Labor and Employment attorney Mark Shank says overuse of covenants could diminish their utility.
The Texas Supreme Court has further expanded employers' ability to enforce non-compete agreements with workers, and the result will likely be even greater use and popularity of these agreements in Texas, says Mark Shank of Dallas' Gruber Hurst Johansen & Hail. In Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, Texas Supreme Court justices overturned rulings by two lower courts and in the process granted more leeway for businesses to enforce these covenants. The case centered on accountant Brendan Fielding's challenge to the enforceability of a non-compete agreement he had with his former employer, Mann Frankfort Stein & Lipp Advisors. Fielding argued that Mann Frankfort had not "expressly promised" to reveal confidential information to him in the course of his job(such express promises were the previous threshold for enforceability identified by the Texas Supreme Court in Sheshunoff Management Services, L.P. v. Johnson). The Supreme Court ruling expands the reach of these covenants by ruling that there can be an "implied promise" from employers that working with confidential information is part of an employee's job duties.

Shanks says the ruling opens the door for even more reliance on these agreements in Texas. "A natural result may be that businesses become more aggressive in trying to tie up lower-level employees with these types of covenants." But businesses should be concerned that overuse of non-competes could dilute their power. "You can diminish the value of these agreements by applying them too broadly or by taking a one-size-fits-all approach with your workforce."