Fighting Florida Non-competition agreements

posted by Donna Ballman  |  Aug 8, 2009 09:57 AM [EST]  |  applies to Florida

Many Florida employees believe that, just because an employer forced them to sign a non compete agreement or be fired, they are not bound by the non-compete agreement. That is just not true. Continued employment is valid consideration for a non-compete agreement in Florida. Florida statutes presume that non-compete agreements are valid. However, you may still avoid the non-competition agreement's unreasonable restrictions in Florida, if you are willing to fight.

Before the Florida Non-compete Fight Begins

Normally the employer sends a letter to the employee and the new employer, threatens to sue both, and the employee gets fired from their new job, even where he or she told the new employer about the non-compete. Unless an employee has a contract with the new employer that protects the employee from termination unless for cause, and that the non-compete is known to the employer and is not cause, Florida is an at-will state. That means any employer can fire any employee for any reason or no reason at all. Therefore, the new employer in Florida is free to fire the employee and may choose to do so as the easiest way to avoid a lawsuit.

Employees should therefore consult an attorney before signing a non-compete to be advised of their rights. If an employee has signed a non-compete without getting advice, they still may have effective legal arguments to defeat the non-compete.

Arguments for Defeating Florida Non-competition Agreements.

1. Employer breaches the contract: If the employer puts the non-compete provision in an employment contract spelling out compensation, insurance and other conditions of employment, it is important to have an attorney go through the contract line-by-line. If the employer materially breached the agreement by failing to pay compensation due, failing to fulfill the insurance requirements, or failing to meet other important obligation, the employee may be able to "rescind" the contract as a remedy for the employer's breach, which would relieve the employee of his or her obligations under the contract.
   
   
2. No legitimate interest to enforce: Many employers attempt to overreach the restrictions on a former employee's right to compete and go well beyond that necessary to protect their legitimate business interests. This is one of the most common employer mistakes. For instance, an employer has no legitimate interest in enforcing a non-compete against low-level employees such as receptionists and clerical employees. An employer who manufactures computer software for accountants may have no legitimate interest in preventing an employee from working on software for doctors. An employer who is phasing out of an area has given up a legitimate interest in preventing an employee from working in that area. An employer who abandons a particular customer, area of business, or product has no legitimate interest in the area it abandoned. The statute allowing non-compete agreements assumes that the following are legitimate business interests:
   
   • Trade secrets;
   • Valuable confidential business or professional information;
   • Substantial relationships with specific prospective or existing customers, patients, or clients;
   • Goodwill associated with an ongoing business or professional practice, by way of a trademark, geographic location or marketing/trade area;
   • Extraordinary or specialized training.
3. Agreement is for too long a time period: For employees, a period of less than 6 months is presumed valid, and over 2 years is presumed invalid. In between, the employer will have to prove that the time period is reasonable. However, most courts will assume that agreements up to 2 years are reasonable. Some judges will find agreements under 3 years reasonable because there is a related statute finding 3 years reasonable when there is a former business owner selling a business. But anything over 2 years is going to be a hurdle for the employer to overcome. The judge can modify an agreement if it is found to be too long or too broad in its restrictions.
   
   
4. Readily accessible confidential information: Many companies get their sales leads from public sources. Phone books, professional directories, the internet, notification services, are all sources that are available to anyone in the industry. So an employer who claims they are protecting their valuable secret client sources is going to have to show that the information was not available to everyone else in the industry. Existing customer lists or unique sources are protected, but chamber of commerce directories are not.
   
   
5. Public health or safety would not be served: This primarily applies to doctors, nurses, and people in specialized scientific and health areas. If there is a shortage of people in a particular specialty, or in a particular geographic area, then the employer cannot enforce a non-compete even if all the other requirements are met. If you are one of 10 brain surgeons in the country who can perform a particular procedure, your employer probably cannot prevent you from saving people's lives.
   

In general, employees should assume that any non-compete agreement that they sign is enforceable. Therefore, Florida employees should not sign them unless they can live with the restrictions. But an employee with the time, will, and resources to fight can frequently limit or eliminate their non-compete provisions.

Importantly, an employer who tries to enforce a non-compete and fails will end up paying the attorney's fees and costs of the prevailing employee, and could be liable for damages to the employee for tortious interference with an employment relationship.

Before leaving a job and accepting a new one in the face of a Florida non-compete, employees should get advice from an employment attorney. A written agreement with the new employer to not only terminate only for cause, but to defend the employee and to pay the employee if the court prohibits him or her from working, will protect the employee. If an employee is sued to enforce a non-compete, he or she MUST contact an employment attorney immediately.  Otherwise, the employee may face a money judgment and you may forgo the best opportunity to raise any defenses to the non-compete agreement.

This article is for informational purposes only and is not intended as legal advice or to establish an attorney-client relationship.

Original article submitted by Donna Ballman

External Links

Links to external sites with additional information about this topic.

• The 2009 Florida Statutes Section 542.335, Valid restraints of trade or commerce
  

Revision History

• Aug 10, 2009 10:10 AM [EST] - Edit by Donna Ballman

posted by Donna Ballman  |  Aug 8, 2009 09:57 AM [EST]  |  applies to Florida