Bill Text: TX HB1327 | 2021-2022 | 87th Legislature | Introduced

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Bill Title: Relating to the enforceability of covenants not to compete against certain discharged employees.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2021-03-05 - Referred to Business & Industry [HB1327 Detail]

Download: Texas-2021-HB1327-Introduced.html

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87R1743 SRA-D
By: Canales H.B. No. 1327

A BILL TO BE ENTITLED
AN ACT
relating to the enforceability of covenants not to compete against
certain discharged employees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Section 15.50, Business &
Commerce Code, is amended to read as follows:
Sec. 15.50. [CRITERIA FOR] ENFORCEABILITY OF COVENANTS NOT
TO COMPETE.
SECTION 2. Section 15.50, Business & Commerce Code, is
amended by amending Subsection (a) and adding Subsection (a-1) to
read as follows:
(a) Notwithstanding Section 15.05 of this code, except as
provided by Subsection (a-1), 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.
(a-1) Notwithstanding any other law, a covenant not to
compete is void and unenforceable if the promisor of the covenant is
an employee discharged without good cause. For purposes of this
subsection, "good cause" means a reasonable basis for discharge of
an individual employee from employment that is directly related to
the employee's conduct, including the employee's conduct on the job
or otherwise, job performance, and employment record.
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 Section
15.50 [of this code] and the procedures and 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 law, including
[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 not to compete agreed to or renewed on or after the
effective date of this Act. A covenant not to compete agreed to or
renewed before that date is governed by the law in effect
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 5. This Act takes effect September 1, 2021.