How can it be illegal to compete against a former employer.?

Question

In Texas we are a right to work state we don't have to put up with no stupid unions. How can it be an issue for someone who works for a company for many years to go into buissiness against his employer if they did not have a no compete clause. This person was the one person who was certified by the state and allowed the company to operate. He quit started his own buisness took most of the clients with him they were with the other company because of him anyway. Now his previous employer has got a stop work order from the courts against him. And has filed a lawsuit against him.

No unions dont protect you they had there day and time but not now. He didnt steal there client list he was the one dealing with the clients. He simply said he was leaving the company and the clients came to him on there on. And for the type of work they do nothing says both companies can't have the same clients. They don't have exclusive contracts with these companies the client themselves have the right to use whoever they want at anytime. And they have been dealing with this guy for years and know the job will be done right through him. And along with him they don't trust the owner of the company this guy used to work for.

Answer 1

The courts have held time and again that people have a right to work in their profession and that a non-compete agreement does not apply; what will apply and has been upheld by courts is a non-solicit agreement. Your 'friend' made the mistake of soliciting old clients from his prior company and as you say taking them with him. So now he'll have to fight this in court.

He may or may not win, but in Texas, courts have time and again stood up for companies not individuals. Some of the best justice money can buy..too bad he doesn't have a Union to back him up; guess he'll have to pay the court costs himself.

Answer 2

Right to Work and unions and non-compete are not necessarily all the same thing.

Texas does allow non-compete agreements. This has absolutely NOTHING to do with unions and everything to do with protecting trade secrets, client lists, proprietary information, etc...

A non-compete clause may be written into the company handbook - although they are much less enforcable if the employee never signed anything.

A company DOES have the right to protect their business interests and an employee's work is still proprietary to that business, unfortunately.

Non-compete agreements, to be enforcable, generally have to have some specifications such as a geographical area and time limits. To restrict to an entire state should be difficult for that employer to enforce - at best.

From a legal perspective - regardless of whether there is a legitimate non-compete agreement; an employer cannot keep someone from earning a living....

In other words, if am selling a unique business product and I leave the company and go to work for the only other competitor in my industry, then the former employer may simply play a game of who has deeper pockets (which is probably what is being done here).

However, the thing going for the employer is that just like an employer can't keep a former employee from earning a living, one employee shouldn't be free to financially devastate a company either. Just something to think about...

Not knowing what the industry is or anymore details, it sounds like you need to get an attorney and fight back...

Answer 3

It sounds like the issue isn't competing per se but "taking his clients with him" is. When you work for a company, whether you sign a non-compete or confidentiality agreement or not...the work you do is owned by the company unless arranged otherwise. This is often referred to as "work for hire" and may be addressed in the employee handbook. For example, if I go to work as a sales person for company A and then leave and contact all of company A's customers telling them they should come to company B...technically the only way I got those customers is by "stealing" customer lists from company A. The "theft" of customer lists is technically the issue, not the fact that I work for company B.
Also, just because someone takes someone else to court doesn't mean a law has been broken - it could simply mean that someone has been inconvenienced but they may try to make it look like more than that.

Answer 4

A company is a company. The people are not a part of the company. When this person left, it was not a piece of the company leaving. People only act on behalf of the client.

I think this situation is related to the opportunity disclosure. When an employee finds an opportunity that their employer might like to pursue, he or she must first go to the company. If the company accepts, the person acts on behalf of the company. If the company turns it down, the person then has the option to pursue it as an individual.

I'd like to add that I am not a lawyer or anything. I don't give legal advice, and my comment shouldn't be taken as such. Take from it what you will, and good luck to "this person."

Answer 5

If he used their client lists (which the company owns) to solicit business for his new company, he could have a major problem.

Answer 6

I don't know how the laws work in Texas, but I do know that when you work for a company, all the work you do for them is theirs. This is especially true if they taught you your skills, and then you take their client base and open a business for yourslef.