Demand letters and lawsuits from former employers are more common than you might think. Our firm regularly fields calls from executives, skilled tradespeople, and professionals facing claims of non-compete violations, customer solicitation, or trade secret theft – often based on agreements they signed years ago and barely remember.
Before you make a move to a competing employer or start your own business, make sure you avoid these common pitfalls:
Mistake #1: "I Created It, So It's Mine"
The reality: Work product created during employment belongs to your employer under the work-for-hire doctrine.
This applies to presentations, client lists, marketing materials, proposals, training documents, and strategic plans – regardless of whether you were the sole creator. The fact that you stayed late to finish a proposal or spent weekends developing a presentation doesn't change the legal ownership.
Exceptions exist only in rare cases involving pre-existing intellectual property you brought to the job or specific contractual terms that grant you ownership rights. Don't assume an exception applies without consulting an attorney.
Mistake #2: Waiting Until After Resignation to Seek Legal Advice
This is perhaps the costliest mistake, especially when setting up a competing enterprise. If you seek legal counsel after resigning, potentially risky conduct may have already taken place and cannot be undone. Forensic evidence of your activities exists in email logs, security videos, download histories, and access records.
Better approach: Consult an attorney two to three months before your planned departure. Early guidance allows you to understand your restrictions, make informed decisions about timing and conduct, and structure your new entity without violating state law or written agreements.
Mistake #3: Assuming "I Didn't Sign Anything" Means No Obligations
Many employees believe they have no restrictions because they didn’t sign a non-compete or confidentiality agreement. This assumption is dangerous for a couple of reasons:
- In Texas, employees owe a fiduciary duty of loyalty to their employer while employed. This means you can't take your employer's business opportunities for yourself or steer customers away from the company while you're still on the payroll. This duty exists even without a written contract. However, it ends when employment ends.
- TheTexas Uniform Trade Secrets Act (TUTSA) protects valuable information that your employer has taken steps to protect and isn't publicly known. Examples of protected trade secrets could include a chemical formula, a building design, client lists, software, or a proprietary process. You can face legal trouble for taking or using this information – even if you never signed a confidentiality agreement.
Important exceptions: Information in the public domain – such as product specs or prices posted online – is not confidential and therefore not a protected trade secret. Likewise, general knowledge and skills acquired on the job are not protected by TUTSA.
Mistake #4: Forgetting About Agreements Signed Years Ago
Many employees overlook agreements signed when they were hired, promoted, or given bonuses or equity in the business. These agreements often contain restrictions that survive employment – sometimes indefinitely:
- Confidentiality and non-disclosure agreements (NDAs) define what information you cannot share or use and typically remain in effect long after employment ends. Violating them – by taking, using, or sharing restricted information – can result in lawsuits.
- Enforceable non-compete agreements restrict you from working in competing roles or businesses for a specific period, within a defined geographic area, after your employment ends. In Texas, these restrictions must be reasonable in scope, time, and geography – overly broad agreements can be reformed by a court to make them enforceable or potentially thrown out entirely.
- Non-solicitation agreements prohibit you from soliciting customers, clients, or employees for a specific period after leaving. What counts as “solicitation”? Texting customers to tell them you're leaving; sending announcements about your new position or company; and encouraging colleagues to join you could all be considered solicitation in violation of your agreement.
Locate and review any agreements you signed when you were initially hired, promoted, or given bonuses or equity. There may be a non-compete or other restrictive covenant included in those agreements.
Mistake #5: Underestimating Your Digital Footprint
What may seem like routine wind-down activities to you – sending yourself a few files, accessing client contact information, downloading presentations – take on a different meaning when viewed collectively by your employer after your resignation.
Texas employers routinely conduct forensic reviews after departures, particularly when employees join competitors or start competing businesses. These reviews encompass emails (I call them “evidence” mails), downloads, WhatsApp or Teams messages, cloud storage activity, file modifications, and access logs from months before your resignation.
Assume everything you do on company systems will be discovered. Even "deleted" information is often recoverable.
How to Avoid Digital Footprint Problems
Take pains to avoid any activities that might appear suspicious. Promptly return all company property, including laptop, cell phone, building keys, security badges, etc. Do not log on to your former employer's online portals or programs after you leave.
Don't make hard or electronic copies of any company materials, forms, client lists, or work products. Do not download files from your company computer to a flash drive or send emails to your personal email address.
If you do need to remove personal files from your company computer, ask HR to look over your shoulder to avoid any hint of impropriety.
Use personal devices, personal time, and personal email for any preparation activities related to your future plans.
Mistake #6: Not Making Your New Employer Aware of Your Restrictions
If you join another employer, the hiring company should include clauses in your employment agreement acknowledging any existing confidentiality agreements and committing to respect those restrictions.
They show that your new employer wasn't inducing you to breach agreements or encouraging you to bring confidential information. This protects both you and your new employer from claims that you conspired to violate your obligations.
Protective language should include:
- Acknowledgment that you have confidentiality obligations to your former employer
- Commitment by your new employer not to request or use confidential information from the former employer
- Representation that you will not bring any protected information to the new role
Preparing to Compete vs. Competing
In Texas, you can prepare to compete while employed – you just can't compete.
Texas law recognizes that employees have the right to plan for their professional future. The critical question is whether your actions merely positioned you for a future opportunity or whether you actively competed against your employer while drawing a paycheck.
Permitted Activities While Employed
While still employed, you may:
- Research market opportunities and develop business plans on your own time
- Form legal entities (such as an LLC or corporation)
- Consult with attorneys, accountants, and business advisors
- Secure financing or investment commitments
- Interview for positions with competitors
- Identify and secure office space or equipment (for use after employment ends)
All preparation activities must occur on your personal time, using your personal devices and resources, and without involving your employer's confidential information.
Prohibited Activities While Still Employed
Competition while employed means taking actions that actively undermine your employer's business interests. While still employed, you cannot:
- Solicit your employer's customers or clients
- Steer business opportunities away from your employer
- Recruit coworkers to join your venture
- Use employer resources (time, equipment, information) for your new business
Frequently Asked Questions
Does my confidentiality agreement expire when I leave?
No. Confidentiality agreements typically survive employment indefinitely unless they have a specific expiration date.
Can I use skills and industry knowledge gained during employment – even if my employer paid for my training?
General skills, industry knowledge, and professional expertise belong to you and can be used in future employment – regardless of whether your employer paid for the training that developed those skills.
If you're a home builder, for example, and you are trained on the steps it takes to build a house – from foundation to framing, plumbing, etc. – you are permitted to leverage that knowledge in your next endeavor.
Specific confidential information that may have been disclosed in training – such as secret prototypes or techniques, proprietary business plans, or a password-protected database – belongs to your employer, however, and should not be used without authorization.
When should I tell customers I'm leaving?
If you signed non-compete or non-solicitation clauses, consult an attorney before making any announcements, as you may be restricted from contacting customers or clients for a specific period.
Are non-competes enforceable in Texas?
Yes, if they meet specific requirements: reasonable in scope, time, and geography; ancillary to another agreement; and supported by consideration. An overly broad non-compete may be reformed by a court or deemed unenforceable.
What if my non-compete covers the entire state?
Geographic restrictions must be reasonable to protect your employer's legitimate business interests. For example, a company doing business solely in the Houston area should not try to restrict an employee from competing within the entire state of Texas.
An overly broad non-compete may be modified by a court to make it reasonable or potentially deemed unenforceable. Consult with an attorney for advice on your specific agreement.
Take the Next Step with Confidence
You have the right to pursue new opportunities and leverage your professional skills and knowledge. Understanding your obligations doesn't limit you – it protects you.
Our experienced business attorneys can help you avoid disputes with your employer by:
- Reviewing your employment agreements and evaluating the enforceability of non-compete covenants
- Consulting with you on trade secret and fiduciary duties specific to Texas law
- Defending you against cease-and-desist letters and other claims from a former employer or partner
Ready to discuss your career transition? Call (713) 783-3110 or contact us online to schedule a consultation with one of our experienced business attorneys.