Anyone who has been running a business for a while knows that January is a high turnover month for employees. And while companies cannot prevent employee turnover, they can take four steps this month to prevent employees from walking out the door with confidential documents…
I will be presenting with Stanley Santire of Santire Law Firm on the The Rise in Trade Secrets and Restrictive Covenants Litigation on January 17th at 2:30 p.m. at the Texas Bar Advanced Employment Law Course in Dallas, Texas. You can get a copy of…
Unlike many other states around the country, Texas did not see any drastic changes in its non-competition laws in 2018. However, out of a 100 + cases involving non-competition disputes, the following handful stand out either because they addressed a novel issue or clarified an area of confusion in this gray area of the law.
What distinguishes those companies that are successful in enforcing their non-compete agreements from those that are not? Generally speaking, just three factors: good agreements, evidence of violations, and swift action to enforce.
A confusing, ambiguous, or imprecise non-compete agreement will yield poor results in court. In other words: garbage in, garbage out.
How enforceable is a non-compete? Generally speaking, non-compete agreements are enforceable. Is a non-compete valid if you are fired? Usually, yes. Do non-compete agreements hold up? When written correctly, yes. How long does a non-compete agreement last? As a general rule, non-compete agreements that last two years or less are considered reasonable.
Few employees realize that when they take their employers’ trade secrets with them prior to leaving their job they may be exposing themselves to criminal liability under the Economic Espionage Act, which makes it a crime to steal trade secrets when (1) the information relates to a product in interstate or foreign commerce (which is virtually any product now days) or (2) the intended beneficiary is a foreign power.
The Fifth Circuit Court of Appeals recently considered whether a travel agency’s noncompete agreement with its employee was enforceable under Texas law. It concluded that because the agreement did not have geographic limits, was not limited to the travel agency’s customers with whom the employee actually worked during her employment, and included entire travel agency industry, the non-compete was unenforceable.
More and more states are amending their non-compete statutes to make them more employee-friendly. This trend, spurred by the White House report on the effect of non-compete agreements on competition and the revelation that some of the largest employers, like Jimmy John’s and Amazon, were requiring their sandwich-makers and warehouse employees to sign non-compete agreements, has continued into 2018.
While a non-solicitation clause that prohibits a sales employee from soliciting all company customers may sometimes be justified, most of the time it is much more reasonable to limit the non-solicitation restraint only to the customers and prospective customers with whom the sales employee directly interacted rather than every customer in the company’s database.
Employees owe a duty of loyalty to their employer and may not: (1) appropriate company trade secrets; (2) solicit away the employer’s customers while working for the employer; (3) solicit the departure of other employees while still working for the employer; (4) carry away confidential information.
What a lot of companies do not realize, however, is that if they wait too long to ask for an injunction after finding out about the employee’s competitive activities, a court may deny their request simply because they waited too long