Forced Out and Bound by a Non-Compete

As a lawyer representing executives in non-compete disputes, I have always found covenants not to compete to be, to put it mildly, troublesome. To have such a patently anti-competitive tool in a free market system flies in the face of everything the free market is supposed to stand for. There is a place for them to be sure, but it still seems as if many of them are enforced for punitive reasons, not legitimate business ones.

If the intent is to keep former executives from using trade secrets or other confidential information in their new jobs, there are sometimes other, less onerous ways to keep that from happening (such as rigorously enforced confidentiality agreements).

In most cases, non-compete agreements are enforced when the executive’s departure was the executive’s choice. That’s bad enough, because nobody should be deprived of the chance to pursue a better employment opportunity, even if it’s for their current employer’s competitor. But at least, in that situation, it was the executive’s choice. And if there were a situation where somebody would use confidential information against a former employer, typically you would think it would be in this situation.

It is particularly galling, however, when an employer who has terminated an executive against his will chooses to enforce the non-compete and prevent the executive from making a living. These cases happen on occasion, and they essentially rub salt in the wound of an executive already smarting over the loss of a job he had no intention of leaving. Presumably, the employee had no intent to compete using confidential information against the former employer, because the employee had no intent to leave at all.

Non-competes have always been controversial, and some states (such as California) have essentially declared them unenforceable. That is not the state of the law in Texas, but I certainly would like to see more of an effort to rein in what can only be called abusive enforcement of covenants not to compete—such as happens when the executive had no plans to compete with her employer in the first place.


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