Restrictions on Sales Employees in Texas

We are blogging on “Non-competes, Trade Secrets, Fiduciary Duties, and the Inevitable Disclosure Doctrine.” Mark Oberti has prepared a detailed paper on all of these issues, which can be found here.

In the context of sales employees, “a covenant not to compete that extends to clients with whom a salesman had no dealings during his employment is unenforceable.” Wright v. Sport Supply Group, Inc., 137 S.W.3d 289, 292 (Tex. App.–Beaumont 2004, no pet.). In other words, “[i]n the case of covenants applied to a personal services occupation, such as that of a salesman, a restraint on client solicitation is overbroad and unreasonable when it extends to clients with whom the employee had no dealings during his [or her] employment.” John R. Ray & Sons, Inc. v. Stroman, 923 S.W.2d 80, 85 (Tex. App.–Houston [14th Dist.] 1996, writ denied); EMS USA, Inc. v. Shary, 309 S.W.3d 653 (Tex. App.–Houston [14th Dist.] 2010, no pet.) (“A restraint on client solicitation in a personal services contract is overbroad and unreasonable if it extends to clients with whom the employee had no dealings during his employment.”) (citation omitted); Poole v. U.S. Money Reserve, Inc., No. 09-08-137CV, 2008 WL 4735602, at *8 (Tex. App.–Beaumont Oct. 30, 2008) (mem. op., not designated for publication); Daytona Group of Tex., Inc. v. Smith, 800 S.W.2d 285, 288 (Tex. App.–Corpus Christi 1990, writ denied). In SafeWorks, LLC v. Max Access, Inc., No. H-08-2860, 2009 WL 959969, at *5 (S.D. Tex. Apr. 8, 2009), Judge Nancy Atlas found that such an overbroad restraint on salespersons was unenforceable as a matter of law.

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