Non-Compete

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On June 24, 2011, the Texas Supreme Court wrote the next chapter concerning the enforceability of non-compete agreements in Texas.  A company’s provision of stock options to employees was deemed satisfactory consideration for a non-compete agreement in Marsh USA Inc. and Marsh & McLennan Companies, Inc. v. Cook, — S.W.3d —-, 2011 WL 2517019 (Tex., 2011).  The Court declared that stock options are reasonably related to the protection of a company’s goodwill, a business interest worthy of protection under the Covenants Not to Compete Act (CNCA).  Although goodwill is intangible, Texas law has long recognized that it is “a property and integral part of [a] business just as its physical assets are.” Marsh USA, Inc., 2011 WL 2517019 * 11. …

Continue Reading The Next Chapter In Enforcing Non-Compete Agreements In Texas

When asked on November 2, 2010, “Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements,” Georgia voters overwhelmingly answered “Yes.”

By this vote, the Georgia voters approved the Restrictive Covenants Act, a law that will dramatically alter Georgia’s legal landscape regarding non-compete agreements and other restrictive covenants.  The Act increases the enforceability of these agreements and allows courts to modify them to the extent reasonably necessary to enforce and protect legitimate business interests.  In order to become effective, Georgia residents had to amend the state Constitution — an event that happened three days ago during Georgia’s general election.  Although there is a question regarding when the Act actually will become effective, by its own terms, it became effective on November 3, 2010.  Below is a summary of some of the key provisions of the new law.…

Continue Reading Georgia Voters Pass Constitutional Amendment Strengthening Enforceability Of Non-Compete Agreements And Restrictive Covenants

Hunton & Williams partners Laura Franze and Roland Juarez recently participated in a panel of California employment law experts to discuss various cutting edge issues in labor and employment law, including the impact of social media, new trends in non-compete agreements and trade secret protections, the ripple effect of the Ninth Circuit’s ruling in Dukes…

A recent Eleventh Circuit Court of Appeals decision upheld the validity of noncompetition and nonsolicitation covenants in an employment agreement governed by Georgia law.  In H&R Block Eastern Enterprises, Inc. v. Morris, the Eleventh Circuit reversed the United States District Court and ruled that provisions in H&R Block’s employment agreement with its former employee, Vicki D. Morris, were valid and enforceable restrictive covenants under Georgia law.  This decision provides additional guidance to employers attempting to draft enforceable employment agreements to protect legitimate business interests.  It also highlights why the Georgia General Assembly recently passed legislation attempting to offer clarity in this area of the law.
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Continue Reading Eleventh Circuit Upholds Restrictive Covenants In Employment Agreement

In Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 2009 WL 1028051 (Tex. April 17, 2009), the Texas Supreme Court held that the covenant not to compete at issue was enforceable because the agreement to furnish consideration (confidential information) for the covenant could be inferred due to the nature of the contract.  The Mann Frankfort Court held that a promise can be inferred when the employee was hired to perform work that necessarily required the receipt of confidential information.  Specifically, the Court stated:

We hold that if the nature of the employment for which the employee is hired will reasonably require the employer to provide confidential information to the employee for the employee to accomplish the contemplated job duties, then the employer impliedly promises to provide confidential information and the covenant is enforceable so long as the other requirements of the Covenant Not to Compete Act are satisfied.…

Continue Reading Texas Court Makes Inferences to Enforce Non-Compete Agreement

Franchisors with operations in the State of Georgia are confronting a new challenge in their effort to enforce non-competition rights against franchisees.  In Atlanta Bread Co. v. Lupton-Smith (6/29/09), the Supreme Court of Georgia held that an “in-term” non-competition clause within a franchise agreement is held to the same strict scrutiny standard applicable to post-term and employment contract non-competition clauses.
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Continue Reading Enforcing Non-Competes Against Franchisees: Atlanta Bread Co.