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A BILL TO BE ENTITLED
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AN ACT
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relating to the enforceability of covenants not to compete against |
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certain discharged employees. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Section 15.50, Business & |
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Commerce Code, is amended to read as follows: |
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Sec. 15.50. [CRITERIA FOR] ENFORCEABILITY OF COVENANTS NOT |
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TO COMPETE. |
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SECTION 2. Section 15.50, Business & Commerce Code, is |
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amended by amending Subsection (a) and adding Subsection (a-1) to |
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read as follows: |
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(a) Notwithstanding Section 15.05 of this code, except as |
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provided by Subsection (a-1), and subject to any applicable |
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provision of Subsection (b), a covenant not to compete is |
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enforceable if it is ancillary to or part of an otherwise |
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enforceable agreement at the time the agreement is made to the |
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extent that it contains limitations as to time, geographical area, |
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and scope of activity to be restrained that are reasonable and do |
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not impose a greater restraint than is necessary to protect the |
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goodwill or other business interest of the promisee. |
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(a-1) Notwithstanding any other law, a covenant not to |
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compete is void and unenforceable if the promisor of the covenant is |
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an employee discharged without good cause. For purposes of this |
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subsection, "good cause" means a reasonable basis for discharge of |
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an individual employee from employment that is directly related to |
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the employee's conduct, including the employee's conduct on the job |
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or otherwise, job performance, and employment record. |
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SECTION 3. Section 15.52, Business & Commerce Code, is |
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amended to read as follows: |
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Sec. 15.52. PREEMPTION OF OTHER LAW. The [criteria for] |
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enforceability of a covenant not to compete provided by Section |
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15.50 [of this code] and the procedures and remedies in an action to |
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enforce a covenant not to compete provided by Section 15.51 [of this |
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code] are exclusive and preempt [any] other law, including |
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[criteria for enforceability of a covenant not to compete or |
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procedures and remedies in an action to enforce a covenant not to |
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compete under] common law [or otherwise]. |
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SECTION 4. The change in law made by this Act applies only |
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to a covenant not to compete agreed to or renewed on or after the |
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effective date of this Act. A covenant not to compete agreed to or |
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renewed before that date is governed by the law in effect |
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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SECTION 5. This Act takes effect September 1, 2021. |