Tired of your boss?
Not appreciated at work?
Or just ready to advance your career and make more money by leaving your current employer and going to work for a competitor—or for yourself in competition?
Before you go, you may want to double-check any agreements with your current employer restricting your mobility. Here’s what to look out for.
If the terms of your employment agreement, whether oral or written, provide that you may be fired or you can quit at any time, then it is probably what is called an “at-will” employment contract because there is no “non-illusory” promise of a future benefit for you. If so, congratulations, you may take any subsequent employment of your choice.
However, just because your employment is at-will it doesn’t preclude the formation of other contracts between you and your employer which would be an “otherwise enforceable agreement”. To create an otherwise enforceable agreement, there must be consideration for a promise, by either you or your employer, which is non-illusory.
Let me explain with an example.
An employee agreement that you will not disclose your employer’s confidential information may constitute that “otherwise enforceable agreement” and a covenant not to compete may be an ancillary agreement if said covenant is designed to enforce the promise not to disclose confidential information.
If the nature of your work would normally require specialized training or confidential information be provided to you, Texas courts hold that the employer has impliedly promised that training and information will be provided and may constitute the non-illusory consideration to make your non-compete agreement binding.
Because there is no requirement that the employer make an express promise defining what it considers to be “confidential”, you can be making an enforceable non-competition agreement restricting your future mobility with no idea what information will be shared, if any is shared at all. As a result, you should find it important to find out what specialized training and access to confidential knowledge the employer will provide.
The requirement for the non-compete agreement to be “ancillary to or part of” is satisfied if the consideration given is “reasonably related” to the business interest (which may be trade secrets, confidential information, or goodwill) being protected.
Non-competition covenants with unreasonable time limits, unreasonable geographical areas and/or unreasonable limitations on scope of activities are generally unenforceable particularly when the employee did not actually work in all areas covered by the covenant.
Finally a non-competition covenant will not be enforced as written if it provides greater protection than is necessary to protect the good will or other business interest of the employer and imposes an undue hardship on you.
What does all of this mean?
Recently, the Legislature and Courts in Texas have made non-competition agreements more enforceable in order to make Texas more attractive to businesses. Accordingly, Texas businesses will have comfort knowing that, when sharing confidential information with their employees, those employees will be bound by mutually agreed upon non-competition provisions. (Whether making non-competition agreements more enforceable will result in more businesses coming to Texas and generating tax revenues is yet to be seen, but certainly a business with many trade secrets and proprietary information would desire enforceable non-competition agreements to bind their employees.)
In order to incentivize businesses to truly compete, businesses must have the assurance they can share confidential information with their employees, and the information shared will not end up in the hands of a competitor.
The primary concern of an employee with a non-competition provision should be focused on the reasonableness of the restrictions upon the employee’s mobility after the employee is no longer employed.
I have attempted to discuss generally this area of the law which can be far more complicated depending on the individual facts.
Please be aware if, at any time, you are being requested to make an agreement concerning your employment which you believe will restrict your mobility, you should consult with an attorney qualified in this area.
If you have any questions, please call me at 214-696-9900.
– Paul W. Brown