We have all been there. You have gotten the job offer, and all that is left to do is sign the employment agreement. But before you sign that agreement, be sure to read it. In order to properly decide what is the best decision for you to make requires you to weigh all the available information. In this spirit, I’d like to touch upon two employment clauses that are gaining widespread attention. In doing so, I hope to highlight some of the dangers and pitfalls that come along when these clauses are ignored.
Essentially a non-compete clause – also known as a covenant, not to compete or non-compete agreement – is a private agreement between an employer and an employee where the employee agrees not to go to work for a competing business for a certain amount of time. Many states have made the wise choice of outright banning non-compete clauses. Unfortunately, in Texas these troublesome clauses are alive and well.
Indeed, Texas Business Code Section 15.50 governs what is required of such clauses. In Texas, for a non-compete to be valid and enforceable it must be reasonable as to geographic scope, scope of activities, and time. The operative word here is “reasonable.” This boils down to a fact-intensive inquiry. For example, in some cases a three-year restraint on employment may be completely unreasonable, but in others, a court may find that it is warranted. The same fact intensive inquiry holds true for the other two elements outlined in the Texas Business Code.
The reason why one must take these clauses seriously is because it can potentially restrict one’s ability to find work. With the current state of affairs due to the Covid-19 pandemic, this cannot be ignored. By way of example, if you work in a niche area and your prospects of finding employment outside that niche area are grim, signing an agreement that could potentially put you out of work for a year could be disastrous.
Moreover, another danger behind these types of clauses is that they can be used to harass ex-employees even when the employer has drafted clearly unenforceable agreements. The reason why employers feel embolden is because while a non-compete may be invalid under the law as written, courts have the power to rewrite these clauses to make them valid. This incentivizes employers to broadly write their non-competes, because even if they lose, they can still get a court to do their dirty work.
Furthermore, to engage in litigation to fight a non-compete can take tens of thousands of dollars and significant time on your part. That is why investing in having a trained legal professional up front to analyze your employment agreement can save you time and money down the road.
The right to a jury trial is the cornerstone of our legal system, yet it can all be waived and thrown away with the stroke of a pen. At an alarmingly increasing rate, employers all over the country are forcing arbitration clauses onto their employees. This mostly overlooked clause can have several ramifications that cannot be seen until and unless you have been wronged.
As a brief overview, arbitration is when parties resolve their dispute through a private arbitrator that has been paid by your employer, not an impartial judge in a court of law. Moreover, unlike a court, arbitration is a mostly confidential process. This means that the misdeeds of the employer will never be heard by the public. This is not even taking into consideration all the procedural quicks that come from arbitration.
Simply put, by essentially paying for the judge, jury and executioner in its cases, employers assume that they will win. From our experience, employers who have arbitration clauses with their employees often value those cases lower and are much less likely to want to resolve the matter.
To conclude, these are only two examples of the myriad of clauses out there of which you need to be aware. Investing in having a trained professional consult on your agreement can save you grief, time, and money in the long run.