Understanding Non-Solicitation Agreements in Texas

If you’re in the business of selling clothes, or running an e-commerce store on WooCommerce, understanding a comprehensive non-solicitation agreement under Texas law is essential. Such agreements can be crucial to protecting your business interests and customer bases. But just what is a non-solicitation agreement, and how does it apply to clothing businesses in Texas?

Non-Solicitation Agreement Defined

Broadly speaking, a non-solicitation agreement is a legal restriction designed to prevent an employee from soliciting either existing employees or customers following the termination of their employment. How these restrictions are used, and how broadly or narrowly they are defined, depends largely on the business. For example, there may be a very large number of employees in close proximity to each other, but only a small customer base that the business retains. Consequently, the restrictions may be targeted much more heavily on the employee relationships than on customer relationships.

In the context of Texas non-compete agreements, a non-solicitation agreement is an agreement that limits an employee’s ability to contact his or her former employer’s clients. Thus, a non-solicitation agreement in Texas focuses on client lists and customer lists to prevent former employees from stealing customers and profits. For clothing businesses in Texas, non-solicitation agreements offer valuable protection against former employees contacting customers.

Why Non-Solicitation Agreements are Relevant to Texas-Based Businesses

Restrictive covenants, including non-solicitation agreements, have been enforced in Texas since 1871. However, new statutes and case law have sharply limited non-compete agreements in recent years, so more businesses are turning to options like non-solicitation agreements to protect their business interests. Article 180 of the Texas Business and Commerce Code governs non-solicitation agreements. It requires non-solicitation agreements to be reasonable in scope and extent, and limits their duration to two years. The terms of a non-solicitation agreement will have to be defined for them to be enforced. Typically, such an agreement will define the maximum number of customers an employee can solicit following termination of their employment. Sometimes, non-solicitation agreements will also specify which clients are covered under the agreement. In some cases, a business will list the customers by name because it is difficult to define customers in terms of the product or service they received.

Elements of a Non-Solicitation Agreement in Texas

There are several important elements that a business should consider including in a non-solicitation agreement: You should always work with a skilled legal professional when drafting non-compete or non-solicitation agreements.

Enforcement and Violations of a Non-Solicitation Agreement

What could happen if an employee violates a non-solicitation agreement? In many cases, employers can sue for monetary damages or ask the court to restrict the employee from soliciting former clients or customers during the remainder or the term of the agreement. However, if the non-solicitation agreement is overly broad, the court may modify or void the non-solicitation agreement.

Legal Issues for Clothing Businesses Who Sell on WooCommerce

For businesses like stores selling clothing using WooCommerce, both non-compete and non-solicitation agreements are very important to retain control of your customer base. A former employee may easily enter the world of e-commerce and open a new online business, so your customer base is vulnerable to poaching and theft. Think about your former employees, and how easily they could reach out to your customer base via social media and build a following by using their previous insider knowledge of your business. If you don’t have non-solicitation agreements, you’ve basically given up the right to control where and how your customers are solicited.

Real Life Examples of Non-Solicitation Disputes in the E-Commerce Industry

An example of a recent dispute over non-solicitation agreements occurred in 2014 between Nordstrom Rack and two of its former department managers who left to join a competing business, Open Sky. Nordstrom sued the former employees in federal court, asking for an injunction preventing them from soliciting former Nordstrom employees as well as customers they had connections with. Although the court did agree that the non-solicitation agreement was enforceable, the court did not grant Nordstrom an injunction to prevent the company defendants from soliciting former employees.

Tips for Drafting an Effective Non-Solicitation Agreement

You can follow these tips to create an effective non-solicitation agreement: Consult a lawyer before entering a non-solicitation agreement, be sure to speak to a legal professional who can help ensure its validity.

How to Honor Non-Solicitation Agreements While Still Growing Your Business

Compliance with non-solicitation agreements doesn’t mean you have to sacrifice profits or growth in order to remain legally compliant. Here are some steps you can take to make sure your business isn’t affected while still retaining some value from existing business relationships: