Drafting Valid Texas Non-Compete Agreements

Although Texas courts will uphold valid non-compete agreements, they expect these documents to contain clear and reasonable terms. In addition, Texas employers can only execute these types of ancillary agreements when they’re directly related to a main document like a valid employment contract.

Companies that ask workers to sign these agreements must also make sure they’re offering proper “consideration” to each employee. Simply providing someone with continued employment will not be considered adequate. The employer must be offering such valid “consideration” as a definite plan to share highly valuable “trade secrets” or unique, proprietary information with each employee required to sign a non-compete agreement.

Basic terminology regarding these agreements

Covenants not to compete are also sometimes referred to as non-compete agreements or “non-solicit” agreements. That latter term refers to the departing employee’s promise not to solicit any of the former employer’s customers until after a set time period noted in the agreement has ended.

In some cases, the shared information might just be limited to the the names and addresses of the employer’s current customers. Of course, the validity of all terms set forth in a non-compete agreement may one day be subject to a court’s interpretation.

What follows is a closer look at the terms and definitions governing Texas non-compete agreements. They’re set forth in Section 15.50 (and following) of the Texas Business and Commerce Code. Stated succinctly, non-compete agreements must set forth reasonable time limitations, detail the scope of activities to be restrained – and describe the geographical area to be covered. This article concludes with a discussion of how you and your Houston employment law attorney should respond if you learn that a former employee has violated his/her covenant not to compete.

A reasonable limitation on the geographical area you seek to control

Stated simply, your agreement will probably be viewed as valid by a court if it only restricts the former employee from competing against you (or working for a competitor of yours) within the same basic geographical area where s/he worked while still employed by you. While a broader area might be considered legitimate, you might have to justify that to a court one day, based on unique aspects of your business industry or other similar issues.

Courts often frown upon these types of covenants when they’re overly broad. The law favors free trade and competition unless a greater employer right (or threat to employer interests) can be clearly established.

A reasonable time period is referenced for restricting the former employee’s activities

Although there don’t seem to be any legal experts willing to name a specific time period you should choose, the consensus appears to be that you shouldn’t make this part of the covenant unduly burdensome.

Speaking in very general terms, if you name a time period much longer than one or two years, (directly dependent on the nature of your company’s work), your lawyer may have to justify that longer time period in court. After all, people are entitled to move on with their lives, regardless of whether you fired them — or they simply wanted to do something new in their work lives.

The scope of the activities being restricted must be fair and reasonable

You normally cannot completely restrict a departing employee’s best options for finding new work. For example, assume an employee has worked exclusively in the computer field for all his or her life, up until leaving your firm. A court would probably consider it overly burdensome if your non-compete agreement forbids that person from accepting or soliciting all types of work in that very broad field.

However, if that employee provided you with highly specific work in a unique sub-field of computer science, you might be able place a restriction on that type of work for a relatively short period of time. Reasonableness is crucial.

What can you do if you discover a former employee is violating a non-compete agreement?

      A. When the questionable behavior does not raise an urgent concern

If that former employee signed what you believe is an enforceable covenant not to compete, you can ask your Houston employment law attorney to take one or more actions on your behalf. However, if the need to stop the past employee from further infringing your rights is not immediate, your lawyer can start by sending the former employee a letter, reminding him/her of the agreement and of your belief that s/he is likely violating it and must stop doing so.

Should you again learn that the former employee is still violating your agreement, you can also contact that individual’s employer and state your concerns, noting the earlier letter sent by your attorney.  If the infringing activity continues, you can file a lawsuit. (Employers are often tipped off about such questionable behavior by current, loyal customers who’ve been recently contacted by the former employee.)

     B. When the wrongful behavior could cause immediate damage to your company

If you believe that you’re about to suffer irreparable harm due to the former employee’s current use of your company’s “trade secrets” or contact with your customers, your lawyer can ask a court to issue an injunction. If granted, this should put an immediate stop to the alleged, illegal activities.

Should the judge decide that the current threat posed to your company is highly significant, s/he can even grant a temporary restraining order (TRO) that prohibits the former employee from doing anything further that could violate the agreement until a first hearing can be held. Anyone who ignores a TRO (or violates one) can be treated as being in contempt of court. That person can then be punished with a fine, some form of imprisonment – or even possibly both.

Conclusion

Always remember that Texas courts demand that all terms in your non-compete agreement be reasonable. Former employees do have a right to move on with their lives and find new opportunities to support themselves that do not directly interfere with your business or its current viability.

Our Murray Lobb attorneys welcome requests for legal advice about covenants not to compete and other employment law issues. We’re also fully equipped to address most corporate and business law matters, as well as your estate planning needs. Please feel free to contact us if you ever need us to draft any contracts or other documents required by your business.

Key Estate Planning Advice for the Terminally Ill

Nearly everyone expects to live to their full life expectancy. However, as we grow older, we begin to see many friends and loved ones die early due to cancer, heart disease or various tragic, unexpected events. For this reason, every adult should create an estate plan and remain ready to modify it once a terminal illness or tragedy suddenly unfolds.

After all, our family members, friends and favorite charities depend on us to maximize the gifts we make through our Wills, trusts and other testamentary devices.

To get ready for this process, you should first make a list of all your current assets (and their values) and then schedule an appointment with your Houston estate planning attorney. When you meet, your lawyer can explain the choices you’ll need to make that can simplify the process, while also decreasing the tax burdens on your heirs and other beneficiaries.

Here’s a look at some of the ways that terminally ill people – or those aware that the end of life is fast approaching – can adjust their estate plans to maximize the final gifts they can give to all those they wish to help.

Specific steps for the terminally ill to consider while updating or creating an estate plan

  • Decide if you should set up a revocable trust. This can help greatly reduce all the tasks the appointed executor must handle — and can lessen the chances that any of your estate will have to pass through the probate process.
  • If you’re a parent or grandparent, consider creating a private annuity. This will allow you to transfer substantial assets to your loved ones while retaining a lifetime annuity. If you do not live to your expected lifetime expectancy, as set forth in actuarial tables maintained by the IRS, most (or all) of your assets may not be taxed.
  • Make sure you’ve fully used up all your current annual exclusions. As many taxpayers know, every American has the right to give $12,000 a year to multiple donees. And if your spouse agrees to all the gifts you’d like to make during the current tax year, you could give away a total of $288,000 — tax free. It’s also possible that other “leveraging” techniques involving family partnerships could greatly increase that amount.
  • Check to see if all your assets are titled properly (so your beneficiaries will reap the best tax benefits). Your lawyer can explain how this can help you obtain the full lifetime exemption from estate taxes. In some cases, it may be best if many assets (including the highly appreciated ones) are held in the name of the terminally ill spouse. When this is allowed, it can help minimize all the capital gain taxes that might otherwise accrue when various assets are sold after the terminally ill person passes away.
  • Review all the assets held in your 401k and other retirement accounts. This can also help you recall what you’ve already bequeathed to various beneficiaries. Be sure to bring all the updated information about these accounts to the meeting.
  • Create an update list of all named beneficiaries and their current addresses. Everyone will appreciate being able to receive your gifts as quickly as possible.
  • Consider placing a certain amount of cash in your checking or savings account so that your executor can easily pay your final expenses using that money.

If you’re the terminally ill patient, seriously consider asking your spouse, executor, other trusted family member or close friend to take part in this meeting with your attorney. This can help you avoid forgetting important assets and beneficiaries. It can also remind you to tell this trusted person where you currently keep all your real estate deeds, the passbooks for all your investment and saving accounts — and all your online account usernames and passwords.

While the information above isn’t intended to be fully comprehensive, it should provide you with an accurate idea of the types of matters you and your lawyer can handle during your upcoming appointment.

Finally, please be aware that your attorney may be able to arrange an initial, teleconferencing appointment if that will work best due to your serious illness. Finalized paperwork can then be signed within a short timeframe.

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Please feel free to contact your Murray Lobb attorneys for help with any of your estate planning or general business needs. We try to remain available to provide you with prompt legal advice and the various contracts and other documents that help keep your business running.

Employees Deserve a Workplace Free of Politics, Discrimination & Harassment

Most Americans are aware that many people now publicly share strong political opinions that can hurt or insult others. While we each can decide how to handle this problem in our private lives, employers face far greater challenges. Their need and right to create a highly productive and politically neutral workplace must be carefully balanced against legitimate free speech concerns, applicable state laws and the governing provisions of the NLRA (National Labor Relations Act).

Carefully developing a company policy that protects the legal rights of all concerned takes considerable planning and input from experts. Should errors be made and employees sue their employers claiming a hostile work environment has developed, the courts will have to weigh the presented evidence and decide if any damages are owed.

Balancing the right to control worker productivity with First Amendment rights

Since employee free speech rights in most workplace settings are not absolute, political neutrality must be maintained and enforced in a highly consistent manner. Simple complaint procedures must be created and employees at all levels properly disciplined when actionable abuse has occurred. Courts may have to decide whether an office atmosphere became so severe that aggrieved employees not only had the right to sue – but should be awarded financial damages.

Here’s an overview of the key topics you must address in an office policy that seeks to maintain a workplace free of harassment and discrimination based on political views. Company owners should speak with their Houston employment law attorneys about how they can create this type of policy — while still paying proper legal respect to the rights of all parties concerned.

Key points to cover in an office policy designed to limit conflicts over political speech

  • Public and private employers. Your policy must clearly reflect whether your employees are working for a private employer or some type of public or government entity;
  • Abide by the NLRA. You must make it clear that any limitations you place on “political discussions” in the workplace are in full keeping with the language and intentions of the National Labor Relations Act (NLRA). After all, there are instances both during and after work hours when some employees may have a legally protected right to discuss certain aspects of their jobs with their co-workers;
  • All employees must be covered by the policy. Indicate that all supervisory personnel will also be required to greatly limit their own discussions or expression of questionable free speech topics related to politics;
  • Provide time for discussion of the policy. This might occur during all future new employee orientation programs – or when privately meeting with each new worker in your human resource manager’s office. It would be wise to consider having each current or new employee sign a form indicating they’ve been given a chance to read over the policy and ask questions about it. Be prepared to explain that the wearing of certain types of political buttons and T-shirts at work will not be allowed;
  • Make it clear that you will respect employee needs for time to vote. You can encourage workers who won’t have time to stand in lines before or after their work hours to tell you in advance of their needs (if certain positions must be covered in their absence). However, you should try and remain as flexible as possible regarding this type of request;
  • Indicate your awareness that some employees may choose to run for public office. Should this occur, privately ask any such employee to avoid discussing a run for any non-union office during work time. However, you should acknowledge your full awareness of the person’s right to pursue this type of activity on their own time;
  • Consider revamping your overall policy against workplace harassment and discrimination. You might want to ask your lawyer to either redraft this type of policy or carefully add new provisions to it that clearly forbid workplace harassment, discrimination or retaliation based on any worker’s real (or imagined) political affiliations. This approach might help you avoid the false impression that you are attempting to place a “chill” on employee free speech rights – when you’re simply trying to extend new protections you believe are owed to all workers.

While this list is not intended to be comprehensive, it should provide you with a better idea of how important it is for you and your entire workforce to have a policy in place that addresses these crucial topics. We all deserve to work in an office that’s as politically neutral as possible so we can do our best work.

Our Murray Lobb attorneys are available to help you draft policies like this one — or any of the many contracts and other documents you need to daily run your business. We’re also available to provide legal advice on many general business, employment law or estate planning topics.

CARES Act – Government Economic Relief Package for Businesses

Last week the United States Government passed what is known as the CARES Act to provide economic relief to businesses (including sole proprietorships!) impacted by COVID-19.  There are a few different avenues and programs to receive help under the CARES Act, one of which is the Paycheck Protection Program (PPP).  The Paycheck Protection Program is specifically designed to help small businesses keep their workforce employed. Visit SBA.gov/Coronavirus for more information on the Paycheck Protection Program and the other available avenues and programs for assistance.

The new PPP loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020. 

 Loan Terms & Conditions

  • Eligible businesses: All businesses, including non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries.
  • Eligible Purposes: payroll, rent, mortgage interest or utilities.
  • Maximum loan amount up to $10 million
  • Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses eligible purposes in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)
  • All loans under this program will have the following identical features:
    • Interest rate of 0.5%
    • Maturity of 2 years
    • First payment deferred for six months
    • 100% guarantee by SBA
    • No collateral
    • No personal guarantees
    • No borrower or lender fees payable to SBA

Murray | Lobb has contacts with multiple lending institutions who are already approved SBA lending processors and can help you navigate the process.  Give us a call at 281-488-0630 or email sgriffin@murray-lobb.com and we will be happy to provide you with these contacts.