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Dec26
Alex Sheshunoff Mgmt. Servs., LP. v. Johnson

The following is not meant to be legal advice.

On October 20, 2006, the Texas Supreme Court clarified Texas law governing covenants not to compete with its "business friendly" decision in Alex Sheshunoff Mgmt. Servs., LP. v. Johnson, 2006 Tex. LEXIS 1039 (No. 03-1050).

The court revisited its ruling in Light v.Centel Cellular Co., 883 S.W.2d 642 (Tex. 1994).  After the 1994 ruling in Light, businesses were often unsuccessful when attempting to enforce covenants not to compete against "at will" employees. In Light, the Texas

 

Supreme Court ruled in favor of the employee and required the employer's

 

promises to be binding at the time the contract was made or the covenant

 

would not be "ancillary to or part of an otherwise enforceable agreement."

 

 

The Scheshunoff made it easier for businesses to enforce covenants not to compete in "at will" employment situations. Sheshunoff makes it easier for Texas businesses to

 

enforce covenants not to compete when the specialized training and confidential information are provided to an employee after the agreement is signed, as long as the confidential information and training are provided.

It is not clear whether the Sheshunoff decision is a victory for Texas businesses.  The majority and two concurring opinions leave room for trial and appellate courts looking to invalidate covenants in more extreme factual circumstances.

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