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

I write about and try to answer practical Oklahoma legal questions. I tend to focus on estate planning and business issues. I make a living as an attorney working for Resolution Legal Group in Oklahoma City. I am husband to Amy and the father of Sam and David. We live exactly in the path where the "wind comes sweeping down the plains."