I know that the title of this blog sounds provocative to many business owners and attorneys alike. Why in the world would a Texas Contract Attorney of over 27 years equate the use of agreements as a metaphorical weapon?
Here’s why. Employees are trouble, at least in my experience as a business owner for over 27 years. Although I have hired gems, recruitment errors almost destroyed my business on several occasions where employees literally ran off with trade secrets and hard cash. And – all of this transpired notwithstanding detailed interviews, reference checks, and even the use of criminal background investigations. Not just bad but dangerous employees slip through the cracks and typically show up in the people you least suspect. The bad guys only wear black hats in the movies.
Of course, as a Texas Contract Attorney and Texas Litigation Attorney, I have witnessed the identical fact pattern over and over again from clients in all industries from intellectual property to service, product, and other sectors. Precious trade secrets whether they are a computer program, restaurant recipe, or specialized information relating to the operation of a retail/sales/online business are being misappropriated every day.
Bottom line – there is a war out there. Evil people on the very tip of criminality are engaged in a war to steal your trade secrets and destroy your business. I am keenly aware of this as the Moster Law Firm practices in the area of Texas Contract Law in addition to litigation. We are hired to write proper contracts and also to deal with situations which go terribly wrong where ineffective or erroneous contract advice was rendered at inception.
The use of the word “weaponize” is thus an apt description of how contract legal services should be rendered. Whether you know it or not, every business owner is engaged in a battle against bad elements. Here are a few tips on how to weaponize key contract provisions and win the war against employee theft.
1. Include Non-disclosure clauses which shut down employee theft.
This sounds like a “no brainer”, but it is more difficult than it appears. Most employee contracts include generic provisions which anyone call pull off the internet. The problem is that they typically don’t work and are unenforceable. In my view, Firms which practice in the area of contract litigation are in the best position to suggest the needed language to shut down the typical employee who gains access to the business family IP/trade secret jewels and then goes to a competitor with absolutely no remorse!
The choice of contract language is specific and based on the most recent pronouncements of the courts which deal with the enforceability of these provisions on a continual basis. The choice of an incorrect word or phrase or even placement of a simple coma, can destroy the enforceability of a non-disclosure prohibition. Therefore, you need to choose your Texas Contract Attorney carefully.
Additionally, many Texas Contract Attorneys are unfamiliar with the new statutory weapons provided by the Texas Uniform Trade Secret Act or TUTSA to protect trade secrets from theft. Effective contracts need to incorporate the definitions used in TUTSA and critically to put in language which ensures the rapid issuance of a Court Injunction or TRO (temporary restraining order) should an employee engage in IP or trade secret theft. He/she needs to be shut down immediately. If you snooze, you lose – literally.
Another overlooked protection is to weaponize the employee restrictions across the board from low level employees to key management. I have seen dishwashers run off with recipes along with receptions who are happy to turn over client lists to competitors in exchange for a better salary.
2. Weaponize Noncompete Clauses and Win.
Many clients and some attorneys erroneously believe that noncompetition clauses are unenforceable in Texas. That is incorrect. The problem is that these contract restrictions are often poorly drafted or include terms which are per se unenforceable. Hence, they are struck down.
The Texas Supreme Court has articulated the provisions which must be in noncompete clauses to ensure enforceability. The critical component is that an agreement cannot simply recite compensation in exchange for a binding noncompete prohibition. There needs to be what lawyers refer to as additional consideration which means that something apart from compensation is being provided to the employee in exchange for the enforceability of the noncompete restriction. The Texas Supreme Court has recited various examples but the easiest way to comply is to offer the employee confidential information or training in exchange for the noncompete restriction. They are thus being provided with a specialized skill or training in exchange for the restriction on competition. That will work.
Critically, the best way to weaponize a noncompetition clause is to include enforceable language which increases the likelihood that you can get a fast TRO if necessary.
There are other workable solutions which experienced Texas Contract Attorneys can advise. At the Moster Law Firm, we understand the need to provide the essential contract provisions and protections up front to minimize and stop employee theft.
We look forward to hearing from you.