Businesses in Texas need to be able to protect their company interests, including trade secrets and carefully built relationships with customers and clients. Accordingly, many businesses seek to include certain restrictions in employment contracts that limit what employees can do and how they can share information from the business. These are known as “restrictive covenants.” One common type of restrictive covenant is the non-solicitation agreement, which is designed to prevent an employee from leaving the business and taking clients or customers with them when they leave. If you own a business in Texas, it is important to understand what a non-solicitation agreement or clause entails, when it can be enforced, and whether you should include one in employment contracts. Our Frisco employment lawyers can assist you with any questions you have about these agreements.
Non-Solicitation Agreements Limit an Employee’s Actions After Leaving
What is a non-solicitation agreement? As we noted above, a non-solicitation agreement or clause is a type of restrictive covenant that limits certain actions an employee can take if they leave your company. Other types of restrictive covenants include non-compete agreements and non-disclosure agreements (NDAs). More specifically, this agreement is designed to prevent an employee from soliciting the clients or customers of your business if their employment relationship with your business ends. Non-solicitation agreements can also prevent an employee from soliciting other current employees at your business (such as to start a new company).
Since non-solicitation agreements are often part of employment contracts that include other terms, they may be known as non-solicitation clauses in those broader agreements.
Enforceability of a Non-Solicitation Agreement
In deciding whether to include a non-solicitation agreement in an employee’s contract, you are likely wondering if the agreement will be enforceable. Under Texas law, the enforceability of such an agreement is treated like the enforceability of a non-compete agreement.
According to the statute, a “covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.” That is a lot of legal jargon to say that if certain conditions are followed, non-solicitation agreements are enforceable. You should work with a lawyer in drafting the agreement to ensure that those enforceability conditions are met.
Should You Include a Non-Solicitation Agreement in Employment Contracts?
Non-solicitation agreements can be very helpful and are a useful tool for companies. In most circumstances, employers should include them.
You will want to be sure that any non-solicitation agreement complies with the statutory requirements for enforceability, meaning that the agreement is reasonable in terms of the limitations it places on the employee’s solicitation activities after leaving your company. You will want to consider the amount of time of non-solicitation, the geographic area, and the scope of the non-solicitation activity in thinking about reasonableness and what is necessary for protecting your company’s interests.
Contact an Employment Law Attorney in Frisco
If you have questions about non-solicitation agreements or other types of restrictive covenants, an experienced Frisco employment law attorney can help. Contact Simon Paschal PLLC for help with any type of restrictive covenant, or other employment law matters.
