Texas Employment Law Update

Texas Employment Law Update

A Resource for Texas Employers

Tag Archives: noncompete

New Developments in Employee Hiring and Noncompetition

Posted in News & Commentary, Noncompetes and Restrictive Covenants
Last week brought several interesting developments on the issue of restrictive covenants and hiring of employees among competitors including 1) the White House’s call to action (CTA) for the States to restrict use of covenants not to compete; 2) the Department of Justice’s announcement that it intends to criminally prosecute employers and executives entering into wage-fixing and… Continue Reading

Court Holds that Reasonableness of Physician Buy-Out Clauses in Noncompetition Agreements Can be Challenged Even When Parties Previously Agreed to Amount

Posted in Case Summaries, Noncompetes and Restrictive Covenants
I have written several posts outlining the unique requirements that employers must include to create a valid noncompeteition agreement with a physician. (posts here and here). A recent case from the Beaumont Court of Appeals holds that even when a physician noncompetition agreement contains a reasonable buy-out clause, the employer may still have to arbitrate the reasonableness… Continue Reading

U.S. Supreme Court Holds that Arbitrator, Not State Court, Must Determine Enforceability of Noncompetition Agreement

Posted in Arbitration, Case Summaries, Noncompetes and Restrictive Covenants
In a per curiam opinion, the U.S. Supreme Court held that under the Federal Arbitration Act arbitrators, not courts,must determine the enforceability of covenants not to compete when the parties are subject to agreements that call for the mandatory arbitration of disputes. In Nitro-Lift Technologies v. Howard, two employees left their employment with Nitro-Lift and began working… Continue Reading

Court Holds Forfeiture Provision in Executive Stock Incentive Program Unenforcable Noncompete

Posted in Case Summaries, Noncompetes and Restrictive Covenants
Covenant not to compete cases normally arise when an employer seeks to enforce a restrictive covenant by having a former employee enjoined from breaching the covenant and working for a competitor.  They can also arise when the employee is not expressly prohibited from competing, but is subjected to severe economic penalty if he engages in… Continue Reading

Employers Should Provide Cell Phones to Their Sales Force

Posted in Human Resources, Noncompetes and Restrictive Covenants
Employers should provide (and pay for) the cell phones and other PDA’s used by their sales force.  Why?  So that the company is entitled to, and can insist on, the return of the telephone, the assigned telephone number and the contacts and other wealth of information contained on those devices when the employment relationship ends.  If… Continue Reading

Handling Texas Noncompetes After Marsh USA (Part 2)

Posted in Noncompetes and Restrictive Covenants
In Part 1, I covered some thoughts on enforcing noncompetition agreements in Texas following the Texas Supreme Court’s new decision in Marsh USA.  Today I’m addressing some tips that employees (and their representatives) who are asked to sign or are attempting to bust a noncompetition agreement might consider. Prior to signing the agreement, negotiate everything you can. … Continue Reading

Handling Texas Noncompetes After Marsh USA (Part 1)

Posted in Noncompetes and Restrictive Covenants
Yesterday, Ryan Miller and I were invited to speak at the Tarrant County Bar Association’s Labor and Employment Section luncheon.  Our topic was the recent changes to Texas noncompete jurisprudence.  A copy of the Power Point presentation we jointly presented can be accessed here. For my contribution, I presented some thoughts on the practical effect the Marsh USA decision… Continue Reading

Recruiters Beware of Candidates with Noncompetition Agreements

Posted in Human Resources, Noncompetes and Restrictive Covenants
Yesterday Rob Radcliff over at the Smooth Transitions Law Blog wrote a post about a lawsuit filed by an attorney against the recruiter that placed him at his new law firm.  In essence, the attorney alleged that the recruiter made representations that she was independent (and not tied to any particular law firm) and fraudulently convinced the attorney to… Continue Reading

Physician Noncompetes: Part 2 Reasonableness Of The Buy-Out Amount

Posted in Noncompetes and Restrictive Covenants
In Part 1 of this two-part series, I examined the temporal, geographic and scope of activity restrictions for Texas physician noncompetition provisions.  Texas law provides another unique feature required only in agreements with doctors.  Noncompetes with physicians must include a provision that permits the doctor to buy-out of the noncompete for a reasonable amount. The buy-out can be determined at inception… Continue Reading

When Does Preparing to Compete Become Unlawful Competition?

Posted in Noncompetes and Restrictive Covenants, Trade Secrets
In Texas, at-will employees can prepare to compete against their current employers without violating the common law duty of loyalty.  Determining whether the line between lawful preparation to compete and unlawful competition begins is sometimes gray.  (See post).  A recent case from the Houston Court of Appeals provides a good summary of what an at-will employee… Continue Reading

BREAKING NEWS: Texas Supreme Court Issues Opinion Enforcing Non-Compete Supported by Stock Options and Goodwill

Posted in Case Summaries, Human Resources, Noncompetes and Restrictive Covenants, Trade Secrets, Unemployment
The Texas Supreme Court has issued an opinion this morning holding that noncompetition agreements supported by stock options and good will are not unenforceable as a matter of law.  I previewed this case here.  As I have time to digest the majority, concurring and dissenting opinions, I’ll provide more thoughts on this case. You can… Continue Reading

Does Texas Law Recognize a Claim against Competitor’s Poaching of Employee?

Posted in Human Resources, Trade Secrets
Many times one competitor sues another competitor over the hiring or two or more employees (whether over allegations of a breach of contract or misappropriation of trade secrets), the Complaint will make allegations of employee "poaching".  This gives rise to the question about whether Texas recognizes a cause of action for one competitor’s poaching of another competitor’s… Continue Reading

Dallas Court Strikes Physician Noncompete that Lacked Buy-Out Provision

Posted in Case Summaries, Noncompetes and Restrictive Covenants
I’ve previously written about the specific requirements that must be included in a covenant not to compete with a licensed physician to make the restrictive covenant enforceable.  The Dallas Court of Appeals recently affirmed a trial court’s decision that a noncompetition agreement between a surgical practice and several limited-partner physicians was unenforceable because the agreement lacked one of the statutorily required provisions.  You… Continue Reading

Appeals Court Holds Trial Court Must Conduct Evidentiary Hearing in Ruling on Temporary Injunction in Noncompete Case

Posted in Case Summaries, Noncompetes and Restrictive Covenants
A trial court’s order granting or denying a temporary injunction in a noncompete case is rarely reversed by the court of appeals.  This week the Fourteenth Court of Appeals took the unusual step of reversing a trial court’s denial of an employer’s application for temporary injunction seeking to prohibit a former employee from engaging in certain competitive… Continue Reading

Texas Appellate Court Continues Trend of Enforcing Noncompetition Agreements

Posted in Noncompetes and Restrictive Covenants
Since the Texas Supreme Court’s Sheshunoff and Mann Frankfort opinions, Texas appellate courts have, with increasing frequency, enforced covenants not to compete in the employment context.  Gone are the days when noncompetition agreements were difficult to draft and enforce in Texas. In Gallagher Healthcare Insurance Services v. Vogelsang, the First District Court of Appeals in Houston… Continue Reading

Texas Relaxes Requirements to Enforce Noncompetes Against Physician-Owners

Posted in Legislation, Noncompetes and Restrictive Covenants
In addition to containing reasonable restrictions as to time, geographic scope and scope of activity to be restrained, Texas imposes additional requirements for enforceable covenants not to compete with licensed physicians.  Those additional requirements include that the covenant:  not deny the physician access to a list of his patients whom he had seen or treated… Continue Reading

Dallas Court of Appeals Holds that Award of Stock Options to Employee May Not Be Sufficient to Support Covenant not to Compete

Posted in Noncompetes and Restrictive Covenants
In a recent opinion of the Dallas Court of Appeals, the Court held that an insurance brokerage and consulting service firm’s noncompetition and nonsolicitation agreement obtained in return for an award of stock options to an employee was unenforceable under Texas law. (See opinion here). Rex Cook was a long-term employee of Marsh USA, Inc. Prior to… Continue Reading