secrets, customer lists, intellectual property rights, and other confidential information that a former employee could use to harm your business. . Specifically, employees argued that the phrase in any other manner persuade an employee to terminate their employment was ambiguous. In Poole v. U.S. Money Reserve, Inc., No. Hi there. Free Non-Solicitation Agreement Template - PDF | Word - eForms A Q&A guide to non-compete agreements between employers and employees for private employers in Texas. Requirements for Enforceable Non-compete Agreements, The somewhat murky language of the Texas non-compete statute, found in Section 15.50 of the Texas Business and Commerce Code, has caused a lot of consternation over the enforceability of these agreements. 0R(Pzw@,&/$G=N 63Qa.l*+f#XWnrQ]v"U!Q>kS Because solicitation and distribution can involve union-related activity or other activity protected by the National Labor Relations Act, these policies are of particular interest to the National Labor Relations Board. Under Texas law, nonsolicitation agreements are subject to the same scrutiny that noncompete agreements are given. Employers should keep in mind that non-competition agreements will be scrutinized by the courts, should the employer seek to enforce. I'm Attorney Robert Wood and Ive handled matters involving Texas non-compete agreements for nearly 30 years. Well-crafted noncompete and non-solicitation agreements can help . The contract is supported by valid consideration given by the employer in exchange for the promise not to compete (consideration could be employee training or access to the companys confidential information), The restrictions are reasonably related to the need to restrain competition (for example, specialized training or access to the companys confidential information), and. Non-solicitation is often a clause that we include in a broader agreement not to compete or severance agreement. Therefore, they must be reasonable and not impose a greater restraint than is necessary to protect the goodwill or other business interest of the employer. For information on the scope of local law coverage, see. 100% virtual noncompete reviews, consultations, & more: Please provide your basic contact infomation.