Craft noncompete agreements to protect your business interests


Employers often require key employees to sign noncompete agreements ensuring that the employee will not use information or customer contacts gained during the course of employment to benefit a competitor. In return, the employer offers the employee “consideration”—maybe extra pay or, more commonly, access to the protected information, which enables the employee to succeed on the job. Each state has a unique set of laws governing noncompete agreements.

Texas court issues injunction preventing customer poaching

A federal court in Texas has issued an injunction preventing a former salesperson for a plastics company from soliciting customers on behalf of his new employer. The competitor had hired the employee despite a nondisclosure and nonsolicitation agreement he had signed.

Federal court edits noncompete pact

A federal court in Minnesota has invoked Texas law to rewrite a noncompete agreement that it decided was too broad.

Failure to renew contract can be basis for lawsuit

Some employers mistakenly believe that if they offer annual contracts, they can’t be sued for not renewing a contract. That’s just not true if the former employee can prove she wasn’t rehired for a discriminatory reason.

Unspecified commission? Jury decides who to believe

For jobs based on written employment contracts, what the agreement says typically governs all the terms and conditions of employment. If something is unclear or unstated, what the parties do later likely will influence eventual judicial interpretation.

Court: Employee who agrees to arbitration must stick to it

The Court of Appeal of California has reversed a lower court order denying arbitration and ordered the case into arbitration instead.

Broad arb clause can cover bias, retaliation, too

A federal court considering whether a broad arbitration clause included in an employment contract bars discrimination and retaliation claims has concluded it does. That’s good news if you use employment contracts and want to push any subsequent employment-related claims into arbitration.

How should we handle news that employee previously signed a noncompete agreement?

Q. We received a letter from a competitor informing us that our new employee used to work for them and is now in violation of noncompetition agreement with the competitor. What should we do?

Suit filed? Arbitration pact may still work

Employers use arbitration agreements to keep employment-related litigation out of the courts. But what if you don’t have an arbitration agreement in place when former employees file a wage-and-hour class action lawsuit against your company? Can you suddenly spring an arbitration agreement on current employees and expect it to work? Surprisingly, yes, according to the 8th Circuit Court of Appeals.

These rules make arbitration agreements stick

There’s no point in using arbitration agreements if they’re not enforceable. Make sure yours will hold up in court by following these rules.

Court upholds arbitration despite language barrier

A California Court of Appeal has upheld an arbitration agreement written in English and signed by employees with limited language ability.

Use a last-chance agreement to salvage employee, avoid lawsuit


Sometimes, a marginal worker shows promise and immediate termination isn’t warranted. Plus, you’re concerned that a lawsuit may follow the firing. In such cases, consider drafting a last-chance agreement (LCA) for the employee. Think of it as hitting the reset button. Here's what to include in an LCA, pluse a sample LCA you can adopt for your workplace ...

In Texas, decisions raise bar on waiver of arbitration agreements

Two recent decisions from the Supreme Court of Texas and the 5th Circuit Court of Appeals are reminders that, under Texas law, it is difficult for employers to waive arbitration agreements.

EEOC loses case based on 'illegal' claims releases

The EEOC has lost an important test of a novel theory that could have changed how some severance agreements are structured. It wanted to forbid requiring workers to waive the right to sue if they were converted from employees to independent contractors.

Can we require owner-employees of a business we're buying to sign noncompete agreements?

Q. My company is in the process of purchasing a small printing business, and we plan to retain several of the owner-employees of the acquired business. As a part of the purchase-and-sale agreement, we would like to take steps to protect our customer base by restricting the competitive activities of the owner-employees for five years. Additionally, we are interested in restricting the activities of an employee who is not a party to the transaction, but is married to one of the owners of the business. May we do so? What are some basics about noncompete agreements?
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