Not infrequently, non-solicitation agreements that employers require their employees to sign are extremely broad. The scope of activity will also vary greatly. Non-compete agreements are enforceable in Texas, provided: A non-solicitation agreement is similar to a covenant not to compete in Texas. Hi there. 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. In some cases, when negotiation and demand letters fail, your only option may be to file suit against the infringer. It highlights issues that counsel should consider to determine when non-solicitation clauses are appropriate and how to draft clauses that are not overly restrictive or . Non-Solicitation Agreements in Texas | Houston Non Solicitation Lawyers document.getElementById( "ak_js_2" ).setAttribute( "value", ( new Date() ).getTime() ); Enter your email address to subscribe to this blog and receive notifications of new posts by email. Non Competes | Dallas Employment Law Lawyer Hersh Law Firm Are you an employee, employer, or a physician? Thus, you shouldnt be allowed to do so., The court enforced this provision against the former employee. Texas Customer Solicitation Restrictions. Even though noncompete and nonsolicitation provisions generally are enforceable in Texas, they must be reasonable in scope. Federal, local, or municipal law may impose additional or different requirements. The contract is supported by valid consideration given by the employer in exchange for the promise not to compete (consideration could be employee training or access to the companys confidential information), The restrictions are reasonably related to the need to restrain competition (for example, specialized training or access to the companys confidential information), and. Whats the official business name of the employer (to check for conflicts). Geography will depend on the nature of the business. But whether a particular act or communication constitutes solicitation isnotalways clear. . (Click here for information on non-solicitation agreements, non-disclosure agreements, and anti-raiding provisions ). A Q&A guide to non-compete agreements between employers and employees for private employers in Texas. In Texas, non-solicitation clauses are treated like a non-compete clause. When an individual or company misrepresents that its product is someone elses (passing off) or that another companys product is their own (reverse passing off), the company who is harmed can file suit, recover damages, and ask the court for an injunction to prevent further harm. 1 0 obj /Domain[0 1 0 1 0 1 0 1] What can we help you with (select all that apply)? stream For purposes of enforcement, Texas law treats non-solicitation agreements as non-competition agreements, so the information discussed here on drafting and enforcing non-competes also applies to non-solicitationagreementsas well. Whereas non-competition restraints are usually tied to a certain geographic area, employee non-solicitation restraints are tied to certain individuals, regardless of the geographic location. /Range[0 1 0 1 0 1 0 1] A non-solicitation agreement can be in the form of an entire document or a clause in an employment contract. Texas law treats a non-solicitation agreement the same as a non-compete agreement - they must meet the requirements listed above to be enforceable. Accordingly, the Executive understands and agrees that for a period of two (2) years following the termination of his employment for any reason whatsoever, he will not, directly or indirectly, solicit, place, market, accept, aid, counsel or consult in the renewal, discontinuance or replacement of any insurance (including self-insurance) by, or h. What Are Acceptable Non-Solicitation Restraints for Sales Employees? Is a non-disparagement agreement a violation of the employees First Amendment rights? Leiza Dolghih is the founder of Dolghih Law Group PLLC. Those that are overly broad may be viewed as unreasonable. Although non-competition restraints are typically fastened to a certain geographic area, company non-solicitation constraints are tied to certain individuals . Your employees have a common-law duty not to disclose your companys trade secrets and proprietary information, but it is still a good idea to reinforce this with a formal non-disclosure agreement (NDA). Second, does your non-solicitation agreement meet all of the requirements of the Texas Covenants Not to Compete Act? What can we help you with (select all that apply)? Thus, employers have a choice to use both or either of these: (1) a non-competition clause, which prohibits employees from competing with the employer in a certain geographic area; or (2) a non-solicitation clause, which prohibits employees from doing business with certain clients, but leaves them free to compete with the former employer in any geographic area. A Q&A guide to non-compete agreements between employers and employees for private employers in Texas. non-solicitation clauses or non-solicitation agreements) prohibit the employee, both during employment, and for a period of time thereafter, from soliciting the employer's clients, employees, or both. A non-compete agreement prohibits an employee from working in a defined industry or job for a particular period of time in a defined location. The plaintiff used their extensive time, labor, skill, and money to create the product, The defendant uses that product to directly compete with the plaintiff, and. That approach includes consideration of the following two points: This determination is a subjective one and it often depends on how much sensitive information the employee had access to, and what type of position was involved. Some Texas courts have held that a restriction on employee non-solicitation is not a restriction on competition. endobj Is a Non-Solicitation Agreement a Non-Compete? - Zach Wolfe Law Firm JFIF Adobe e C Therefore, they must be reasonable and not impose a greater restraint than is necessary to protect the goodwill or other business interest of the employer. . We also remain available to help you with all your general business, corporate, and estate planning needs. This shall not bar any employee of the Company from applying for or accepting employment with a person or entity. XK Because the injunction in this case did not do so, the injunction was void. In this case, former employees accused of violating a non-solicitation clause argued that it was unreasonable under the Texas Covenants Not to Compete Act and, therefore, was invalid. Are you an employee, employer, or a physician? endstream The court held that these provisions were too broad because they applied to all of the Companys employees. Geographic restriction can range from the local area to a global restriction. Federal, local, or municipal law may impose additional or different requirements. For more information about . A non-solicitation agreement is a form of non-compete. << $.' Our employment law attorneys at Murray Lobb routinely advise clients on unfair competition issues, including how to prevent unfair competition issues from arising and how to take legal action to protect your companys interests. When faced with an employee solicitation claim, it is best to consult with an attorney who is familiar with the case law in this area and who can interpret the language of the specific non-solicitation clause in question. The takeaway from this case is that, just as a noncompete agreement must be reasonable to be enforceable, a nonsolicitation provision must be reasonable as well. One court defined it this way: Solicit . Essentially, the non-solicitation clause was a non-compete prohibiting that employee from working with former clients. When Non-Solicitation Agreements Are Enforceable In short, the answer is, No. This Legal Update addresses the use of non-solicitation (non-poaching) clauses in confidentiality or non-disclosure agreements (NDAs) entered into between parties discussing or exploring a potential business transaction. robind March 29, 2022 Business, Employees, EmploymentContracts, EmploymentLaw. November 17, 2021 Leiza Dolghih. If they have a non-compete agreement with their employer, assuming the agreement meets the appropriate legal requirements, i.e., among other things, is reasonable, has geographic, scope, and term restrictions, and is supported by consideration, the . Non-Solicitation Agreements in Business Contracts - The Balance Engineers, researchers, designers and the like likely would have access to the kind of information that would make their non-compete enforceable. The answer is: Yes,they can be. The First Amendment protects you from punishment by the government for expressing yourself, but it does not apply to a private company. A customer non-solicitation clause can look something like this: The Executive recognizes the Corporations legitimate interest in protecting, for a reasonable period of time following the termination of the Executives employment, those Corporation accounts with which the Executive will be associated during his employment. These provisions often preclude the employee from soliciting all of her former employers customers. If you have questions, please dont hesitate to shoot me a message or call 469-754-2812. This Standard Clause has integrated notes with important explanations and drafting tips. % document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This field is for validation purposes and should be left unchanged. They are often used in conjunction with other restrictive covenants, such as non-compete agreements. In Poole v. U.S. Money Reserve, Inc., No. The injunction should have been limited to the customers with which the defendants themselves did business. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This field is for validation purposes and should be left unchanged. Enter to open, tab to navigate, enter to select, Practical Law Standard Clauses 7-570-4345, https://content.next.westlaw.com/practical-law/document/I61946b52fd5911e398db8b09b4f043e0/Non-Solicitation-Clause-TX?viewType=FullText&transitionType=Default&contextData=(sc.Default), Local Law Coverage in Labor & Employment Resources. "I did not solicit her, she solicited me:" Taking a closer look at Non We always encourage employers to use legal counsel when drafting or using non-compete and/or non-solicitation agreements. What can we help you with (select all that apply)? The trial court enjoined the defendants from soliciting any of the plaintiffs customers.The plaintiffs then filed an interlocutory appeal, seeking a ruling that the injunction was overly broad. /Height 1276 Hi there. Posted in Uncategorized. Legal actions to protect our clients interests against former employees and others who engage in unfair competition through misappropriation of trade secrets, trademark and copyright infringement, or other methods. Texas non-solicitation provisions (aka. Rather, the wording of the injunction order must precisely detail why irreparable harm will occur absent the injunction. However, several Texas cases, including a recent one from the Beaumont Court of Appeals, have held that such provisions are too broad. If your employees enter a non-disparagement agreement with your company and then violate the agreement, it can be enforced in court. The court explained: A number of courts have held that a non-compete covenant that is limited to the employees clients is a reasonable alternative to a geographical limit.. Permissible Scope of Nonsolicitation Agreements in Texas Complete this short form* or call 469-754-2812 to contact attorney Robert Wood about your non-compete matter. A Texas Standard Clause limiting an employee's solicitation of employees and customers during the term of the employee's employment and for a specified period after the employment relationship ends. App.Beaumont Oct. 31, 2008), an employer filed suit against two of its ex-employees for, inter alia, violating their non-solicitation agreements.The agreements at issue prohibited the former employees from soliciting or attempting to take away any existing or potential clients, customers, suppliers, businesses, and/or accounts of [the employer] . Free Texas Non-Solicitation Agreement - PDF | Word - eForms Local law may impose additional or different requirements. 100% virtual noncompete reviews, consultations, & more: Please provide your basic contact infomation. Non-solicitation provisions must bear relation to employees' activities And what difference does it make? endobj The court of appeals held that the temporary injunction was void because the injunction order failed to state why injunctive relief was necessary (i.e., it failed to explain why the plaintiff would suffer irreparable harm absent injunctive relief).Under Texas law, a temporary injunction, to be valid, must state why irreparable harm would occur absent injunctive relief. Moreover, the court of appeals held that the restriction on solicitation of potential clients was overly broad. Are you an employee, employer, or a physician? In contrast, a non-solicitation agreement only prohibits an employee from soliciting clients or employees of the former employer for a defined period and, sometimes, in a defined geographic area. Whats the official business name of the employer (to check for conflicts). Wimmer, it held that an employee non-solicitation provision must have a territorial limitation in order to pass muster under Georgia's 2011 Restrictive Covenants Act (RCA). These types of contracts typically prevent employees from soliciting customers of a business or asking employees of a business to work for their own company. I use this blog to help employers and workers understand the complexities surrounding the enforcement of non-competes. [/DeviceN[/Cyan/Magenta/Yellow/Black]/DeviceCMYK 1 0 R] Its not uncommon for a provision prohibiting solicitation of employees to apply to all of the employers employees. Conversely, calling the customer and urging him to do business with your new company arguably would. 09-08-137 CV, 2008 WL 4735602 (Tex. Reasonable time periods will vary but are generally in the neighborhood of one to two years. Under this definition, informing your former employers customer that you have changed companies (which allows the customer to suggest continuing to do business with you) arguably does not constitute a solicitation. At any . When composing non-compete and non-solicitation agreements, its best to seek the counsel of skilled employment law attorneys. To understand why, let's back up a bit. Georgia Employers Must Act Now as Recent Court Decision Potentially Updated April 16, 2023. Everything You Need to Know (and Probably Don't) About - Bradley Passing off is covered by Texas law on unfair competition, and it may also be covered by federal trademark or copyright infringement law, depending on the circumstances. What can we help you with (select all that apply)? endobj . It is common for an employment agreement to contain both a "non-solicitation" section and a "non-compete" section. You can contact her directly atleiza@dlg-legal.comor (214) 531-2403. A recent case involved the following non-solicitation provision . . Preventing Unfair Competition in Texas with Employee Agreements This shall not bar any employee of the Company from applying for or accepting employment with a person or entity. Many non-compete agreements in Texas often include employee non-solicitation restraints, which prohibit departing employees from soliciting their co-workers to leave with them. You can contact her directly at leiza@dlg-legal.com or (214) 531-2403. Non-solicitation agreements are contractual clauses used by companies that have interests in protecting trade secrets. >> Each article will address some of the "vital stats" of a non-compete: consideration, limitations (geography, time, scope), specific statutes (such as physicians), and the interplay with the cousins of a non-compete - non-solicitation of employees and non-solicitation of customers. Enforcement of such clauses via injunctive relief requires finesse as employer must maneuver between enforcing the clause and protecting its business interest and preserving the customer goodwill. Drivers, clerical workers, retail clerks, and similar employees may be viewed as a lesser risk. The federal court rejected that argument as well, relying exclusively on pre-existing case law on this issue. Because most . A non-solicitation agreement is a legal contract that prohibits an employee or another party from soliciting a business's clients or employees for their own benefit.Typically signed at the beginning of employment or as part of a severance package, the non-solicitation agreement is intended to protect a business's most valuable assets from its competitors. In a recent case from the Fort Worth Court of Appeals, the court held that a provision prohibiting solicitation of employees was too broad and, therefore, unenforceable. /Type/ExtGState /FunctionType 4 I use this blog to help employers and workers understand the complexities surrounding the enforcement of non-competes. See, e.g., Totino v. Alexander & Associates, Inc. Complete this short form* or call 469-754-2812 to contact attorney Robert Wood about your non-compete matter. When enforcing a non-solicitation clause, a company should always consult with an attorney to determine the scope of the enforcement given a particular sales employee's area, the circumstances surrounding a his/her departure, and the size of the company customer list. %PDF-1.4 But why does this issue come up? For information on the scope of local law coverage, see Local Law Coverage in Labor & Employment Resources. This has made it somewhat easier for employers to defend their agreements. A non-solicitation agreement prevents an employee, both during employment and for a set time after employment, from soliciting the employers clients or other employees. There is conflicting Texas case law on whether a restriction on soliciting a former employer's employees is a non-compete subject to the requirements of the non-compete statute. Protecting Your Texas Business with Non-Compete, Non-Solicitation, and To do so, they often ask employees to sign non-compete agreements, also known as restrictive covenants. I'm Attorney Robert Wood and I've handled matters involving Texas non-compete agreements for nearly 30 years. /Type/XObject Each case must be judged on its own facts, taking into account factors such as the consideration given by the employer in exchange for the promise not to solicit. The phrase ancillary to or part of an otherwise enforceable agreement at the time the agreement is made has vexed employers and the courts for quite a while. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This field is for validation purposes and should be left unchanged. That approach includes consideration of the following two points: Circumstances for the non-compete - Why did the employer ask for the restrictive covenant? A non-so - licitation clause is an employment contract provision that prohibits an employee from soliciting or recruiting other clients and/or coworkers away from the employer. Federal, local, or municipal law may impose additional or different requirements. 100% virtual noncompete reviews, consultations, & more: Please provide your basic contact infomation. The court noted, While it might be considered reasonable to limit [Employees] solicitation of [Companys] employees located in the IT department, which was where [Employee] worked, the non-solicitation covenant . Note that employee non-solicitation restraints, which are mostly legal in Texas, should not be confused with no-poaching agreements between two employers, which are illegal. It also prohibited solicitation of all former [Company] employees who worked for [Company] or any of [Companys] subsidiaries between August 14 and October 14, 2011. Below, we will go over some of the basics of how to prevent competition issues with former employees and how to protect your business interests through litigation, including: For many businesses, it is necessary to preemptively address the potential for unfair competition by former employees by requiring your employees to sign contracts prohibiting them from using your proprietary information, trade secrets, and intellectual property and prohibiting them from engaging in conduct that would be harmful to your company. (emphasis supplied), Unlike a blanket non-solicitation provision applying to all of the employers customers, this one only prohibited the former employee (an insurance broker) from soliciting and doing business with customers for whom he personally worked during his final two years with his employer. Well, violating a valid non-compete/non-solicitation agreement for one thing. First, we need to understand what exactly constitutes solicitation In other words, what does it mean to solicit? But the court held that the totality of evidence showed that the defendants, who were salespersons, were not in fact knowledgeable about the plaintiffs marketing information.Thus, the restriction s pertaining to potential customers was overly broad. These agreements are meant to prevent an employee from leaving the company and setting up a competing business down the road using knowledge gained from their former employer. Leiza Dolghih is the founder of Dolghih Law Group PLLC. The trend seen in the Texas Supreme Court suggestsa two-phased approach in ruling on non-compete agreements. Specifically, employees argued that the phrase in any other manner persuade an employee to terminate their employment was ambiguous. When negotiating an employees departure, however, it can be a good idea to spell out the terms of the departure and the employees obligations going forward, including an agreement not to compete, a non-solicitation agreement, a non-disparagement agreement, and a non-disclosure agreement, with severance pay as consideration. Non-Solicitation Agreements | Dallas Employment Litigation Lawyer Hi there. Employees also argued that the agreement was overbroad because the clause covered all of the company employees and not just those employees whom they supervised while working at the company. Answers to questions can be compared across a number of jurisdictions (see Non-Compete Laws: State Q&A Tool). For eighteen (18) months following your termination of employment, for whatever reason, you will not, whether initiated by you directly or on behalf of your employer, or a third party, recruit, lure or entice away, or in any other manner persuade an employee to terminate their employment with the Company.