The requirement of the “otherwise enforceable agreement” simply means that both parties must have made binding commitments. In the 1990s and 2000s, the question of whether there was an “otherwise enforceable agreement” was the subject of much dispute. This was especially true when it came to an all-you-can-eat employee. Find out if your Texas non-compete clause is enforceable. Fill out the short form below or call 469-754-2812 for answers from attorney Robert Wood Employees have an employer-employee relationship. This means that the employer can control certain aspects of the employer`s work (e.g. B when the employee works or where he or she works). Therefore, independent contractors are self-employed for tax obligations. An enforceable non-compete obligation ensures that the employer exercises some control over the other persons for whom the independent contractor works. Also, where the independent contractor works. The existence of a non-competition obligation could therefore – depending on the specific facts of the employer-employee relationship – lead to the employee actually being classified as an employee for the purposes of tax and social benefits. The IRS, the Federal Department of Labor, and the Texas Workforce Commission each decide whether an employer-employee relationship exists using a multifactorial test, and the test used by each agency includes as a factor whether there is a non-compete obligation.

All three are of the view that a non-compete obligation generally indicates that the employer exercises control as an employee. This does not mean that the existence of a non-compete obligation necessarily makes the alleged independent contractor an employee. This is just one of the many factors that are taken into account. Sometimes there are important reasons why an independent contractor is legitimately limited by a non-compete clause. Employees at will can be fired at any time and for any reason (unless there is an illegal reason). Therefore, there is a widespread myth that because the employer makes no promise to employ the employee for a certain period of time, the employee cannot be bound to his or her mutual promise not to compete. However, in an all-you-can-eat employment relationship, consideration by an employer usually consists of confidential company information or specialized training, not the promise of a guaranteed period of employment. Therefore, the duty not to compete becomes enforceable once the employer provides services by giving the employee access to confidential information, specialized training, etc. A “balancing” of factors is usually done for the purpose of classifying an employee.

To be clear, just because an employee is ultimately classified as an independent contractor does not mean that he or she cannot enter into an enforceable obligation of non-competition. Even if a non-compete obligation is valid under Texas law, this does not mean that an employer enforcing the agreement will automatically prevail. An employee who is bound by a non-compete obligation may have different defenses. The impure hands of the employer, for example, can be a defense against injunctive legal protection. Or an employer seeking an injunction may not have suffered irreparable harm or have a reasonable remedy. The facts of each case must be carefully analyzed. The usual requirements for a valid non-compete obligation – that the non-compete undertaking is an ancillary agreement to an otherwise enforceable agreement and that the restrictions must be proportionate in scope – also apply to a non-compete obligation with an independent contractor. The agreement must also refer to the party that enforces the interests of the agreement that deserve this type of protection. This usually involves the protection of a trade secret, such as .B. a secret formula or a list of customers, or to prevent the party restricted by the non-compete obligation from recruiting customers who use their connection with the company of the party seeking a restriction through the non-compete obligation. The misconceptions listed above highlight some of the most common areas of confusion that employees and employers face when it comes to the applicability of non-compete obligations in Texas. Although the evolution of legal interpretations of the law by the courts in recent years has shed additional light, any dispute depends to a large extent on the exact wording contained in the non-compete obligation, the professional obligations of the employee and the employer`s company or industry as a whole.

Therefore, it`s best to consult a lawyer if you`re trying to enforce (or avoid enforcing obligations, not competing). A. Yes. I waste no time, and having made more than 1,000 competition tickets, I know the questions I have to ask, and I am good at analyzing a situation quickly. The comparison of the recent Washington law to the Texas law shows that the treatment of non-compete obligations varies greatly from state to state and highlights the importance of understanding the laws of the state in which you live (as an employee subject to a non-compete clause) and/or when you have corporate offices (as an employer that uses non-compete obligations). To protect the goodwill and confidential information of the company, a Texas employer may use a non-compete obligation. A non-compete obligation is enforceable in Texas if it is supported by valid consideration and is reasonable in terms of time, geographic scope, and activities to be restricted. In general, Texas law disapproves of contracts and agreements that restrict employee mobility.

The Texas Free Enterprise and Antitrust Act of 1983 states that “any contract, combination, or conspiracy to restrict trade or commerce is illegal.” Employers and employees should take this issue into account when deciding whether to sign a non-compete obligation. Washington`s new law shows the aversion of many courts and lawmakers to non-compete obligations and is an example of future states looking to adopt even stricter regulations for their use. In our next blog, we will discuss the specific rules that apply to doctors` non-compete obligations. In his concurring opinion in Marsh USA, Judge Willett warned judges not to be “divine when competition becomes unfair competition and when a restriction becomes an unreasonable or unnecessarily restrictive restriction.” Texas law, he said, “does not allow protectionism” and that non-compete obligations cannot protect against “the bruising of ordinary competition.” However, Texas lawmakers have created an exception to this by making non-compete obligations enforceable in certain circumstances. .