Many companies have been taking advantage of the economic turmoil caused by the pandemic to poach employee talent that they otherwise would not have been able to recruit or afford. Companies that have experienced layoffs, furloughs, salary reductions or bonus freezes, are particularly vulnerable to raiding attempts by their competitors.
An employer cannot wrongfully breach a provision of an employment contract that is favorable to the employee (such as reducing his wages without his consent and without contractual authority to do so) an then go into a court of equity to secure, by injunction, the enforcement of another provision favorable to it.”
Since the White House issued a call to action to state legislators asking them to reign in the use of non-compete agreements in 2016, 16 states proceeded to amend their non-compete statutes to add additional protections for employees
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.
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.
On February 7, 2020, the American Medical Association submitted a letter to the Federal Trade Commission (FTC) concerning non-compete agreements in the workplace and urged