The Employer's Legal Resource: Oklahoma Legislature Enacts Employee Raiding Law
Oklahoma employers are rightfully concerned about the prevention of unfair competition from former employees, including the misappropriation of their trade secrets, the poaching of their customers, and the raiding of their employees. However, many businesses have been dismayed to learn that the non-compete and non-solicitation agreements signed by their former employees may be unenforceable under Oklahoma law as unlawful restraints of trade. There are three exceptions to this general rule. First, where the seller of an existing business sells the goodwill of the business, the seller may agree with the buyer to refrain from carrying on a similar business within a specified county and county or counties contiguous thereto, so long as the buyer carries on the business. Second, partners may, upon dissolution of a partnership, agree that none of them will carry on a similar business wit hin a specified county and any county or counties contiguous thereto. Third, an employer who has a non-compete agreement with an employee, either verbally or in writing, may prevent a former employee from directly soliciting the sale of goods, services, or a combination of goods and services from the established customers of the employer.
While Oklahoma law still prohibits non-compete agreements, except in the narrow three circumstances described above, the Oklahoma legislature recently enacted legislation permitting Oklahoma businesses to lawfully prohibit the raiding of their employees and independent contractors by former employees.
The law, which becomes effective November 1, 2013, 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 law allows an employer to enter into a contract with its employees which broadly prohibits its former employees from either directly or indirectly or actively or inactively seeking to hire your employees and independent contractors. The law does not define the phrases "directly or indirectly" or "actively or inactively." Neither does it define the term "independent contractors." Accordingly, one can only imagine whether a job posting constitutes "indirect" solicitation. We will keep you updated on all further developments.
In order to fully protect your interests, it's vital that you ensure your non-compete and non-solicit agreements comply with Oklahoma law and take advantage of the new employee raiding law permitting you to prohibit the solicitation of your employees and independent contractors. In drafting an anti-raiding agreement to withstand scrutiny by an Oklahoma court, follow the same advice we give regarding non-compete agreements: make sure the language of your agreement is taken, verbatim, from the statute.
Contact our labor and employment group if you have any questions about non-compete agreements or employee raiding.
By Kenneth T. Short, email@example.com