Exploring Non-Compete Clauses in Dallas: What Employers Need to Know
Are you an employer in Dallas, Texas looking for legal advice on non-compete clauses3 min read
Are you an employer in Dallas, Texas looking for legal advice on non-compete clauses? If so, you’ve come to the right place. Understanding the ins-and-outs of state and local laws are key when it comes to protecting yourself from legal issues down the road. Noncompete clauses are an important component of any business, but to ensure they are effective, employers must understand the legality of their use before implementing them.
Non-compete clauses, often referred to as restrictive covenants, are contractual provisions not allowing an employee to carry out specific activities or enter into similar positions or contracts with rival organizations. Generally, they provide an employer with a means to protect proprietary information and valuable assets in the event that an employee resigns or is terminated. Additionally, these clauses are sometimes used as a means of bringing employees to market by capitalizing on the knowledge, skills, and resources they’ve learned while employed.
In Texas, non-compete clauses are governed by the state legislature, meaning that employers may only use these legally. Generally, the law defines an appropriate clause as the material and information that have been made known to an employee as part of their employment that is confidential and unique to the company, regardless of whether the employee is leaving or staying. However, the clause cannot interfere with the former employee’s ability to make an income, apply for new positions, or carry out duties that are similar to those of their previous job. Ultimately, non-compete clauses are considered enforceable if they protect more than just a “generalized interest”, i.e. a trade secret, proprietary information, or a specialized skill that the employee has been trained in and that an employer wants to protect.
When looking to implement a non-compete clause, what should employers look out for? First, it must be shown that the clause was necessary in order to protect the employer’s trade secrets or unique information. The clause should be tailored to the services provided by the employee, as in order for the clause to be legally enforceable, the court must find it to be reasonable in both scope and duration. Furthermore, any limitations or financial damages the employee may incur must be a result of the breach of the clause and not of the departure itself.
Additionally, employers should be aware that each state’s legislature may determine the enforceability of non-compete clauses. This means that a clause considered valid in one may not be valid in another. In the case of Texas, the state legislature has determined that any employee subject to a non-compete must be disclosed prior to the employee’s acceptance of the job offer. Anything outside of this ruling may be considered invalid or unenforceable in Texas’s courts.
Finally, it is important to consider other local laws or regulations before implementing a non-compete clause in Dallas. For instance, the City of Dallas Charitable Institutional Solicitation Act, established in 2009, requires any company performing charitable solicitation must register with the city and submit disclosure information. Non-compete clauses are also subject to this, as it is considered charitable solicitation when it directly involves funds or services to support an organization or charitable fund- raising activity.
When considering non-compete clauses, protection of trade secrets, unique information, or specialized skills are key, as is understanding both state and local regulations. By using the information provided here, employers in Dallas, Texas can ensure they are in compliance with both state and local laws while protecting their business’ security and financial interest.
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