Labor & Employment Law

Texas Customer Solicitation Restrictions. Unfair Competition Law in Texas.

By Robert Wood

Texas noncompete agreements routinely contain a provision prohibiting an employee from soliciting, or doing business with, her employer's customers (except on her employer's behalf).  Not infrequently, these provisions preclude the employee from soliciting any of her employer's customers.  However, some Texas cases have held that such provisions are too broad.

Several Texas cases have held that nonsolicitation provisions should only apply to the customers with whom the employee in question actually worked while she worked for the employer.  Thus, a provision keeping the employee from working with 'all' of the employer's customers might be too broad.  Other cases have held that nonsolicitation provisions should not prohibit an employee from contacting customers he had before he became employed by the employer.

In addition, Texas courts have held that nonsolicitation provisions must meet the same rigorous standards applicable to noncompete agreements.  That is, they must me 'ancillary to an otherwise enforceable agreement' and reasonable in scope.  Conversely, nondisclosure agreements, which do not constitute restraints upon trade, are not analyzed in the same way as noncompete agreements.

OBSERVATION:

Just as Texas courts are hostile to noncompete agreements that are overly broad, they also frown on nonsolicitation agreements that are too broad.  Whenever an employer attempts to prevent one of its former employees from soliciting or doing business with one of the employer's customers, the provision must be examined to ensure that it is reasonable in scope.

Full post as published by Texas Non-Compete Law Blog on April 16, 2010 (boomark / email).