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Business LitigationBusinesses of all sizes—from large corporations to single entrepreneurs and startups—often face disputes with other companies, customers, employees, state and federal regulatory agencies, or their investors. When the future of the business depends on the outcome of a lawsuit, you want an experienced attorney fighting on your side. You also want an attorney familiar with your industry who speaks the language of your business.

The Michels Law Firm delivers results in business litigation. We have decades of experience representing businesses at every stage of litigation, including mediation, arbitration, trial, and appeal.

We serve business litigation clients in many industries, including healthcare, manufacturing, oil and gas, and real estate. Some of the cases we handle include:

  • Breach of contract
  • Fraud
  • Negligent misrepresentation
  • Breach of Fiduciary Duty
  • Tortious Interference with Contract
  • Collections
  • Vendor / Supplier Disputes
  • Employment Disputes
  • Covenants not to compete
  • Theft of trade secrets

Can I Stop A Former Employee From Working For A Competitor?

Key Takeaways:

  • In many cases, there are several ways to prevent a former employee from working for a competitor. One way is by imposing a Non-Compete Agreement.
  • Non-compete agreements are meant to protect confidential and trade secret information. They should therefore be limited to employees who encounter that sort of information in the course of their work.
  • In addition, non-compete agreements should be imposed as soon as the employee starts working for you. Attempting to impose a non-compete agreement later in the working relationship, or after the working relationship, is legally dubious and will probably not hold.
  • Your competitors are legally allowed to talk to your clients, and even legally allowed to try to convince your clients to become their clients instead.
  • A potential lawsuit for “interference” with your business or clients based in a competitor talking to your clients only becomes relevant if the competitor knows there is some other reason why they are prohibited from talking to those clients. Otherwise, there is no basis for a lawsuit.

Yes, in many cases, there are ways to stop a former employee from working for a competitor.

One of the main ways to prevent an employee from working for a competitor is by utilizing a Non-Compete Agreement.

For many, many years, it has been standard practice in Texas to impose a non-compete agreement on the first day an employee comes to work for the company. If non-compete agreements aren’t used for every single employee, the general policy is to impose a non-compete on the first day that the employee is promoted to an executive position, or any position that puts the employee in contact with confidential and trade-secret information.

If you have an employee sign a non-compete agreement right when employment starts (or right when access to trade secrets or confidential information), you will have very a solid basis for legal action preventing that employee from going to work for your competitors.

However, things get a far more complicated if you don’t impose a non-compete agreement right away, but rather seek to do so later.

Later impositions of non-disclosure agreements is actually a somewhat murky area of law right now in Texas. As it currently stands, though, if you didn’t impose a non-compete agreement when the employee walked in the door, then too bad, so sad, love dad, as they say. That is, your former employees can go and work for any competitor they want to.

I always advise my clients that non-compete agreements require significant preplanning and foresight in order to apply properly. You have to think carefully about which employees you want to prohibit competing in which ways, and focus in on that.

You’re not going to be able to stop every secretary or member of the cleaning and maintenance crew or other low-level employee from “competing” against you by going to work at another company that happens to be your competitor.

You have to be able to identify the people who have access to meaningful information that could be harmful to the company if they took it and used it with another competitor. Non-compete agreements should only be imposed on those employees and should be imposed as soon as they start working for you.

Can We File A Lawsuit Or Sue When Another Business Is Interfering With Our Clients Or Our Business?

Other companies have the right to talk to whomever they want. My competitor attorneys can talk to any client of mine and say, “I can do a better job for less money, and I can give you higher quality work”.

Is that interfering? No, it’s not. The free enterprise system says that as long as I am honestly competing and I’m not using confidential information you gave me about your company, I can go to any of your clients and say, “I can do you a better job”.

So, as for the question of whether you can file a lawsuit or sue when another business “interferes” with your clients or your business, the answer is that there must be some reason the competitor knows or believes that they are prohibited from contacting that client, or prohibited from trying to get that client to become their client.

If no such reason exists, beyond your sense of offense that someone is poaching your client, then there are no real grounds for a lawsuit.

For more information on Non-Compete Agreements For Employees, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (281) 210-1596 today.

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