Wednesday, February 24, 2010

Non – Competes are alive and well in Texas!

Read the label before consuming employment in the state of TEXAS! Recent Texas Supreme Court rulings may require new laws requiring hazardous employment to be conspicuously labeled!

Attorney General's Warning: Accepting this job may be hazardous to your career!

And you thought all you needed to work in Texas was a shingle to announce your profession and a shotgun to keep varmints off your land; well think again! In the beautiful and once free nation of Texas courts were hesitant to enforce non-compete agreements against employees and allowed them the constitutional right to the "pursuit of happiness." But what was once a safe haven promoting a free market and safe society has now become just another territory controlled by the Borg!(1)

Texas law has taken a paradigm shift relative to giving employers the edge they need to forcing you out of your chosen field and waiting in the unemployment line; in many cases for years! You were relatively safe in the cowboy nation until 1989 when the Texas legislature passed the "Covenants Not to Compete Act." From 1989 to 1994 the battle ensued. It was in 1994 that employers learned that the letter of the law must be followed to enforce such covenants (2) Texas was a place for families to come and enjoy good employment without the fear of becoming "un-employable" in what would be a communistic landscape.

In Three small sections of the Texas Business and Commerce Code one can find the basis for which your new and excited employer will later come back and haunt you like the plague of death. The 3 sections that deal with the "Covenants Not to Compete" are:



  • § 15.53 PREEMPTION OF OTHER LAW! (3)
These 869 words and a few assorted symbols are what lie between you and good employment in the future!What is important is that there are several components to an enforceable non-compete agreement they are: (4)
  • State and Federal Jury Trials
  • Be ancillary to or part of otherwise enforceable agreement at the time the agreement is made;
  • Protect a legitimate business interest;
  • Contain reasonable limitations as to the scope of activity to be restrained;
  • Contain reasonable geographical limitations; and
  • Contain reasonable durational limitations.
It appears that after the "Covenants Not to Compete Act" was legislated that it remained relatively unchanged. Section 15.52 was added later in 1993 but it has been a "well talked about urban legend" that you have the right to work in Texas and that non-competes didn't hold much H2O, certainly not quality H2O at that. I have had bosses tell me, "Oh don't worry about this it is just part of our protocol." Well Texas courts may not be crazy about enforcing non-competes but there have been some changes that give pretty sharp TEETH to these agreements and a lot has been written and blogged about since these changes.

Major Change #1 – The case of: Alex Sheshunoff Mgt. Servs., LP v. Johnson, 209 S.W.3d 644 (Tex. 2006). The court decided that the original interpretation of Light (5) was not complete. What once required "at the time the agreement was made" to merely requiring that the company performs sometime in the future.

"We now conclude, contrary to Light, that the covenant need only be "ancillary to or part of" the agreement at the time the agreement is made. Accordingly, a unilateral contract formed when the employer performs a promise that was illusory when made can satisfy the requirements of the Act." – Supreme Court of Texas

Major Change #2 – The case of: Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 52 Tex. Sup. J. 616 (Tex. April 17, 2009). The court broadened the use of the non-compete to cover not only a specific promise of consideration (confidential or proprietary information) but also an implied promise of consideration. Making it much easier to enforce a covenant of non-compete in Texas; thereby removing many of the hurdles that once stood in the way of your previous employer from denying you the right to pursue employment in your chosen field. And for many of us that means the career which we have dedicated the majority of our adult lives to.

So in short non-compete covenants must be 1) Ancillary and 2) Reasonable. Well as things have changed it is now becoming necessary for all good pirates of digital printing to have an attorney on retainer! It also appears that you shouldn't leave your career and enjoyable future up to just any attorney.

It seems prudent that only a Board Certified by the Texas Board of Legal specialization in Labor and Employment law will do now that the cat is out of the bag so to speak. Or in pirates terms the "parrot is out of the treasure chest."

I did a good amount of reading on the subject of non-compete covenants and found some notable resources and potential advisors. One blog that I ran into that seemed quite authoritative was:  by Robert Wood (6).

When I went to the Texas Board of Legal Specialization's website (7) I found roughly 576 listings of attorneys that are "Board Certified" in Texas to specialize in Labor and Employment. You can go to their website to see if an attorney you are considering is board certified to get you back to the road of paradise and put your "parrot back in the treasure chest."

So as you look for a "den of thieves" to call your own, please remember to always have a qualified attorney look at your employment documents before executing them! Or it may be you they are executing after the termination of your employment!

"Employees who are presented with a non-competition agreement should carefully consider the impact that the covenant may have upon their future employment in the event that the employment is later terminated.  …  Thus, any employee who is presented with a non-competition agreement would be well advised to have it carefully reviewed by an attorney prior to execution." – Betty Brown attorney at law

I will say one thing; I like to consider myself "a valuable asset" to any organization that is involved with the printing and publishing industry. And I am sure that those that read this blog are as well! I would ask you to carefully consider and always challenge any and all "agreements" that are presented to you in regards to your employment. I never would have guessed that the innocent little stack of paper that precedes your employment could ruin your opportunities after your employment.

If "we" all whom are highly sought out by our competitors refuse to go along with overly broad, unduly long and unfair agreements that the industry will come around and start to quit trying to force those whom they so desire out of the business.

I have spent my life in this industry of printing and I have spent thousands of dollars in my education and tens of thousands of hours keeping up with the technology changes over the last 20 years. When I walk into a company I bring value, when I leave I should be allowed to continue my quest in this industry.

None of the hardware providers that I have worked for: Konica Minolta, Datamax, nor Ikon have so greatly impacted my knowledge or offered (such valuable consideration) with their "top secret, proprietary, confidential and otherwise considered trade secrets" that I should be banned from working in this business. In fact all of the hardware companies that I worked for were greatly impacted by the "knowledge, training and other valuable contributions that I left with them" that they are better because of it.

I was involved with Printing a decade and a half before even running across them, and was involved with Digital Printing almost a decade before any of them got involved with it. I will say that Konica Minolta and Datamax (whom both I signed a non-compete) never gave me any hard time and with the application of a bit of professionalism and integrity I never heard a word from them and still continued to work in the same city selling hardware. Only time will tell if Ikon is as reputable.

In light of this information remember ONE simple thing. Pirate Mike is in fact a PIRATE involved with selling digital printing equipment - NOT an attorney! I am not responsible nor obligated to find you "healthy" employment and in no way should my opinions be construed as a contract to give you advice or encumber me in any way either in this lovely state of TEXAS or anywhere that good quality H2O can be found! Even though I may have certain implications in some countries that do not allow employment I certainly do not have any in countries that do!

So what does all that mean?

No information in this article is intended to constitute legal advice. For specific legal advice, please contact an attorney. Thank you!
This is just the uneducated opinion of a pirate that sells digital printing.

1. CBS Studios, "The Borg – Video Documentary", 2006,
2. Light v. Cental Cellular Co. of Texas, 883 S.W.2d 642 (Tex. 1994).
5. Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642, 644–45 (Tex. 1994).
6. Wood, Robert 2010, K&L Gates LLP
7. Texas Board of Legal Specialization

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