Both employers and employees are wondering how COVID-19 will affect the litigation of the non-compete disputes around the country and whether the courts will be more or less likely to enforce such agreements in light of the nationwide health emergency and the drastic economic downturn.
Author: Leiza Dolghih
I advise my clients on how to reduce their exposure to litigation through properly drafted agreements and well-designed business practices, and I also help them litigate and arbitrate any business and employment disputes, when they arise.
When Do Employers Enforce Non-Compete Agreements?
Many companies in Texas have non-competition agreements with their employees, but not all companies enforce them. Some companies will sue the departing employees for violating non-compete agreements, even thought such agreement may not be valid under Texas laws. Others, will not bother with enforcement even though they have valid agreements on hand. The reality is that the validity of a non-compete agreement is only one factor in a company’s decision whether to enforce it.
COVID-19 Texas Employer Guide – CDC Recommends Safety Measures for Critical Infrastructure Employees Exposed to COVID-19
The Center for Disease Control and Prevention (CDC) just issued an Interim Guidance that pertains to “critical infrastructure workers,” who may have been exposed to COVID-19.
CDC advises that such workers may be permitted to continue work following potential exposure to COVID-19 as long as they remain asymptomatic and additional precautions are implemented to protect them and the community.
COVID-19 Texas Employer Guide – Are Non-Compete Agreements Still Enforceable?
In Texas, the reason for termination of employment – whether it was for cause, without cause, a layoff, a reduction in force, or any other reason – does not affect the enforceability of a non-compete agreement. Therefore, employers should not assume that non-competition agreements are no longer enforceable and must carefully approach enforcement of such agreements against departing employees as well as the hiring of new employees who may be still bound by non-competition agreements with their former employers.
COVID 19 – How Does It Affect Contractual Obligations?
Sometimes, a business can be excused from performing under a contract due to a force majeure or an “Act of God” provision in that agreement. However, given that COVID 19 is a new phenomenon, there is no clear law on (1) whether COVID 19 qualifies as an “Act of God” or a force majeure event and (2) many contracts will need to be interpreted to determine whether their particular force majeure clauses encompass COVID 19. Needless to say, the parties may disagreed about the interpretation.
COVID 19 Texas Employer Guide – The U.S. Department of Labor Questions and Answers
The Department of Labor Wage and Hour Division answers Fair Labor Standards Act questions related to COVID-19, including whether and how employers must compensate employees for reduced hours work, telework, and additional expenses associated with working from home.