Employees in Texas typically owe a duty of loyalty or a fiduciary duty to their employers.  That includes a duty not to divert corporate opportunities or engage in activities that benefit employees at the expense of their employers. Recently, the Fifth Circuit upheld an award of $11,000,000 against an oilfield supervisor after a jury found that he breached his fiduciary duty to the employer. The company alleged that the oilfield supervisor hired his friend’s company to drill out over 200 wells over the course of several years. To funnel work to his buddy, the oilfield supervisor told his ..read more

Last week, the Federal Trade Commission (FTC) announced a new rule banning virtually all non-compete agreements, which is supposed to go into effect on August 21, 2024. Within hours of this announcement, two lawsuits were filed in Texas against FTC alleging that the agency did not have the authority to pass such a sweeping rule. The Eastern District of Texas Has Ordered The Parties to Complete the Briefing by June 12, 2024 One of these cases – filed by the U.S. Chamber of Commerce – is moving very quickly. The court has ordered the parties to complete the briefing by June 12, 2024, and has ann ..read more

Yesterday, the Federal Trade Commission announced that a special meeting will take place on April 23rd, next Tuesday, during which the commission members will vote on whether to ban non-compete agreements in the United States. Why is this happening now? FTC has been considering a ban for a long time. In January of last year, they issued a proposed rule that would ban all non-compete agreements. As is typical with proposed rules, they allowed members of the public to comment on the rule. Since they received over 26,000 comments – from individuals, companies, and various commercial and lobbying ..read more

The federal court of appeals that oversees Texas recently ruled that a company that promoted a sale of its client, but did not cause the final sale, was still entitled to a commission on the sale, which amounted to almost $4 million on a $190 million transaction.  The seller engaged a company to advise it regarding a potential sale and promised to pay a $25,000 quarterly fee for “advisory services.” As part of the same agreement, the seller also agreed that the advisor would get an “advisory completion fee” if the seller closed a transaction, i.e., a sale of all or substantially all of th ..read more

Yes, if you are in Texas. There has been a lot of buzz about federal government banning all non-compete agreements (not likely to pass) and some states have actually outlawed such agreements. However, Texas is not one of them. And since each state has their own rules about non-competes, in Texas, these agreements are still very much enforced when they are reasonable. There are, of course, ways to defeat non-compete agreements, however, anyone who signs a non-compete agreement without reading it or without understanding that it may be enforceable, is acting at their own peril. Some of the defen ..read more

The recent rule from the U.S. Department of Labor (DOL) lays out how employers should decide if their workers should be paid as W-2 employees or as 1099 contractors. This rule becomes effective on March 11, 2024 and is meant to protect workers from wage theft by their employers. The main aim of this new rule is to address the problem of employers wrongly labeling employees as independent contractors, which denies employees minimum wage and overtime rights. This misclassification can make employers liable to pay back wages under a federal statute (FLSA) and even face penalties for not paying pa ..read more

Clients in litigation often ask what happens if the other side destroys relevant emails, documents, or other evidence crucial to proving their wrongdoing. A recent opinion from the Fifth Circuit illustrates just how a court can punish someone who intentionally destroys evidence during a lawsuit. In these circumstances, the trial court punished the defendant with a default judgment in excess of $5,000,000.00. In this case, a software company sued another company for stealing the code for its software product. During discovery, the owner of the defendant company destroyed electronic evidenc ..read more

An employee recently posted on Reddit that his former employer demanded that he sign a non-compete agreement a month after he had been fired and found another job with a competitor. Feeling stressed and not knowing what to do, the person turned to the Reddit community, asking for advice with a post that was titled: “My former employer is forcing me to sign a non-compete clause after I found a new job in a month after they fired me.” The employee was put on a performance improvement plan after he had undergone radiation therapy, and was subsequently fired. The employee does not mention the name ..read more

Many major hospital chains in Texas require their physicians to sign non-compete agreements. Despite all the talk about how the federal government is going to ban all non-compete agreements, until that happens (which is not very likely), hospitals will continue to require non-compete restraints from their physicians and will continue to enforce such agreements. Not all hospital non-compete restraints are reasonable or are likely to be enforceable in court. However, until somebody challenges their restraints in court and obtains a declaration that their non-compete is not enforceable, hospitals ..read more

With all this talk about how the federal government is about to ban non-compete agreements, many might think they no longer need to worry about non-compete restraints in their contracts, but that is not the case. At least, not in Texas. While legal scholars and companies are debating whether the Federal Trade Commission (FTC) even has the power to ban non-compete agreements, which is highly doubted by some, companies in Texas are continuing to sue employees for breaches of their non-compete and non-solicitation clauses. The most recent example is a lawsuit that The Ticket’s parent company (we ..read more