Texas Non Compete Agreements. What Constitutes a Promise to Give Confidential Information?
In a recent case, the employer’s consideration in exchange for the employee’s promise not to compete was set forth in the following provision:
Employer hereby agrees to provide to Employee any specialized training necessary, in the opinion of Employer, to allow Employee to conduct the duties of employment with Employer. Employer further agrees to provide to Employee any of Employer’s proprietary and confidential information necessary to allow Employee to conduct the duties of employment with Employer.
The employee contended that this provision didn’t obligate the employer to do anything, because the employer might have concluded that no specialized training (confidential information) was needed for the employee to do her job. The court [of appeals] disagreed:
[T]he trial court could have concluded that Rattikin was in fact bound to provide O’Brien with confidential and proprietary information and specialized training. The agreement merely gives Rattikin the option of determining, in its opinion, what confidential and proprietary information and training it should provide O’Brien during the course of her employment.
1. The best practice for an employer is to unambiguously promise to provide confidential information at the moment the non-compete agreement is signed, and then do it.
2. This case illustrates the difficulty in predicting with certainty whether a particular non-compete agreement is enforceable. Clearly, the employee in this case had a plausible argument that the employer maintained sole discretion over whether to provide specialized training or confidential information, and that, therefore, the alleged consideration was "illusory." The court disagreed with this interpretation, but the employee (and her attorney) no doubt believed in the correctness of her legal position.
O’Brien v. Rattikin Title Co., No. 2-05-238-CV, 2006 WL 417237 (Tex. App.–Fort Worth Feb. 23, 2006, pet. filed).