Question 1

What Is a Non-Solicitation Agreement?

Accepted Answer

In Texas, businesses often use legal agreements to protect their company interests, such as trade secrets and client relationships. These agreements 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 agreement.

Non-solicitation agreements 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 agreements are often used in conjunction with non-compete agreements.

Question 2

Are Non-Solicitation Agreements Enforceable?

Accepted Answer

Non-solicitation agreements are enforceable in Texas, but their enforceability depends on the specific terms and circumstances of each case. Similar to non-compete agreements, non-solicitation agreements must meet certain criteria to be valid under Texas law. To be enforceable, a non-solicitation agreement must:

Be ancillary to or part of an otherwise enforceable agreement
Be supported by consideration (something of value)
Be reasonable in terms of geographic scope, duration, and the extent of prohibited activity
Be justified as a means of protecting the employer’s legitimate business interests
If the non-solicitation agreement meets these requirements, a court is more likely to enforce it.

Case law addresses the reasonableness of a non-solicitation agreement’s scope, duration, and geography. This analysis is fact-specific and determined on a case-by-case basis.

For a non-solicitation agreement to be enforceable, it must be drafted clearly and carefully. Courts will consider the specificity of the language used, the circumstances under which it was signed, whether the language is unambiguous, and whether both parties entered the agreement willingly.

Non-solicitation agreements that are overly broad or unreasonably restrict an employee’s ability to pursue their career may not be enforced. In some cases, a court may modify or nullify such an agreement.

Question 3

What Are the Consequences of Breaching a Non-Solicitation Agreement?

Accepted Answer

If you breach a non-solicitation agreement, your employer may take legal action against you. Before pursuing litigation, the employer may send a demand letter, requesting that you cease activities that violate the non-solicitation agreement. This letter typically includes a deadline for you to confirm that you will stop soliciting clients or employees.

While the demand letter is not legally binding, it serves as a warning to avoid legal action and encourages the employee to comply, knowing that litigation could follow if they don’t stop violating the agreement.

If you continue to breach the non-solicitation agreement after receiving the letter, your employer may file a lawsuit. The primary remedy sought for breaching a non-solicitation agreement is often an injunction—a court order requiring you to stop soliciting or hiring the employer’s clients or employees.

In addition to an injunction, a former employer may seek:

Compensatory damages—to recover lost profits caused by your breach, requiring proof of actual financial loss.
Punitive damages—to punish malicious conduct, which requires strong evidence that the breach was intentional and malicious.
Liquidated damages—some non-solicitation agreements specify predetermined amounts that the employer can recover if they prove the agreement was violated.
Typically, attorneys’ fees are not awarded for breaches of non-solicitation agreements unless specified in the contract.

If you are facing a potential breach of a non-solicitation agreement, consulting with an experienced contract attorney can help you understand the potential consequences and defend your case.

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