Some states prohibit these restraints in employment contracts completely. Others allow one but not the other. Texas allows both. These restrictions on employees are meant to protect employers’ investment in their employees and confidential information shared with them during their employment. A prudent employer will use one or both of these covenants to protect its confidential information from ending up in the hands of a competitor.
A non-compete covenant restricts an employee’s right to engage in a business activity that is competitive with his employer. Whereas a non-solicitation clause restricts an employee’s ability to solicit the customers or employees of his former employer. Often, employers will also include a confidentiality clause, which will prohibit their employees from sharing with third parties or using any confidential information they learned while working for the employer.
Whether an employer should include all of the above clauses or only some of them in its employment agreements depends on what role a particular employee will play in its business, how much customer interaction she or he will have, whether she or he will have access to any of the employer’s confidential information, and several other factors.
Leiza Dolghih is the founder of Dolghih Law Group PLLC. She is board certified in labor and employment law and has 16+ years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at leiza@dlg-legal.com or (214) 531-2403.