Smooth Transitions

Smooth Transitions

addressing the Legal issues arising from the departure of employees & Business breakups

The Uber Update

Posted in HR Issues



Last week in Dallas, Uber Black drivers went on strike and refused to pick up cheaper Uber X fares.  For those not familiar with the difference, Uber Black is the higher end service with nicer cars while Uber X is cheaper.  Uber Black drivers did not want to drop their fares and a deal was eventually reached.

Uber has had a tough go of it in the courts and public opinion the last few months.  Recently, a lawsuit was filed in Dallas over a driver related assault putting Uber’s practices under the microscope.

In April ago we discussed the California class action asserted by Uber drives claiming that they were employees not independent contractors.  That class has now been certified meaning Uber drivers may move forward with their class action against Uber.  Uber of course was hopeful that the judge would not certify the class and dismiss the case.  Though class certification is not ruling on the merits it is a required first step for a class action.  In many instances, cases will settle (like any other lawsuit) between class action and trial but expect the Uber lawyers to try and knock out as many of the plaintiffs’ claims through discovery and summary judgment practice.

The implications are huge for Uber.  It and other taxi alternatives like Lyft are buit on the independent contractor model.  Employees are much more expensive than contractors and if Uber was forced to pay its drivers like employees its bottom line would be impacted.  The challenge for the Uber lawyers is resolving the case with an admission or judgment that finds Uber is an employer.  We’ll continue to monitor the California class action and other cases against Uber.

Top 10 From Texas Non-Compete Camp

Posted in Arbitration, Confidentiality, Non-Compete Agreements, Non-Solicitation Agreements, Presentations, Trade Secrets, Trial and Pre-Trial Procedure

Texas Non-Compete

Last week I had the privilege of speaking and attending the Texas Non-Compete Camp put on by UT LAW CLE and Mike Maslanka.  There were a number of great lawyers there addressing topics ranging from whether to sue the new employer of a former employee to ethical considerations of representing both the employee and employer.  Here are some items I took away from the employer’s persepctive:

  1.  Spend time considering the non-compete the employee is going to sign.  There is no one size fits all approach and if an employee can show the covenant was overlybroad the court could award them their costs and fees;
  2. The employer doesn’t always have to lead off with a lawsuit – consider pre-suit depositions if more evidence is necessary;
  3. If the employer is going to require a non-compete, also consider non-solicits, anti-raids, and confidentiality provisions;
  4. Always include venue and choice of law provisions;
  5. Consider whether arbitration or jury trial waivers make sense;
  6. Texas has adopted the Uniform Trade Secrets Act and a prevailing party in some circumstances can obtain their attorneys’ fees;
  7. There are other types of agreements that have the impact of a non-compete like stock/equity incentive plan agreements and garden leave agreements that might be considered;
  8. These types of disputes are fast, furious, and expensive;
  9. Remember that most of these disputes will never see a jury and that a judge has a great deal of discretion in temporary restraining orders and injunctions; and
  10. A party seeking a TRO will have to swear to the facts alleged – make sure whatever sworn to is accurate as it can come back to bite you.


Hawaii Non-Compete Legislation

Posted in Non-Compete Agreements, Non-Solicitation Agreements, Trade Secrets, Uncategorized

It’s always interesting to take a look at other states to see how they deal with non-compete legislation.  We’ve discussed Masschusetts and most recently doctor non-competes in New Mexico.  Hawaii is the latest state to enact new noncompete legislation targeting workers in a “technology business”.  This is how the Hawaii legislature defined “technology business”:



Basically, folks that work in a technology business can no longer be subjected to a non-compete and can also solicit other “technology business” workers to come and work with them somewhere else.  Now of course, those employees cannot use their previous employer’s trade secrets at their new job.  The statute does not prohibit non-solicitation clauses that prevent a former employee from calling on previous customers.

Tailoring non-compete legislation to certain professions is neither new nor novel.  Texas has sepcific requirements for doctors that include buyout provisions.  The Hawaii statue basically eliminates any barriers to job change for technology business workers but still prevents them from using trade secrets or calling on former employees.  The inside story on the language in the statute, the carve out of broadcast/phone companies, and the why/how behind the legisation would be interesting to hear.  We’ll continue to montior these types of changes on our end.  No changes appear to be in the pipeline for Texas non-compete statute.


5 Injunction Non-Compete Lessons

Posted in Injunction, Non-Compete Agreements, Non-Solicitation Agreements, Trade Secrets, Trial and Pre-Trial Procedure, Uncategorized

For the last few months I’ve been involved in a number of temporary restraining order/preliminary injunction cases in state and federal courts in a number of different industries/professions. Some general reminders/lessons from non-compete/non-solicit fights:

  1. Signed Agreements – Make sure the non-compete agreements at issue are signed.  Some companies have their employees execute agreements on line and there is an electronic signature.  How is that going to be proved up in litigation? (Usually, there is an electronic signature document that the company has.)   Obviously, a written signature is easier to use but not always available these days.
  2. Consistent Agreements – Often times agreements may be old or prepared by a predecessor company.  Make sure they are consistent.  Look at the key terms here – choice of law, venue, non-solicit, non-compete etc. etc.  Unforuntately, these types of agreements are sometimes only reviewed at the outset of a lawsuit.
  3. Choose venue wisely – Sometimes the agreement itself may dictate where a suit is filed (hopefully it does).  If not, where should the suit be filed?  What state? (where is the employee located/where is the company located)  State or federal court?
  4. Evidence – In some cases the company may have evidence of “bad things” the former employee did or is doing.  This may range from using the former company’s proprietary information to contacting clients/customers.  In some cases the company may only know that the former employee is working for a competitor and that’s it.  So how do you get the evidence necessary to support a TRO or preliminary injunction?  In Texas the pre-suit deposition may be an option or a motion for expedited discovery requesting documents and depositions.  The point is strong evdience is necessary to support an injunction.
  5. Resolution – Most post-employment covenant cases that are resolved by settlement do not inolve the employee ending his/her employment with their new company.  Most of these cases are resolved by a non-solicit agreement.  What do I mean?  An employee and their new company (in most instances) is not going to simply agree that the new employee will no longer work for the new company.  That type of relief is difficult to get and most defendants are willing to go the distance on the non-compete issues.  The fertile ground for this type of resolution is defining the customers/clients the former employee will not contact and ensuring they are not using proprietary information.

Packing Heat in Texas – What employers can do.

Posted in HR Issues, Uncategorized



This past legislative seesion Texas joined other states in passing open carry legislation for gun owners.  In short, as of January 1, 2016, qualified individual will be permitted to openly carry firearms.  The qualifications of gun owners and other frequently asked questions are addressed here.  Just like for concealed carry, businesses/employers can restrict individuals from bringing guns into their place of business.  Texas Penal Code Chapter 30.06 provides the “how” for concealed-carry.  The new provisions for open carry will follow the same requirements, which contains very specific notice requirements.  An article in the Dallas Morning News forecasts a new debate over open carry signs in the future.  For now, the sign requirements:

— Must appear in contrasting colors with block letters at least one inch in height.

— Must be in both English and Spanish.

— Must be displayed in a “conspicuous manner” at the property’s entrance.

— Must say: “Pursuant to Section 30.07, Penal Code (trespass by license holder with an openly carried handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a handgun that is carried openly.”

Employers that want to restrict access should follow the statute

Get the deal signed – DeAndre Jordan Punches Dallas in Its Collective Gut

Posted in Hiring and Firing, HR Issues


Here in Dallas this morning we are trying to recover from what went from a fairy tale NBA free agent signing to a team on the decline that is still on the decline.  You might not be an NBA fan or sports fan for that matter but picture this:  The Dallas Mavericks are several years out from an NBA championship so the expectations remain high here.  The problem is the Mavericks have not drafted well or been able to sign high end free agents.  Drum roll – and then DeAndre Jordan comes into the picture.  Even while the playoffs were still on, rumors of Jordan’s signing with the Mavericks were out there.  Jordan is a Houston native and attended Texas A&M.  He could sign with the Mavericks and return to his native Texas.  By the way, Jordan is a great rebounder, young, and very good.

The Mavericks and Dallas for that matter move into full on recruitment.  In addition to the Mavericks other Dallas luminaries like Tony Romo were involved in the push to get Jordan to Big D. Fast forward to last week and the celebration in Dallas.  Jordan agrees in prinicple for four years and $80 million.  All the Mavericks/Jordan had to do was paper the deal and they were on their way.  This is typically how NBA deals are done.  Except here, the LA Clippers (his former team) put on their own full court press.  I’ll spare you with the details but the Dallas Morning News has a good recount here. Late last night Jordan confirmed he is resigning with the Clippers and didn’t give the Mavericks a chance at changing his mind.  Word is Clippers representatives won’t leave Jordan’s side until he signs his new deal.  Wow.

This post is not critical of the Mavericks, Jordan’s move to go back to LA is not typical.  But, it does illustrate the point of having a signed employment agreement.  Whether if it’s a an $80 million NBA contract or non-compete agreement with a star employee.  Unless there is a signed deal an agreement in principle is merely an agreement to agree.  An agreement to agree in most circumstances is not enforceable.  Typically the agreement in principle will lead to the contract with all the lawyer provided bells and whistles, but always get it in writing.  Both to cement the deal and to ensure all the parties are clear on the terms as memories fade.

So for the Mavericks its back to the drawing board.  Unfortunately, it might be a tough season next year in Big D.

Non-Compete Legislation – The Jimmy John’s Backlash

Posted in Non-Compete Agreements, Non-Solicitation Agreements


When news of the Jimmy John’s non-compete came out last October my concern was the impact it would have on businesses with legitimate non-competes.  There is always a populist theme that is anti-non-compete.  Employees should be able to come and go as they please and a non-compete agreement prevents that.  “Bad” non-competes undermine “good” non-competes.  There are situations where non-competes make sense and there is an interest worthy of protection.  But when bad non-competes are in play and receive attention, the discussion of why we have non-competes in the first place follows.

As I said then, I doubt anyone from Jimmy John’s ever contemplated enforcing a non-compete against the guy or gal behind the sandwich counter but nevertheless they included the non-compete language.   Now Congress has gotten involved with the Mobility and Opportunity for Vulnerable Employees Act – the “Move Act”.  The Move Act prohibits non-competes for employees that make less than $15 an hour and is sponsored by Minnesota Senator Al Franken.  There is a good discussion by lawyer Robert Milligan about prospects for success of the legislation here.

There always seems to be a battle to pass non-compete legislation.  The employee usually doesn’t have lobbyists at work while businesses do.  Regardless, there are some heavy hitters behind the bill and there has been a significant amount of press about the Jimmy John’s Non-Compete and the Move Act.  We’ll continue to monitor progress of the legislation.  The takeaway is businesses that use non-competes to deter employee migration, without any intent to enforce the agreement, ultimately undermine post-employment covenants accross the board.


Recruiter Tips/Links

Posted in Placement Professionals

sd_wsNCPTomorrow, I have the privilege of speaking to the DFW Texas Recruiters Network. Over the years I have had the privilege of representing placement professionals in a number of circumstances. Some tips:

  1. Make sure your engagement agreements/contracts make sense and are enforceable;
  2. Remember that non-competes and non-solicitation agreements in Texas can be enforceable;
  3. Screen your candidates to determine if they have entered into a non-compete or non-solicit;
  4. Remember that if someone you placed is sued it is likely that their new employer will be as well;
  5. Protect your candidate and client information – that information can be a trade secret;
  6. Make sure you are in compliance with the Texas Occupations Code;
  7. A little money spent on an attorney up front can save a lot of money down the road;
  8. Be factual when you talk about a potential employer;
  9. Don’t give legal advice; and
  10. If you sign an agreement prepare to have to comply with it.

Below are some resources and previous writings placement professionals might find of use: