September 2017

 

The usual gamut of post-employment covenants includes non-compete restrictions, non-solicitation of customer restrictions, confidentiality restrictions, and in many cases the anti-raid provision designed to keep a departing employee from hiring away a former employer’s employees and contractors.  The anti-raid is not always given a lot of thought, but it should be.  Why?  Because when there is an orchestrated departure, the odds are a departing employee will attempt to hire away the top lieutenants.   In most cases, the departing employee would rather use the same team as opposed to staring from scratch.

An anti-raid provision is a restraint of trade and subject to the Texas non-compete statute.  In the 2011 Marsh opinion that we have previously discussed, the Texas Supreme Court confronted this very issue.  The non-compete agreement in that case contained a clause stating that the departing employee could not “solicit any employee of [former employer] who reported to [departing employee] directly or indirectly to terminate his employment with [former employer] for the purpose of competing with [former employer].” In the section of the opinion where the court was laying out general rules for evaluating enforceability of non-competes, the Court reasoned: “Covenants that place limits on former employees’ professional mobility or restrict their solicitation of the former employers’ customers and employees are restraints on trade and are governed by the [Covenants Not to Compete Act].” See Marsh USA, Inc. v. Cook, 354 S.W.3d 764, 768 (Tex. 2011). Other courts have made similar rulings relying on Marsh.

So, like a non-compete agreement, generally the anti-raid must be ancillary to and otherwise enforceable agreement and reasonable in time and scope to satisfy the non-compete statute.  In most situations the anti-raid will accompany a non-compete agreement and non-solicit agreement because they are held to the same standard.  That said, a court may be more likely to enforce an anti-raid provision as opposed to the non-compete.  Why?  Because a court would rather keep a former employee from hiring folks away as opposed to putting them out of work.

What are some things to consider when drafting an anti-raid?  (1) Should the agreement apply to individuals the departing employee actually worked with?  (Yes, the narrower the better and the odds are the departing employee isn’t going to hire folks they don’t know or haven’t worked with.) (2) Try to use language that is broad in terms of the actions the former employee can use to hire someone one away but narrow enough to be enforceable (not always easy).  (Usually we see the use of the phrase “direct or indirect” but there are other ways to deal with this issue.  (3) Make sure you consistently use the anti-raid provision for all employees as appropriate. (Often times an orchestrated raid may involve multiple former employees trying to take customers away.)  (4) Include a reasonable time period.  (Usually this is the same length as the non-compete or non-solicit.)  (5) Remember Texas is an at-will state and employees can leave.  Try to keep them happy.