Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson

In Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006), the supreme court observed that the Texas Legislature and the courts "would not allow an employer to spring a non-compete covenant on an existing employee and enforce such a covenant absent new consideration from the employer." Id. at 651. If the mere opportunity to continue performing one's job could be consideration, then an employer could "spring a non-compete covenant on an existing employee and enforce such a covenant absent new consideration," something the supreme court stated is prohibited. See id. Moreover, appellant's act of permitting appellee to fly the rocket pack does not "give rise to appellant's interest in restraining appellee from competing." See id. at 648-49. In Sheshunoff, the court stated at the beginning of its opinion that the issue before it was "whether an at-will employee who signs a non-compete covenant is bound by that agreement if, at the time the agreement is made, the employer has no corresponding enforceable obligation." Sheshunoff, 209 S.W.3d at 646. In the non-compete agreement, the employer promised to provide the employee with training in the employer's business methods and confidential information, such as customers and prospects. The employee promised not to disclose the confidential information and not to compete with the employer for one year after termination of the employment relationship. Id. at 647. As it was an employment-at-will relationship, the employer's promise to provide training and confidential information was illusory because the employer could terminate the employee without providing the training and confidential information. Id. at 650. The court went on to hold that the agreement became enforceable when the employer delivered the promised consideration by providing the training and confidential information. Id. at 655. In the midst of this discussion, the court emphasized the importance that there be consideration and that the consideration given by the employer give rise to the employer's interest in restraining the employee from competing. Id. at 650. The court concluded that the employer had provided consideration for the non-compete agreement by providing the employee with the promised training and confidential information. Id. at 647, 655.