Texas Employee Poaching Attorneys

Is Poaching Employees Legal? Know Your Rights

If a competing company is recruiting your star employees, you may be facing more than just a staffing challenge – you could have a legal case for employee poaching. 

While businesses naturally compete for talent, employee raiding can cross legal boundaries when it involves violating non-compete agreements, misappropriating trade secrets, interfering with existing contracts, or breaching fiduciary duties. 

At Hendershot Cowart P.C., our Texas employee poaching attorneys help businesses protect their teams, proprietary information, and competitive position through strategic legal action and preventative measures tailored to Texas business law. We also represent businesses defending against poaching claims.

Is a competitor raiding your employees? Call (713) 783-3110 or contact us online to review your options.

On This Page:

• What Is Employee Poaching?
• Is Employee Poaching Illegal in Texas?
• Can I Sue for Employee Poaching in Texas?
• How Do I Defend Against an Employee Poaching Lawsuit?
• How Do I Stop Competitors Who Are Poaching My Employees?
• What Damages Can I Collect If I Sue?
• How Employee Poaching Damages Are Calculated
• How Can I Prevent Competitors From Stealing My Employees?
• Protect Your Business from Employee Poaching – Act Now

What Is Employee Poaching?

Employee poaching, or employee raiding, is when one company deliberately recruits and hires employees from a competing business. Although poaching employees isn’t outright illegal, there are several ways in which the practice is considered unlawful. As a result, individuals or companies found guilty of employee raiding can face legal consequences.

Move Quickly To Enforce Your Rights

We’ve had clients tolerate the first, second, or even third instances of employee poaching before deciding to act. If you hesitate to enforce a known violation, the courts may question whether legitimate business interests are at risk.

As soon as you suspect that something may be amiss, contact our experienced business attorneys at (713) 783-3110 to weigh your options. 

Speaking to an attorney does not necessarily mean you will end up in litigation. It does, however, mean that you will be apprised of your rights and are better able to weigh your options.

Is Employee Poaching Illegal in Texas?

Employee poaching isn’t inherently illegal in the state of Texas, but it can become a legal issue when it involves:

• Violation of a non-compete agreement. A non-compete agreement can include provisions that restrict certain competitive activities for a certain period of time in a specific geographic range after employment ends. If employees break that agreement, they could face legal ramifications such as injunctions, lawsuits, and monetary damages.
• Breach of a non-solicitation provision. Non-solicitation agreements prevent departing employees from recruiting former clients or colleagues if they leave their current employer.
• Misappropriation of trade secrets. The Texas Uniform Trade Secrets Act, or TUTSA, prevents employees from taking or using confidential information they gained during employment. TUTSA is especially relevant if you believe a competitor is targeting employees with access to valuable trade secrets. 
• Interference with existing employment contracts. When companies poach employees from competitors, they may face legal liability for what is called “tortious interference” with existing employment contracts. This legal claim applies if the new employer willfully and intentionally interferes with the employment contract.
• Breach of fiduciary duties (particularly by departing executives). Executives and high-level employees in Texas owe fiduciary duties to their employers that include a duty to act in the company's best interest.

Can I Sue for Employee Poaching in Texas?

While employee raiding isn’t illegal in and of itself, the offense is often associated with other illegal business practices, such as violation of non-compete agreements, tortious interference, or the theft of trade secrets.

Employers can file a lawsuit and ask the courts for an injunction to stop the improper competitive activity and to recover financial damages if a non-compete agreement is violated or if protected trade secrets have been misappropriated and used against them.

How Do I Defend Against an Employee Poaching Lawsuit?

This is where the advice and experience of our Texas business law attorneys come in handy. Our law firm can defend your business against employee poaching lawsuits by: 

• Evaluating the enforceability of non-compete and non-solicitation agreements; 
• Challenging trade secret misappropriation claims; 
• Contesting allegations of fiduciary duty breaches; and 
• Mitigating damages. 

If you’ve been served with an employee poaching lawsuit or received a “cease-and-desist” letter, call our law firm to discuss the facts of your case. We will work with you to defend your position and protect your interests.

How Do I Stop Competitors Who Are Poaching My Employees?

First, let’s review your employment agreements:

• Is there a valid contract between you and the poached employee or employees? When companies poach employees from competitors, they may face legal liability for tortious interference with existing employment contracts.
• Did your employees sign a non-compete agreement? Non-compete agreements are enforceable if they are reasonable in scope, duration, and geography, and part of an otherwise enforceable agreement, such as an employment contract.
• Did your employees sign a non-solicitation agreement? Non-solicitation agreements generally prohibit your employees from contacting clients or customers to persuade them to do business with a new, different, or competing firm. Non-solicitation agreements may also prohibit a former employee from recruiting your employees.

Other legal causes of action you can pursue when your employees are being poached include:

• Fiduciary breaches of duty: Executives and high-level employees in Texas owe fiduciary duties to their employers that include an obligation to act in the company's best interest. This prohibits recruiting subordinates while still employed, disrupting operations or relationships before departure, or concealing competitive activities.
• Texas Uniform Trade Secrets Act (TUTSA): If the poached employee is privy to proprietary business information, you may be protected by the Texas Uniform Trade Secrets Act.

Our law firm can review your available legal options and intervene on your behalf. 

What Damages Can I Collect If I Sue?

If an employer has grounds to pursue litigation for employee poaching, such as the violation of a non-compete or non-solicitation agreement or misappropriation of trade secrets, they could receive compensation for damages to their business. The amount and type of damages available depends on the circumstances and underlying agreements.

Generally, damages sought for employee poaching may include:

• Actual Damages: Former employers may seek monetary or compensatory damages as compensation for lost profits related to the breach of a non-compete agreement. The employer must provide evidence of the losses.
• Unjust Enrichment: The employer may pursue reimbursement for the defendant’s unjustly gained revenue – the profits gained from a competitor misappropriating your trade secrets.
• Exemplary Damages: In cases involving malicious conduct, and where there is sufficient proof of wrongdoing, the court may require punitive damages as a form of punishment up to two times the amount of actual damages.
• Liquidated Damages: An employer may include a clause in the employment contract stating that the employee will be subject to a fee if they breach the contract. Liquidated damages may be an actual amount or a formula for calculating the amount that the employee owes the employer. The court will decide whether the clause is fair before requiring payment in full.
• Court Costs and Attorney Fees: The successful party may request court and attorney fees as part of the settlement, but the court will determine whether the unsuccessful party’s actions warrant payment for these costs.

If the court feels that monetary damages alone will not make the injured business whole, it may also order injunctive relief. Injunctive relief usually takes the form of a temporary restraining order or temporary injunction to stop the damaging behavior while the matter is being litigated. 

How Employee Poaching Damages Are Calculated:

Actual damages (also called compensatory damages) aim to make the plaintiff whole by measuring the losses directly caused by the breach of a non-compete or trade secret misappropriation:

• Lost Profits Approach. Damages are calculated by measuring financial loss directly attributable to the employee’s departure, considering factors like lost sales or clients, decreased productivity, and the cost of hiring and training a replacement. This approach typically requires evidence linking a drop in profits to the defendant’s actions.
• Market Share Analysis. This approach measures the market share lost to the competitor after the breach and calculates the monetary value of that lost market share. The plaintiff must be able to show a causal connection between the breach and the market share loss. 
• The Yardstick/Benchmark Method compare the employer’s performance to similar businesses not affected by the breach and calculates the difference as the measure of damages. This approach hinges on finding truly comparable businesses. 

Unjust enrichment focuses on the defendant’s gains rather than the plaintiff’s losses:

• Profit Disgorgement is calculated by estimating the defendant’s profits derived from the misappropriated trade secrets or breach of non-compete. The burden often shifts to the defendant to prove which portions of their profits weren’t attributable to the breach
• Avoided Development Costs. This approach calculates what it would have cost the defendant to independently develop the misappropriated information, including research and development costs and the value of the time saved by not developing the information on their own.
• Reasonable Royalty Approach asks the question, what would a reasonable licensing fee be if the two parties had negotiated a licensing agreement for the stolen intellectual property? 

The court or jury makes the final determination on damage amounts.

How Can I Prevent Competitors From Stealing My Employees?

To protect your company from competitors stealing your employees in Texas, you can implement several legal and practical strategies:

• Include an enforceable non-compete and non-solicitation agreement within your employment contracts
• Protect sensitive company information by requiring employees to sign confidentiality agreements
• Consider work-for-hire agreements to clearly document that all work product created by the employee during employment is owned by the employer. This removes "it was my creation" defenses should a trade secret end up in the wrong hands later. 
• Proactively protect your trade secrets to maintain legal protections under the Texas Uniform Trade Secrets Act

Finally, courts in Texas generally favor employee mobility, so also focus on building a workplace that employees don’t want to leave rather than relying solely on legal restrictions to keep them. 

Protect Your Business from Employee Poaching – Act Now

Don't let employee poaching damage your business and threaten your competitive edge. Our experienced Texas business litigation attorneys understand what's at stake and are ready to act swiftly to protect your team, your trade secrets, and your company's future. 

Whether you need to enforce existing agreements, pursue damages, or implement stronger preventative measures, contact Hendershot Cowart P.C. today at (713) 783-3110 for a consultation. The sooner you reach out, the more options you'll have to defend your business interests.

Don’t be a victim of employee raiding. Take a stand today. Contact Hendershot Cowart P.C. to schedule a consultation with our firm (713) 783-3110.