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 does not permit post-employment non-compete agreements in the traditional sense. 15 O.S. § 217 declares void any contract that restrains anyone from exercising a lawful profession, trade, or business. The only employment-context exception is 15 O.S. § 219A, which permits an employer to require a former employee not to directly solicit the sale of goods or services from the employer's established customers — and nothing more. Broader restraints (prohibiting employment with a competitor, geographic restrictions on the employee's profession) are void.

The Oklahoma Supreme Court in Howard v. Nitro-Lift Technologies, LLC, 2011 OK 98, struck an overbroad non-compete in its entirety and refused to blue-pencil. Oklahoma courts cannot be relied upon to rewrite a defective agreement.

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 — The No-Blue-Pencil Warning

In Howard v. Nitro-Lift the Oklahoma Supreme Court held that a non-compete forbidding any "owning, managing, operating, joining, controlling, participating, being connected with" a competing business for two years was so far outside § 219A that the court refused to sever or reform any portion. The whole agreement was void. The lesson: draft narrowly to § 219A from the outset; do not rely on blue-penciling.

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: A traditional post-employment non-competition restraint is void under 15 O.S. § 217 and Howard v. Nitro-Lift Technologies, LLC, 2011 OK 98. This package substitutes the narrow customer-non-solicit permitted by 15 O.S. § 219A together with employee non-solicit, NDA / trade-secret protection (15 O.S. § 219B; 78 O.S. § 85+), and IP assignment.

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, and that 15 O.S. § 219A permits only a narrow non-solicitation covenant with respect to established customers. This Agreement is drafted to comply with §§ 219A and 219B and the Oklahoma Uniform Trade Secrets Act (78 O.S. §§ 85–94).

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 (No-Raid)

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 (15 O.S. § 219B; 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 acknowledge that the restrictions in Sections 1–4 are narrowly tailored to comply with Oklahoma law. If any provision is held void, the remaining provisions shall remain in effect, subject to the limits of Howard v. Nitro-Lift Technologies, LLC, 2011 OK 98 (no judicial reformation of overbroad restraints).

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) restrictions are narrowly tailored to 15 O.S. §§ 219A and 219B; (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 anchored to 15 O.S. § 219B and 78 O.S. § 85+.
☐ 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.
☐ No reliance on blue-pencil — agreement drafted narrowly from the outset (Howard v. Nitro-Lift warning).
☐ 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 (post-employment restrictions): https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=438063
• 15 O.S. § 219B (trade secrets / confidential information): https://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=438064
• Howard v. Nitro-Lift Technologies, LLC, 2011 OK 98, 273 P.3d 20: https://law.justia.com/cases/oklahoma/supreme-court/2011/109003.html
• 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/