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In reviewing hundreds of non-compete agreements a year, sometimes I have to break the news to business owners that their non-compete agreements are not going to hold up in court and need to be rewritten. Typically, those agreements were drafted by the owners themselves, are outdated, or are taken from another jurisdiction, where the non-compete rules are different from Texas. So, what are the top five mistakes I see with such agreements that make them unenforceable? A non-compete agreement that is missing a geographic restriction (i.e. “within state of Texas,” “within counties where the employer operates,” “within an X-mile radius,”…
In recent years, it has become quite common for surgeons to become part owners of free-standing ambulatory surgery centers in Texas. Often, their purchase of the ownership comes with the strings attached – a requirement that they perform a certain number of surgeries at that particular ACS and that they do not compete with the ACS within a certain geographic radius. Earlier this year, a Texas surgeon challenged his non-compete with an ACS where he was a part owner after his ownership proved not to be as profitable as he had expected. The basis for his challenge was that the…
In most states, non-compete agreements are enforceable in some shape or form, and many states enforce non-compete agreements regardless of whether an employee quit or was fired. See here. Therefore, rather than assume that their non-compete agreements are not enforceable, departing employees should take the following steps to mitigate the risk of getting sued for violating their post-employment obligations: Return all company property back to the former employer; Do not take any company documents, emails, or other information; Do not erase company devices prior to returning them; Do not solicit customers or co-employees to leave the employer; Do not…
All jokes aside, while getting out of non-compete restraints is not always possible, some of the most common ways that employees – and employers that want to hire them – can overcome such agreements include the following: Employee was not provided the necessary “consideration” in return for the promise not to compete; The restraints are patently unreasonable in time, geographic area, or scope; There is no legitimate business interest in requiring an employee to sign a non-compete agreement; The agreement has expired; The agreement is too ambiguous to be enforceable; The agreement is missing a key term, making it unenforceable;…
I recently came across an article published by a consulting company advising medical practices that “as a rule of thumb” physician non-compete agreements should not extend beyond a five-mile radius.  Not only is this information wrong, but it also fails to acknowledge the differences between how various states treat physician non-compete agreements. First of all, courts around the country have consistently found physician non-compete agreements with a radius of 15 to 75 miles to be reasonable where such restrictions were justified by a legitimate business interest. For example, in Missouri, courts have held that: (1) a five-year restriction within a…
Mandatory employee vaccinations are not a new topic in the area of employment law.  Over the years, through employees’ challenges to mandatory flu vaccines, a body of law emerged addressing whether an employer can terminate an employee for refusing to vaccinate. As a general rule, an employer can terminate employees for refusing to vaccinate. The two exceptions to that rule are: (1) disability and (2) religion. In those circumstances where an employee rejects the mandatory vaccine on one of these grounds, the employer must go through an interactive process to determine if the employee’s religion or disability can be reasonably…
Whether a medical practice can bind a physician with a non-compete agreement depends on where the medical practice is located and which state’s law governs the contract. Some states – California, Oklahoma, Alabama, North Dakota, Massachusetts, and Rhode Island – either prohibit all employment non-compete agreements or physician employment non-competes specifically. Prohibitions on physician non-competes in some of these states are relatively new and apply only to the employment agreements executed after the new laws came into effect. For example, the Massachusetts’s statute prohibiting physician non-compete clauses went into effect on October 1, 2018. Thus, it does not apply to…
The answer depends on which state the employee is in, as each state has its own laws regarding the enforceability of non-compete agreements. In a minority of states, an employee’s reason for termination of employment makes no difference as to whether his or her non-competition agreement is enforceable.  For example, in Texas or Georgia, it does not matter if the employee quits, is laid off, or fired “for cause” – the non-compete agreement is likely to remain enforceable as long as it is reasonable and meets other criteria.  In a few states, like California or Oklahoma, the reason for termination…
In January, the Fifth Circuit Court of Appeals ruled that the conditional certification step in collective actions brought under the Fair Labor Standards Act (FLSA) is not required. The ruling is significant because it expressly rejects the “near universal” practice employed by trial courts around the country and adopts an approach that will allow employers in Texas, Mississippi, and Louisiana to determine early on in FLSA lawsuits which of their employees will receive notice of litigation and be allowed to participate. The Typical Conditional Certification Process The FLSA allows employees to bring a collective action lawsuits against their employer for…
States around the country vary in how they approach the enforcement of unreasonable non-compete agreements. While the majority of states allow their courts to “blue pencil” or rewrite restrictive covenants to make them reasonable, three states do not permit such reformation, and four states have no clear legal guidance on whether blue-penciling is permitted, leaving employers in limbo. However, even in those states where the courts routinely blue-pencil non-compete agreements, employers should not rely on that procedure for several reasons: Blue-penciling is expensive as it can only be done after a lawsuit is filed; Blue-penciling is unpredictable because it is…