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 Alex Sheshunoff Mgt Servs v. Kenneth Johnson (Tx 2006)
Jackson Lewis LLP - October 27, 2006 Since 1994, employers in Texas have been hamstrung by a decision of the state’s highest court which severely limited the enforceability of covenants not to compete in employment at-will relationships. Light v. Centel Cellular Co., 883 S.W.2d 642 ( Tex. 1994). In the twelve years since then, employers have attempted to find creative ways to circumvent the near absolute prohibition against having an enforceable non-compete agreement with an at-will employee. Following the precedent set by the Texas Supreme Court, many state courts subsequently rejected these attempts, finding that the resulting agreements were “illusory.”  Texas Supreme Court Modifies Position - Upholds Non-Compete Covenant.Ford & Harrison LLP - October 25, 2006 Changing its prior position on the issue, the Texas Supreme Court has held that an employer’s promise to perform (for example, to provide training or confidential information) is sufficient to create an enforceable covenant not to compete in an at-will employment relationship; however, the non-compete covenant is not enforceable until the employer takes the action it has promised. Texas Supreme Court Provides New Focus for Noncompete Contract Enforcement.Littler Mendelson, P.C. - October 25, 2006 All employers have good reason to welcome the Texas Supreme Court's most recent ruling on noncompete contracts. Much of the confusion that made noncompete contract enforcement in Texas difficult to predict has been eliminated. In Alex Sheshunoff Management Services, L.P. v. Johnson, the Texas Supreme Court shifts the focus for noncompete contract analysis away from technical timing and contract formation issues that dominated recent decisions, and back to whether the contract is reasonable and necessary for the protection of a legitimate business interest. Lower courts were split on whether the Texas Covenant Not to Compete Act (the "Act") required a specific formation process with unique timing requirements. It is now clear that the contract formation process will be less important than the content of the contract and circumstances surrounding performance of it.
Texas Supreme Court Enforces Covenant Not to Compete (pdf).Ogletree Deakins - October 24, 2006 Texas Supreme Court Enforces Covenant Not to Compete.
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