Gavel to Gavel: Agreements enforceable

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The Journal Record - May 23, 2013

For years, Oklahoma employers have required employees to sign agreements stating they will not solicit the company’s employees if they go to work for another employer. In April, Gov. Mary Fallin signed legislation confirming the enforceability of those agreements.

Over the years, the Oklahoma Legislature and the courts have been active on the issue of noncompetition agreements with employees. Oklahoma statute specifically prohibits employers from requiring employees to sign noncompetition agreements. Nonsolicitation agreements, however, are allowed, as long as they are limited to restraining employees from directly soliciting established customers.

Until now, the Oklahoma Legislature has been silent about agreements not to solicit other employees, and thus, many took the position that such agreements were enforceable. Those who argued against such agreements claimed they should not be enforced because they may restrain people from employment opportunities, based on an agreement to which they were not a party. Then, in 2011, the Oklahoma Supreme Court caused concerns about the enforceability of such provisions when it decided Howard v. Nitro-Lift Technologies Inc. The noncompetition agreement in that case contained many facets, including an employee nonsolicit provision. The court determined that the overall agreement was unenforceable, but in doing so it made only a passing reference to the employee nonsolicit provision.

Fallin calmed those concerns for employers when she signed Senate Bill 1031, which states, “A contract or contractual provision which prohibits an employee or independent contractor of a person or business from soliciting, directly or indirectly, actively or inactively, the employees or independent contractors of that person or business to become employees or independent contractors of another person or business shall not be construed as a restraint from exercising a lawful profession, trade or business of any kind.”

The new law goes into effect on Nov. 1.

This does not mean that employers can prohibit solicitation of employees without parameters. Rather, employee nonsolicitation provisions should be limited in scope to something that is reasonable in terms of both geography and time frame.

The new law brings clarification for employers concerning agreements not to solicit employees. While these agreements are now enforceable by statute, employers must ensure that they remain realistic about what they seek to protect and keep any agreements reasonably limited in time and geographic scope.

 
This article appeared in the May 23, 2013, issue of The Journal Record. It is reproduced with permission from the publisher.
© The Journal Record Publishing Co.

 

Topics:  Independent Contractors, Non-Compete Agreements, Non-Solicitation Agreements

Published In: General Business Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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