General enforceability of Texas non-competes
Texas law generally disfavors non-competes as a restraint on trade, but recent Texas Supreme Court decisions and the adoption by Texas of the Uniform Trade Secrets Act bring Texas closer to those jurisdictions generally favoring restrictive covenants.

Statutory requirements for Texas non-competes
To be enforceable under Texas law, a non-compete must meet the requirements of Section 15.50(a) of the Texas Business and Commerce Code:

·     The non-compete must be “ancillary to or part of an otherwise enforceable agreement.”
·     The non-compete must contain reasonable limitations as to time, geographical area, and scope of activity.
·     The non-compete must not impose a greater restraint than is necessary to protect the goodwill or other business interest of the employer.

Sufficient consideration for Texas non-competes

Texas case law clarifies that non-competes must be supported by sufficient consideration.  Because Texas is an at-will employment state, an offer of at-will employment is illusory and is not sufficient consideration.  The most common form of consideration for non-competes in Texas is giving the employee access to confidential information.  See Alex Sheshunoff Mgmt. Serv’s, L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006); Mann Frankfort Stein & Lipp Advisors v. Fielding, 289 S.W.3d 844 (Tex. 2009).  

Best practice: The agreement should state that employees will receive confidential information even if the employee is terminated immediately after hire.

·     Sufficient consideration can consist of specialized training.  See id.
·     Stock options can also constitute sufficient consideration. Marsh USA Inc., v. Cook, 354 S.W.3d 764 (Tex. 2011).

Reasonable limitations as to time
·      Two years is typically deemed to be a reasonable time period for restriction in Texas.  Brink's Inc. v. Patrick, No. 3:14-CV-775-B, 2014 WL 2931824, at *5 (N.D. Tex. June 27, 2014). 
·      Texas courts have allowed restrictions as long as five years.  See, e.g., Johnson Serv. Group, Inc. v. France, 763 F.Supp.2d 819, 826 (N.D. Tex. 2011) (“two to five years has repeatedly been held as a reasonable time limitation”); Salas v. Chris Christensen Systems Inc., No. 10–11–0107–CV, 2011 WL 4089999, at *19 (Tex. App.—Waco Sept.14, 2011, no pet.) (“we cannot say that the Agreement's five-year restraint is per se unreasonable”); Amey v. Barrera, No. 13–01–0130–CV, 2004 WL 63588, at*6 (Tex. App.—Corpus Christ–Edinburgh Jan. 15, 2004, no pet.) (upholding a non-compete agreement that prohibited the defendant from working in “Corpus Christ and surrounding area for 5 years” as reasonable and enforceable).
·      Despite the possibility of enforcing a five-year restriction, the better practice is to use the more reasonable time period of two years.

Reasonable limitations as to geography
·      Texas courts have generally upheld non-compete agreements that prevent an individual from performing similar services to those he provided in territories in which s/he previously worked. See e.g., Johnson Serv. Group, Inc. v. France, 763 F.Supp.2d 819, 826 (N.D.Tex. 2011) (“Texas courts have upheld geographical limitations preventing competition within a metropolitan area, as the 50–mile limitation essentially does here.”); Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787, 794 (Tex. App.—Houston [1st. Dist.] 2001, no pet.) (upholding a reformed noncompete covenant that prohibited a former manager from working in those counties where he previously oversaw operations); Propath Services, LLP v. Quest Diagnostics Clinical Laboratories, Inc., No. 3:00–CV–2391–H, 2002 WL 535056, at *10 (N.D.Tex. Apr. 9, 2002) (holding that a covenant which prohibited a party from acting in forty-eight Texas counties was not unreasonable because the defendants marketed the relevant services within those counties); Daily Instruments Corp. v. Heidt, No. H–13–2189, 2014 WL 710683, at *12 (S.D.Tex. Feb.21, 2014) (“Geographic restrictions are reasonable to the extent they are commensurate with the territory in which the employee worked during his employment with the employer.”).
·      Texas courts will not uphold non-competes restricting employees from working anywhere the employer had commercial activity if the particular employee did not work in the expanded area.  Cobb v. Caye Publishing Group, 322 S.W.3d 780 (Tex. App.—Ft. Worth 2010, pet. filed) (covenant not to compete cannot be enforced outside of area where the employee worked despite the employer’s commercial activity).

Reasonable limitations as to scope of activity
·      In determining whether the scope of activity is reasonable, Texas courts will consider “whether the defendant is restricted from earning a living if the agreement not to compete is enforced.”  Evans Consoles Inc. v. Hoffman Video Sys., Inc., No. 3:01-CV-1333-P, 2001 WL 36238982, at *8 (N.D. Tex. Dec. 6, 2001) (citing American Express Financial Advisors, Inc. v. Scott, 955 F.Supp. 688, 693 (N.D. Tex. 1996); French v. Community Broadcasting of Coastal Bend. Inc., 766 S.W.2d 330, 334 (Tex. App.—Corpus Christi 1989)).
·      If the ban is not industry-wide, the non-compete is more likely to be enforceable.  Brink's Inc. v. Patrick, No. 3:14-CV-775-B, 2014 WL 2931824, at *5 (N.D. Tex. June 27, 2014). 

What happens if the non-compete is overly broad?
If a Texas Non-Compete is overly broad, Texas courts may reform the non-compete restrictions and then can award the employee’s attorney fees.  For this reason, it is advised to use less restrictive terms for time, geography, and scope.

Which employees should sign a Texas non-compete?
While it may be tempting to ask all employees to sign a non-compete, only those employees who truly present a threat to the employer should be asked to sign for the following reasons:
·      The downside to asking low-level employees to sign a non-compete is that it is unlikely that they will possess sufficient confidential information (or other adequate consideration) to meet the requirements of Section 15.50(a) of the Texas Business and Commerce Code.
·      In addition, employers may waive their rights to enforce the non-compete against more important employees if they do not enforce the non-compete across the board.
·      Companies such as Jimmy Johns have recently come under fire for requiring employees as junior as sandwich makers to sign non-competes:  http://www.nytimes.com/2014/10/15/upshot/when-the-guy-making-your-sandwich-has-a-noncompete-clause.html?_r=0

Physicians in Texas are subject to special rules for non-competes, including allowing the physician access to certain patient files and buy-out rights.  I will address these rules in an upcoming post.

Massachusetts joins California, Connecticut, Washington, D.C. and several cities in requiring employers to provide paid sick leave to employees after a voter referendum passed with 60 percent of voters in favor.  The full text of the Massachusetts Paid Sick Leave Initiative can be found here.  The Massachusetts law will require up to 40 hours weeks of paid sick leave where employers have 11 employees or more and will require up to 40 weeks of unpaid sick leave for employers with fewer than 11 employees.  The law will go into effect July 1, 2015. 

Both part-time and full-time Massachusetts employees of the larger employers (11 or more employees),  will earn one hour of paid sick leave for every 30 hours of work.  Leave can be taken to care for a family member, to attend routine medical appointments for self or family member, or to deal with domestic violence for the employee or child.  Up to 40 hours of unused sick time may be rolled over into the following year.  Similar unpaid leave will be earned by employees of smaller employers.

Employees are required to give advance notice of their need for leave when possible and may be required to present documentation to the employer regarding the leave.  Employees cannot be penalized by employers for using sick leave as allowed under the law.

Responding to trend of cities/municipalities in states including California and New Jersey passing their own sick-pay laws, ten states, including Georgia, Wisconsin, Louisiana, North Carolina, Tennessee, Mississippi, Kansas, Arizona, Indiana, and Florida have passed laws prohibiting local jurisdictions within the state from passing such laws.

Considering that the United States is one of only 22 wealthy nations that does not guarantee paid sick leave to workers, employers and employees should not be surprised to see this trend continue.  According to the Huffington Post, "nationally, only one in three workers in the bottom quarter of the wage scale has paid sick leave, while only one in four part-time workers does," so such measures will likely have the most impact on lower-income employees.

CNN Money reports here that post-recession, it is taking workers 44 and older five weeks longer than younger workers to find a new position.  Prior to the recession, older employees took less time (4.5 weeks less) than younger workers to find a new job.  The article states that "strict laws make employing older folks more expensive." 

I would suggest that the more likely explanation is that companies who dealt with layoff requirements under the Age Discrimination in Employment Act (ADEA), including strict ADEA notice requirements during the downturn, consciously or unconsciously discriminated in hiring once it picked back up.  It is more difficult to prove hiring discrimination than discrimination against employees, so older workers facing such discrimination may have little recourse.  

Another possible explanation is that employers post-recession are looking to hire employees at lower salaries, and older and more experienced employees are simply asking for more money and thus taking longer to find work.  Still, as the economy improves one would expect these statistics to revert back to normal unless employers are simply afraid of dealing with ADEA compliance/and or afraid of lawsuits by older employers.  For information on dealing with ADEA compliance requirements or if you have been terminated because of your age, contact Dallas employment attorney Michelle MacLeod at the MacLeod Law Firm by emailing michelle@macleodlawfirm.com.