» Enforceability of Noncompete Agreement Raised in Texas Hair Salon Lawsuit

Enforceability of Noncompete Agreement Raised in Texas Hair Salon Lawsuit

An appeals decision in the Fifth District Court in Dallas, Texas shows that employees who have at-will status can still be subject to noncompete employment agreements. The appeals court decided in late May that a trial court had erroneously thrown out the case of the Jon Scott Salon, Inc. v. Jacalyn Garcia and Lindsey Gresham. Garcia and Gresham worked for the Jon Scott Salon and in their employment agreements had signed that they would not directly or inadvertently market to the salon’s customers within a 10-mile radius for one year when they left the company.

When these two hair stylists and cosmetologists terminated their employment on April 13, 2010, they started a new salon within the off-limit radius. Jon Scott allegedly started to get an extraordinary amount of no-show appointments and cancellations. At the original trial, Jon Scott claimed breach of contract, misappropriation of trade secrets and confidential information, theft, conversion, and breach of fiduciary duty. The trial judge threw out the case due to their at-will employment, but in the appellate court, the judge said that status does not bar their employment contract responsibilities. The lawsuit will now go back to the trial court to decide if the hair stylists violated the noncompete agreement.

The appellant opinion stated that, “…once the employer fulfills the promise to divulge the confidential information, the contract becomes enforceable and may support a covenant not to compete.” By signing the documents and using the salon for, “…opportunities and resources to develop contacts and goodwill, they agreed to refrain from using the goodwill for the benefit of any person or entity other than appellant [Jon Scott Salon].”

In a personal-service industry such as a hair salon, non-compete agreements can be vital to the business’ success, especially with the high employee turnover that the industry has. It’s not just high-paid technology, sales, or CEO positions that may warrant these types of agreements to safeguard a company’s client base, and marketing and sales tactics. Texas law on noncompete agreements has changed dramatically over the years, and courts look to numerous factors to determine enforceability.

Disputes involving noncompete agreements can be complex, so having a knowledgeable business attorney on your side – whether you are a business owner, individual, or employee – is advised.

Austin noncompete attorney, Austin business attorney and Austin business litigation attorney Gregory D. Jordan has more than 20 years of experience working on behalf of individuals and businesses in many diverse industries. He can help answer questions about the enforceability of these agreements and what conduct is allowed under a noncompete agreement. To learn more, please contact Austin noncompete lawyer and Austin business litigation attorney Gregory D. Jordan at http://www.theaustintriallawyer.com or call (512) 419-0684.

Gregory D. Jordan is an Austin business attorney, Austin employment lawyer, and Austin business litigation lawyer. To learn more, visit Theaustintriallawyer.com.

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