Once you accept a job offer, employers usually provide you with a stack of paperwork to review and sign. During the excitement of starting a new job, employees don’t always take the time to understand the terms and conditions of their employment contract.
Most employers include non-solicitation clauses in their contracts, but employees rarely take the time to truly grasp what those clauses could mean for them in the future.
Before you sign your employment contract, be sure to read through the terms and conditions. If you don’t understand them, ask your employer to clarify or work with a contract attorney to explain your rights and responsibilities.
If you’ve already signed your contract and are considering a new job opportunity, you might wonder, Are non-solicitation agreements enforceable in Texas? Non-solicitation agreements can be enforceable in Texas, depending on the circumstances and facts involved.
What Is a Non-Solicitation Provision?
In Texas, businesses often use legal clauses to protect their company interests, such as trade secrets and client relationships. The clauses they insert in contracts restrict or limit what employees can and can’t do and how they share business information. These are “restrictive covenants.” One common restrictive covenant is a non-solicitation provision.
Non-solicitation clauses are designed to prevent employees from leaving the company and taking clients with them when they leave. They can also prevent an employee from soliciting other current employees to leave and start a new company.
Non-solicitation agreements also outline the geographical scope and duration of the limitation. These clauses are often used in conjunction with non-compete agreements.
Are Non-Solicitation Clauses Enforceable?
Non-solicitation clauses are enforceable in Texas. Each contract and non-solicitation clause differs, and enforceability depends on the circumstances involved. Under Texas law, the enforceability of non-solicitation clauses is similar to non-compete agreements. Therefore, the criteria for a valid non-compete agreement applies to a non-solicitation agreement. To be enforceable, a non-solicitation clause must be:
- Ancillary to or part of an otherwise enforceable agreement;
- Supported by consideration (something of value);
- Reasonable in geographic scope, duration, and extent of prohibited activity; and
- Justified as a way to protect the employer’s legitimate business interests.
If the non-solicitation provision meets these requirements, the court will likely enforce it.
Case law addresses the reasonableness of a non-solicitation or non-compete agreement’s scope, duration, and geography. The analysis is fact-specific and addressed on a case-by-case basis.
Non-solicitation clauses should also be drafted clearly and carefully to ensure enforcement. Courts can consider the specificity of the language used in the agreement, the circumstances under which it was signed, whether the language is unambiguous, and whether both parties entered it willingly.
Courts are less likely to enforce non-solicitation agreements that are overly broad or unreasonably restrict the employee’s ability to pursue their career of choice. The court can also modify or nullify the agreement.
Consequences for Breach of Non-Solicitation Clause
If you breach a non-solicitation clause, your employer may take legal action against you. Before taking legal action, an employee in breach may receive a demand letter from the former employer demanding that they cease all activities in breach of the agreement. The letters often include a deadline by which the employee must confirm they will stop any further activities violating the non-solicitation clause.
The purpose of the demand letter is to stop the former employee from soliciting the employer’s clients or employees without resorting to litigation. It is not a legally binding letter, but it can encourage the employee to stop what they are doing if they know litigation could be the next step.
If the employee doesn’t cease their actions, the employer may file a lawsuit against them. The most commonly sought relief for a breach of a non-solicitation agreement is an injunction. Your former employer asks the court to enforce the non-solicitation agreement by requiring you to stop soliciting or poaching their clients.
In addition to injunctive relief, a former employer may seek:
- Compensatory damages—compensation for lost profits due to the breach, which requires showing there was an actual loss;
- Punitive damages—damages for malicious conduct, which requires strong evidence that the employee acted maliciously; and
- Liquidated damages—some non-solicitation agreements will specify a certain amount of damages the employer can recover if they prove you breached the agreement.
Attorneys fees are not typically awarded for breach of non-solicitation agreements.
After reviewing your case, a contract attorney can help you understand what consequences you might face for breaching a non-solicitation agreement.
Should You Sign a Non-Solicitation Agreement?
Determining if you should sign a non-solicitation agreement depends on the language of the clause and if you think it could keep you from working in your current industry. Always consider your ability to make a living and if the contractual provisions would prevent you from doing so.
If you are having difficulty understanding the language of a non-solicitation clause or its implications for your particular situation, consider seeking legal advice.
Additionally, don’t feel pressured to sign immediately or sign it as is. You can take time to review it, get advice, and even negotiate the terms with your employer.
Massingill Can Help You Understand Non-Solicitation Clauses
Whether you are just about to sign a contract or you’ve already done so, let an experienced contract attorney review it with you. By working with an attorney, they can help protect your rights during and after your time of employment.
Massingill can review your contract, negotiate better terms, and advise you on defending against non-solicitation provisions. Our attorneys have extensive experience drafting, negotiating, and enforcing employment contracts and their various provisions. As a small Texas law firm, we can provide each client with individualized attention.
Our firm has received nearly 200 five-star reviews from satisfied clients for our superior service. We pride ourselves on fighting for your rights to work freely and earn a living. Contact Massingill today to learn how we can help with your non-solicitation agreement.
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Joshua Massingill
Joshua Massingill is an attorney practicing in Austin, Texas. He serves on the Texas State Bar’s Law Practice Management Committee, the Leander Educational Excellence Foundation (LEEF) Board of Directors, and the Success-Werx Board of Advisors. He mentors young entrepreneurs in Leander ISD’s INCubatorEDU program and is active in his church.
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