Employee Non-Compete Agreement and Enforceability Memo — Oklahoma

OKLAHOMA Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

Part A — Enforceability Memo

TO: [CLIENT / HIRING MANAGER]
FROM: [COUNSEL NAME], [LAW FIRM]
RE: Enforceability of Post-Employment Restrictions on [EMPLOYEE NAME] — Oklahoma Law
DATE: [__/__/____]

1. Executive Summary

Oklahoma generally voids traditional post-employment non-compete agreements. Section 217 limits restraints on a lawful profession, trade, or business. Section 219A addresses direct solicitation of established customers, and § 219B separately addresses agreements against solicitation of the employer's employees or independent contractors. A covenant must be analyzed under the provision that actually governs it.

The U.S. Supreme Court vacated the Oklahoma Supreme Court's 2011 Howard v. Nitro-Lift judgment because the state court decided the agreements' validity despite their arbitration clauses. That vacated judgment does not establish a rule against judicial reformation of overbroad covenants.

Practical recommendation: Do not use a traditional non-compete in Oklahoma. Instead, deploy the four-part protection package in Part B of this template: (1) § 219A customer non-solicit, (2) employee non-solicit, (3) NDA / trade secret protection, (4) IP assignment.

2. What § 219A Permits — and What It Prohibits

3. Howard v. Nitro-Lift — Vacated Judgment

The Oklahoma Supreme Court's 2011 Howard judgment was vacated by the U.S. Supreme Court in Nitro-Lift Technologies, L.L.C. v. Howard, 568 U.S. 17 (2012), on arbitration grounds. Do not cite the vacated Oklahoma judgment as a binding no-blue-pencil rule. Draft each restriction within the applicable Oklahoma statute and review severability under controlling authority for the particular covenant.

4. Other Statutory Avenues for Employer Protection

5. Recommended Drafting Parameters (OK)

6. Recommendation

[Use the Alternative Protections Package in Part B. Do not attempt a traditional non-compete. Recommended modifications to current draft: ________________________________.]

Part B — Cannot Be Enforced: Alternative Protections Package (Oklahoma)

Important: Oklahoma generally voids traditional post-employment non-competes under 15 O.S. § 217. This package uses a customer non-solicit under § 219A and an employee non-solicit under § 219B, with separate confidentiality, trade-secret, and IP-assignment terms.

EMPLOYEE CUSTOMER NON-SOLICITATION, EMPLOYEE NON-SOLICITATION, CONFIDENTIALITY, AND INTELLECTUAL PROPERTY AGREEMENT

This Agreement is entered into between [EMPLOYER NAME] ("Company") and [EMPLOYEE NAME] ("Employee") on [__/__/____].

Recitals

A. Company is engaged in the business of [________________________________].

B. Employee will have access to Company's established customer relationships, trade secrets, and confidential business information.

C. The parties acknowledge that Oklahoma law (15 O.S. § 217) generally voids contracts restraining trade, § 219A addresses direct solicitation of established customers, and § 219B addresses solicitation of employees and independent contractors. The separate confidentiality terms are intended to protect Company information under applicable contract and trade-secret law.

1. Customer Non-Solicitation (15 O.S. § 219A)

1.1 During Employee's employment and for a period of [twelve (12) to twenty-four (24)] months after termination for any reason, Employee shall not directly solicit the sale of goods, services, or a combination of goods and services from any established customer of Company.

1.2 "Established customer" means any person or entity that purchased goods or services from Company during the [twelve (12) months] preceding Employee's termination and with whom Employee had material business contact during Employee's employment.

1.3 Acceptance of Unsolicited Business. Consistent with 15 O.S. § 219A, this Agreement does not, and is not intended to, prohibit Employee from accepting unsolicited business from any Company customer. Employee may compete with Company generally, may work for a competitor of Company, and may own or operate a competing business; Employee may not, however, directly solicit Company's established customers during the Restricted Period.

2. Employee Non-Solicitation (15 O.S. § 219B)

For [twelve (12) to twenty-four (24)] months after termination, Employee shall not solicit or recruit any person who was an employee or independent contractor of Company during the six (6) months preceding Employee's termination, nor induce any such person to terminate their relationship with Company.

3. Confidentiality and Trade Secrets (78 O.S. §§ 85–94)

3.1 "Confidential Information" means non-public business or technical information of Company, including but not limited to customer lists, pricing strategies, product designs, software, methodologies, business plans, financial information, vendor relationships, and any "trade secret" as defined in 78 O.S. § 86.

3.2 Employee shall hold all Confidential Information in strict confidence and shall not use or disclose it except as required to perform Employee's duties. Trade-secret obligations are perpetual; other Confidential Information obligations continue for [____] years after termination.

3.3 Employee acknowledges that misappropriation of trade secrets is independently actionable under the Oklahoma Uniform Trade Secrets Act, 78 O.S. §§ 85–94.

4. Intellectual Property Assignment

4.1 Employee assigns to Company all right, title, and interest in any work product, invention, improvement, copyrightable work, or other intellectual property conceived or developed by Employee, alone or with others, during employment, that (a) relates to Company's actual or anticipated business, or (b) results from work performed for Company, or (c) uses Company's resources.

4.2 Employee shall execute all documents reasonably necessary to perfect Company's ownership.

5. Return of Property

Upon termination, Employee shall return all Company property and delete Company information from personal devices, with written certification of compliance.

6. Reasonableness and Severability

The parties intend the restrictions in Sections 1–4 to comply with applicable Oklahoma law. If a provision is held void, the remaining provisions shall remain in effect to the extent permitted by law. The parties do not assume a court will rewrite a defective restriction.

7. Remedies

Breach causes irreparable harm. Company may seek injunctive relief, damages, and (for trade-secret misappropriation) the full range of remedies under 78 O.S. § 88, including exemplary damages and attorney fees for willful misappropriation.

8. Governing Law; Venue

Oklahoma law governs. Venue is the state and federal courts in [________________________________] County, Oklahoma. Any choice-of-law provision selecting another state is void to the extent it would circumvent 15 O.S. § 217.

9. No Non-Compete

The parties expressly acknowledge that this Agreement does not prohibit Employee from (i) working for a competitor of Company, (ii) owning an interest in a competing business, (iii) practicing Employee's profession or trade after termination, or (iv) accepting unsolicited business from Company's customers. Any such prohibition would be void under 15 O.S. § 217.

10. Severability; Survival; Entire Agreement

Severable. Sections 1–7 survive termination. This is the entire agreement on its subject matter.

11. Employee Acknowledgments

Employee acknowledges: (a) opportunity to consult independent counsel; (b) the customer and employee solicitation restrictions are intended to comply with 15 O.S. §§ 219A and 219B, respectively; (c) the Agreement does not impose a non-compete; (d) Employee enters this Agreement freely.

EMPLOYEE:

COMPANY:

Part C — Pre-Signing Checklist

☐ No traditional non-compete language anywhere in the agreement.
☐ Customer non-solicit limited to "directly solicit" "established customers" (15 O.S. § 219A).
☐ Express carve-out preserving Employee's right to accept unsolicited business, work for competitors, and practice profession (Section 9).
☐ Employee non-solicit durational limit set (12–24 months) and tethered to employees Employee actually worked with.
☐ Confidentiality / trade secret clause reviewed separately from § 219B under applicable contract and trade-secret law.
☐ IP assignment broad enough to capture work product, narrow enough to comply with applicable state IP-assignment limits.
☐ No geographic restraint on Employee's profession.
☐ No "any capacity" language.
☐ No prohibition on owning competing business.
☐ Choice of law set to Oklahoma; venue in Oklahoma county.
☐ Severability reviewed under controlling law; do not rely on the vacated 2011 Howard judgment.
☐ Sale-of-business / partnership non-compete (if applicable) addressed under separate § 218 / § 219 agreement, not in employment NCA.
☐ Onboarding file retains: signed offer letter, signed Agreement, IP-assignment acknowledgment.
☐ Trade-secret inventory maintained to support § 78-85 misappropriation claim if needed.

Sources and References

• 15 O.S. § 217: https://oksenate.gov/sites/default/files/2023-10/os15.pdf
• 15 O.S. §§ 219A–219B (customer and employee solicitation): https://oksenate.gov/sites/default/files/2019-12/os15.pdf (official historical text; confirm current amendments before use)
• Nitro-Lift Technologies, L.L.C. v. Howard, 568 U.S. 17 (2012): https://www.govinfo.gov/content/pkg/USREPORTS-568/pdf/USREPORTS-568-17.pdf
• Inergy Propane, LLC v. Lundy, 2009 OK CIV APP 8, 219 P.3d 547
• Oklahoma Uniform Trade Secrets Act, 78 O.S. §§ 85–94: https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=83770
• Oklahoma Bar Association: https://www.okbar.org/