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Noncompete pacts in Texas: New ruling brings clarity … and questions

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in Employee Benefits Program,Employment Law,Hiring,Human Resources

by Scott A. Brutocao, Ogletree Deakins, Austin

Last October, the Texas Supreme Court ruled employers may require new and existing employees to sign covenants not to compete, even if they are “at will” employees. As long as the employees get something in return for agreeing to the restrictions their employers want, the agreements are legal.

The conventional thinking among the courts about noncompete covenants is shaped by the following logic:

  1. Covenants not to compete depend on the employers providing employees the kind of confidential information about clients, markets, business processes and so forth that an employee might need to be effective on the job—and that the employee could use after leaving the employer.
  2. Such confidential information benefits employees. The employer provides it as “the something in return” for the employee’s promise not to compete.

Before the Texas Supreme Court ruled, a contra...(register to read more)

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