Haynes and Boone's Newsroom
Employee Benefit Plan Review Guest Article: Noncompete Agreements in the Employment Context
Dean J. Schaner, Katie Chatterton, Meghaan C. McElroy
Here we go again! For the third time in less than six years, the Texas Supreme Court has repudiated technical legal niceties and has adopted broad proemployer principles to support the enforcement of noncompetition agreements in Texas. Eschewing footnotes and dicta from a prior opinion issued in 1994, the court reasoned that an employer's grant of stock options to an executive employee constituted sufficient consideration to support the enforcement of a nonsolicitation of customers provision (in an employee agreement) against a former executive when he jumped ship to work for a competitor. The Marsh decision essentially demonstrates that confidential/trade secret information and specialized training are not the exclusive forms of employer-generated consideration necessary to enforce noncompetition and nonsolicitation of customer restrictions in Texas. And, in turn, the practical takeaway is that employers will find it far easier to enforce noncompetition/nonsolicitation agreements under Texas law.
Excerpt from Employee Benefit Plan Review, Nov. 29, 2011. Online link unavailable.