Is my Texas non-competition clause too broad?
December 4, 2010 1:21 PM Subscribe
Help me sign this Texas employment agreement with eyes wide open.
posted by anonymous to Law & Government (4 answers total)
[Please assume that all "YANML" caveats and disclaimers are understood! I have an employment attorney that I can contact if needed. I'm just looking for drive-by thoughts, especially from anyone with legal/HR experience in Texas]
From January-June 2010, I was a strategy and sales consultant to a professional services firm in a niche market, on a monthly retainer. I also performed similar services for other clients in unrelated industries. I was an independent contractor and will get a 1099 for that period.
In June, the CEO of the company wanted 100% of my time, so he made me a full-time offer with a 6-month probation period. We agreed that we would re-visit all terms in December. We did not sign any paperwork in June, but we discussed the biggest pieces clearly and both sides felt that we had an oral contract in good faith. (The CEO and I are civic colleagues and have many shared acquaintances in our tight-knit community. He would not be inclined to jeopardize that goodwill, nor would I.)
Now, we are preparing to execute an actual employment agreement, upon end of the probation period. It is accompanied by a 30% raise, so there is consideration. There is almost no trade secret or proprietary information on the table.
Let me state clearly: I like the job, I trust my employer, and I need the money. Next week, I will be signing this document one way or the other. Sure, I wish I had the luxury of waiting for totally perfect terms where I am covered to my satisfaction and everything will be hunky-dory forever, amen... but alas, it is not so.
What I want to do is make sure I've gathered as much understanding as possible of the thing that is most likely to become contentious down the road: the non-compete clause. So I've reviewed several Texas employment attorney opinions and case studies online, as well as recent cases, and the Texas Supreme Court decision in April 2009 that increased enforceability of non-competition for employers.
I'm okay with the non-solicitation piece, since I would not have interest in poaching staff or calling up existing clients and trying to lure them away. The one place I would be likely to run afoul is that I could feasibly get an offer from an industry affiliate to go to work for them.
The employer is asking me to agree to a 2-year restriction, where the geographic territory is the entire state of Texas (which is indeed our market), and where I will not "Engage in any business in any way similar to or competitive with the business of the Company". There is no language that specifies that I agree not to work in sales, or otherwise that I will refrain from doing the specific job I perform right now. (i.e. if I sign this, I couldn't even go to work as a janitor, in a similar firm)
tl;dr #1 Is it reasonable to sign a 2-year non-compete for the whole state, when I haven't even worked for the company but six months? That really seems quite long to me. I would be willing to challenge this down to one year before I sign it... but if two years is so long as to render the clause overly broad, then maybe the best course is not to challenge that now and risk ill will, if I know I can simply have it "blue penciled" later.
tl;dr #2 Is restricting me from working for another employer who is "in any way similar to or competitive with" too broad, considering Texas precedents? Our industry is complex with multiple layers and levels of service providers and processes. Our firm doesn't have many direct competitors... but "any way similar or competitive" is a big net. If I followed this to the letter, I would effectively have to exit the entire industry. Challenging this part of the document, though, will essentially say to the employer, "Plan to worry about me going to work for someone else." I'd rather not send up those red flags, if I can avoid it and rely on the option of a blue-pencil appeal if things go awry.