It’s important to carefully tailor noncompete agreements, also known as covenants not to compete. Employers can prohibit employees from poaching customers, but it’s essential to have an attorney help you craft a covenant that will prevail in court.
Recent case: Page Vogelsang worked as an accountant for Gallagher Healthcare Services and had signed a covenant not to compete. She promised not to take any clients with her if she had worked with them in the two years immediately before her departure from Gallagher—and not to work with those clients until another two years had passed.
When she left and took clients with her anyway, Gallagher sued.
The court ruled that the agreement was valid because it was reasonable in scope—it didn’t bar Vogelsang from practicing accountancy, just from working with former clients. The court said that was an appropriate balancing of an employer’s right to benefit from its client development efforts and a former employee’s right to practice her profession. (Gallagher v. Vogelsang, No. 01-07-00478, Court of Appeals for the First District of Texas, 2009)
Final notes: Crafting a Texas covenant not to compete isn’t a do-it-yourself project. Texas law on this issue has changed over the past few years, and now courts are much more willing to enforce covenants than they were before.
Still, there are all sorts of pitfalls that can invalidate the agreement. For example, to be valid, such covenants must include at least an implied promise by the employer to provide confidential information, and the employer must actually provide that information. Plus, what is a reasonable agreement depends on the industry and the profession involved.
Get expert help from an attorney who has drafted successful agreements for Texas employers. Otherwise, you may end up spending thousands on litigation and gain nothing from the covenant.
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