| 86R13256 LED-D | ||
| By: Hinojosa | H.B. No. 2960 | |
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| relating to a prohibition against covenants not to compete for | ||
| certain low-wage employees. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Section 15.50(a), Business & Commerce Code, is | ||
| amended to read as follows: | ||
| (a) Notwithstanding Section 15.05 of this code, and subject | ||
| to any applicable provision of Subsection (b), a covenant not to | ||
| compete is enforceable if it is ancillary to or part of an otherwise | ||
| enforceable agreement at the time the agreement is made to the | ||
| extent that it contains limitations as to time, geographical area, | ||
| and scope of activity to be restrained that are reasonable and do | ||
| not impose a greater restraint than is necessary to protect the | ||
| goodwill or other business interest of the promisee, except as | ||
| provided by Section 15.501. | ||
| SECTION 2. Subchapter E, Chapter 15, Business & Commerce | ||
| Code, is amended by adding Section 15.501 to read as follows: | ||
| Sec. 15.501. PROHIBITION AGAINST COVENANT NOT TO COMPETE | ||
| FOR CERTAIN LOW-WAGE EMPLOYEES. (a) In this section: | ||
| (1) "Employee" means an individual who is employed by | ||
| an employer for compensation. | ||
| (2) "Employer" means a person who employs one or more | ||
| employees. The term does not include a public employer. | ||
| (b) This section applies only to an employee who earns not | ||
| more than the greater of: | ||
| (1) the federal minimum wage under Section 6, Fair | ||
| Labor Standards Act of 1938 (29 U.S.C. Section 206); or | ||
| (2) $15.00 an hour. | ||
| (c) An employer may not require an employee to whom this | ||
| section applies to enter into a covenant not to compete that | ||
| restricts the employee from performing work: | ||
| (1) for another employer for a specified period of | ||
| time; | ||
| (2) in a specified geographical area; or | ||
| (3) for another employer similar to the employee's | ||
| work for the current employer. | ||
| (d) A covenant not to compete described by Subsection (c) is | ||
| void and unenforceable. | ||
| (e) Section 15.51 does not apply to a covenant not to | ||
| compete described by Subsection (c). | ||
| SECTION 3. Section 15.52, Business & Commerce Code, is | ||
| amended to read as follows: | ||
| Sec. 15.52. PREEMPTION OF OTHER LAW. The criteria for | ||
| enforceability of a covenant not to compete provided by Sections | ||
| [ |
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| remedies in an action to enforce a covenant not to compete provided | ||
| by Section 15.51 of this code are exclusive and preempt any other | ||
| criteria for enforceability of a covenant not to compete or | ||
| procedures and remedies in an action to enforce a covenant not to | ||
| compete under common law or otherwise. | ||
| SECTION 4. The change in law made by this Act applies only | ||
| to a covenant entered into on or after the effective date of this | ||
| Act. A covenant entered into before the effective date of this Act | ||
| is governed by the law in effect at the time the covenant was | ||
| entered into, and the former law is continued in effect for that | ||
| purpose. | ||
| SECTION 5. This Act takes effect September 1, 2019. | ||