Autry v. Acosta: Narrowly Tailoring a Non-Compete Agreement
The Oklahoma Court of Appeals recently reviewed a district court’s decision regarding a non-compete agreement. Generally, non-compete agreements are not legal in Oklahoma. However, the Oklahoma legislature has provided for a narrow exception to this general rule. The exception can be found in Title 15 Section 219A of the Oklahoma Statutes. This narrow exception allows for non-competition agreements which prevents the former employee from directly soliciting the sale of goods or services from established customers of the former employer. Noticeably, the law prohibits any prohibition on a former employee participating in the same business as the former employer.
In the Court of Appeals decision, an employer had signed a non-competition agreement with a company and subsequently left the company years later. When the employee left, some customers of the employer left to become customers of the former employee.
The non-compete agreement stated the following: …Employee shall not… in any capacity whatsoever, including, without limitation… directly or indirectly, engage in the business of selling, soliciting, or promoting the sale of Clients that Employee represented while employee by [former employer].
The district court reformed the agreement by removing the word indirectly and issued an injunction. The Court of Appeals said that the covenant to not compete violated state law because it prohibited more than the direct solicitation of “established clients.” The removal of the word “indirectly” did not completely correct the non-compete because it was unclear which customers the former employee was prohibited from soliciting.
Had the former employer more carefully drafted the non-compete, it would likely be enforceable. Instead, because of few poorly chosen words, the entire non-compete is invalid.
Before hiring key personal for a business, employers should carefully consider their non-compete agreements and seek legal counsel to ensure their compliance with Oklahoma’s stringent non-compete laws.