noncompete

While you were sleeping . . . Oklahoma non-compete law changed a bit

The New Law

While you were [probably] sleeping, Oklahoma law about non-compete agreements and non-solicitation agreements shifted a little bit.  The new law passed in May 2013 went into effect as of 12:00 a.m. today as Title 15 O.S. sec. 219B:

A contract or contractual provision which prohibits an employee or independent contractor of a person or business from soliciting, directly or indirectly, actively or inactively, the employees or independent contractors of that person or business to become employees or independent contractors of another person or business shall not be construed as a restraint from exercising a lawful profession, trade or business of any kind. Sections 217, 218, 219 and 219A of Title 15 of the Oklahoma Statutes shall not apply to such contracts or contractual provisions.

Regular readers of this blog know that non-compete related topics are a popular subject.

What does this mean?

Not nearly as much as you might think.  Similar to many laws that result from the political process, it appears to be “full of sound and fury” but ends up signifying . . . very little.  This law was passed in response to a decision from the Oklahoma Supreme Court that voided out an entire employee non-solicitation clause because it also prohibited hiring people that might seek employment on their own initiative and without any solicitation or inducement by past employees. In light of this decision, some people thought that all “anti-raiding” provisions might be unenforceable under Oklahoma law.

The practical effect

An employer and an employee (or independent contractor) can agree that when an employee leaves the employer, the employee will not try to hire away the employer’s other employees.  An employer may lose one employee, but that doesn’t necessarily mean there is going to be a mass exit of other employees.

The result of this new statute is that provisions that are in many sharply-drafted employment agreements are now “officially” enforceable (assuming they comply with the statute of course).

Daniel Joshua Salinas identified one other notable item about the new law in this blog post: the law permits restrictions on non-solicitation of employees but does not appear to limit the hiring of those people.

  An example

Here is an example of what a restrictive non-solicitation clause might look like in an employment agreement:

During the term of the Employee’s employment under this Agreement and for a period of twenty-four (24) months thereafter or, if longer, a period of twenty-four (24) months following the termination of the Employee providing any services to the Company, whether such termination be by the Company or by the Employee, the Employee will not directly or indirectly (i) recruit, solicit, encourage, or induce any employee of the Company or its affiliates to terminate such employment (ii) approach any such person for any foregoing purposes, (iii) otherwise disrupt any such employee’s relationship with the Company or its affiliates.

By the way, if you copy this language and use it in an agreement, you are doing so at your own peril and you will get no more than the value you paid for it :).

 

 

Posted by Shawn Roberts in Blogposts, Oklahoma Employment Law, Oklahoma non-compete

Oklahoma Non-Compete Agreements explained

For a term that is used as much as “non compete” I think the details of the agreement and parameters are not well understood. One way I am trying to help in this area is by offering a collection of posts titled “Oklahoma Non-Compete Agreements.” You can find an index to the posts below and watch the video above for a brief explanation of the series.

Over past year I have written several articles about non-compete agreements under Oklahoma law. Below is a collection of the links to each article and a snippet of the article. You can access the full articles from here and also bookmark this page to ensure that you can always access all the articles.

Is my Oklahoma non compete agreement enforceable?
The short answer is that if you are in Oklahoma the non compete agreement it is not enforceable.  With a couple of exceptions, Oklahoma law is clear that an individual is allowed to work in his or her chosen business or industry even if a piece of paper says otherwise.  While competition is allowed, Oklahoma law prohibits a former employee from soliciting the established customers of the former employer.

Two scenarios where a non compete agreement is enforceable
In an article from a few months ago, I wrote about how Oklahoma law categorically invalidates non compete agreements. Oklahoma has made a public policy decision that with a couple of exceptions employees will not be barred from competing. Below are the exceptions to the rule:

Non compete Agreements are still not OK in Oklahoma
I wrote a few months ago about how Oklahoma law prohibits non compete agreements for former employees and touch on exceptions here.  Yesterday, the Oklahoma Court of Civil Appeals reiterated that any agreement which restricts a former employee’s ability to work in the same field as the former employer is void under Oklahoma law.

4 critical points to consider in a non disclosure agreement [before you sign it]
1.      Is the definition of “confidential information” specific enough to be workable?  For the non disclosure agreement to have any value, both sides must understand what is being protected.  I routinely see non disclosure agreements that have wonderfully frightening all inclusive definitions of “Confidential Information.”

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma non-compete

Oklahoma non-compete law summary

Over past year I have written several articles about non-compete agreements under Oklahoma law. Below is a collection of the links to each article and a snippet of the article. You can access the full articles from here and also bookmark this page to ensure that you can always access all the articles.

Is my Oklahoma non compete agreement enforceable?
The short answer is that if you are in Oklahoma the non compete agreement it is not enforceable.  With a couple of exceptions, Oklahoma law is clear that an individual is allowed to work in his or her chosen business or industry even if a piece of paper says otherwise.  While competition is allowed, Oklahoma law prohibits a former employee from soliciting the established customers of the former employer.

Two scenarios where a non compete agreement is enforceable
In an article from a few months ago, I wrote about how Oklahoma law categorically invalidates non compete agreements. Oklahoma has made a public policy decision that with a couple of exceptions employees will not be barred from competing. Below are the exceptions to the rule:

Non compete Agreements are still not OK in Oklahoma
I wrote a few months ago about how Oklahoma law prohibits non compete agreements for former employees and touch on exceptions here.  Yesterday, the Oklahoma Court of Civil Appeals reiterated that any agreement which restricts a former employee’s ability to work in the same field as the former employer is void under Oklahoma law.

4 critical points to consider in a non disclosure agreement [before you sign it]
1.      Is the definition of “confidential information” specific enough to be workable?  For the non disclosure agreement to have any value, both sides must understand what is being protected.  I routinely see non disclosure agreements that have wonderfully frightening all inclusive definitions of “Confidential Information.”

Posted by Shawn Roberts in Blogposts

Non compete Agreements are still not OK in Oklahoma

I wrote a few months ago about how Oklahoma law prohibits non compete agreements for former employees and touch on exceptions here.  Yesterday, the Oklahoma Court of Civil Appeals reiterated that any agreement which restricts a former employee’s ability to work in the same field as the former employer is void under Oklahoma law.

The case is Scanline Medical, L.L.C. v. Brooks.  The restrictive agreement in question absolutely prohibited the former employee from “sell[ing] any medical device product competitive with any of the Spinal Concepts [or Orthovita] Products, or in any way [possessing] a financial interest . . . in any business engaged in the distribution, solicitation, promotion or sale of any medical device product competitive with any of the Spinal Concepts [or Orthovita] Products.”

By completely preventing the former employee from working in his “chosen profession” the noncompete agreement violated Oklahoma law and the Court would not enforce it.  Competition is allowed but an employer can protects it confidential and proprietary information with the right agreements in place.

I work with employers and employees to address non compete agreement issues and put reasonable protections in place to protect both sides.  Please feel free to contact me at sjr@shawnjroberts.com if you have any questions.

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma Employment Law, Oklahoma non-compete

Two scenarios where a non compete agreement is enforceable

 

In an article from a few months ago, I wrote about how Oklahoma law categorically invalidates non compete agreements. Oklahoma has made a public policy decision that with a couple of exceptions employees will not be barred from competing. Below are the exceptions to the rule:

1. When you sell goodwill. When a business sells their interest in the business including the goodwill, Oklahoma law allows a non compete agreement between the seller and buyer. While “goodwill” is an intangible assets and often difficult to define, in Oklahoma it generally means the “custom or patronage of any established trade or business; the benefit or advantage of having established a business and secured its patronage by the public.”

2. Business Partners splitting up. A non compete agreement is also allowed when a business with multiple owners or partners dissolves.  In anticipation of a dissolution of the partnership, the partners may agree that none of them will carry on a similar business within a specified county and any county or counties contiguous thereto, or a specified city or town or any part thereof.

If you have any questions about non compete agreements, please feel free to contact me anytime at sjr@shawnjroberts.com.

Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma Employment Law

Is my Oklahoma non-compete agreement enforceable?

The short answer is that if your non-compete agreement is controlled by Oklahoma law the non-compete agreement is not enforceable if it goes beyond the limitations in Title 15 O.S. section 219.A.

The Law

With a couple of exceptions, Oklahoma law is clear that a former employee is allowed to work in his or her chosen business or industry even if a piece of paper says otherwise.  While competition is allowed, Oklahoma law prohibits a former employee from soliciting the established customers of the former employer.  When the Supreme Court of Oklahoma addressed the non-compete issue in 2011 it was crystal clear about enforceability:

Title 15 O.S.2001 § 219A is the Legislature’s pronouncement on Oklahoma’s public policy regarding covenants not to compete. It provides that where an employee has executed a covenant not to compete with an employer, the employee “shall be permitted to engage in the same business as that conducted by the former employer or in a similar business as that conducted by the former employer as long as the former employee does not directly solicit the sale of goods, services or a combination of goods and services from the established customers of the former employer.” The statute goes on to provide that any provision in a contract between an employer and an employee in conflict with the provisions of the section “shall be void and unenforceable.
¶ 21 Subsection A utilizes the mandatory term, “shall,”in association with the employee’s right to engage in the same or similar business as that of the employer while subsection B provides that “any” provision in a contract between the employer and employee conflicting with those terms “shall be void and unenforceable.” The term “any” is all-embracing and means nothing less than “every” and “all.”The plain, clear, unmistakable, unambiguous, and unequivocal language of 15 O.S.2001 § 219A prohibits employers from binding employees to agreements which bar their ability to find gainful employment in the same business or industry as that of the employer. The only exception allowed by the statutory provision is that the employee may be barred from soliciting goods or services from the employer’s established customers.

Protections for the Employer

An employer who invest its’ resources in training an employee and has disclosed confidential information to the employee still has ways to protect itself.  A strong employment agreement providing protection for confidential information and trade secrets goes a long way to protect an employer’s interest.

To sum it up, a former employee can compete against his former employer. However, he cannot do it using the employer’s confidential information or by directly soliciting the former employer’s established clients.

If you have questions about Oklahoma non-compete agreements from either the employee or employer perspective, please feel free to email or call me. I have worked with both employers and employees so I understand the issues from both directions.

 

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Posted by Shawn Roberts in Blogposts, Business Law, Oklahoma non-compete