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 Non-compete
agreements involve very high stakes,
particularly for the employee who faces a
temporary, or perhaps permanent, loss of his or
her livelihood. Litigation concerning these
agreements is often expensive, time-consuming,
and also emotionally and financially draining.
This website is devoted to the questions, issues
and decisions to be confronted by
non-competition agreements.
See article entitled:
"Successfully Defending Employees in Non-compete
and Trade Secret Litigation."
Questions and Answers:
Are non-compete agreements valid in
Florida?
While a non-competition agreement is clearly in
restraint of trade, it is made legal by virtue
of Section 542.335 of the Florida Statutes so
long as such contracts are reasonable in time,
area, and line of business. This statute applies
only to the enforceability of non-compete
agreements entered into after July 1, 1996.
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So as long as they are reasonable, are
non-compete agreements enforceable?
Not exactly. A court will not enforce a
non-compete agreement unless: (1) it is set
forth in a writing signed by the employee; (2)
the employer must prove the existence of one or
more "legitimate business interests" justifying
the non-compete. The term "legitimate business
interest" includes, but is not limited to: (a)
trade secrets; (b) valuable confidential
business or professional information that
otherwise does not qualify as trade secrets; (c)
substantial relationships with specific
prospective or existing customers, patients, or
clients; (d) customer, patient, or client
goodwill associated with: (i) an ongoing
business or professional practice, by way of
trade name, trademark, service mark, or "trade
dress;" (ii) a specific geographic location; or
(iii) a specific marketing or trade area. (e)
extraordinary or specialized training. Any
non-compete not supported by a legitimate
business interest is unlawful and is void and
unenforceable.
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I signed a non-compete a few years ago. My then
employer was recently purchased by a new
company. However, we still work out of the same
office and have the same staff as before. Am I
bound by the non-compete that I signed with my
old company?
A court will not refuse to enforce a non-compete
agreement on the ground that the new employer is
an assignee or successor to the original such
contract, provided that the original non-compete
expressly authorized enforcement by a party's
assignee or successor.
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What about the fact that the enforcement of the
non-compete will prevent me from engaging in my
chosen livelihood?
Subsection (g) of Section 542.335 states that in
determining the enforceability of a restrictive
covenant, a court shall not consider any
individualized economic or other hardship that
might be caused to the person against whom
enforcement is sought.
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My former employer has gone out of business but
the former owner has told me that I am still
bound by the non-compete agreement that I signed
while I was employed by his company. Can he do
that?
By statute, a court may consider as a defense
the fact that the person seeking enforcement of
the non-compete no longer continues in business
in the area or line of business that is the
subject of the action to enforce the non-compete
only if such discontinuance of business is not
the result of a violation of the non-compete.
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My employer (former employer) breached my
employment agreement by not paying me all of my
compensation. Can the company still enforce the
non-compete agreement even though they breached
my employment agreement?
Florida Statute section 542.335(g)(3) provides
that in determining the enforceability of a
restrictive covenant, the court, "shall consider
all other pertinent legal and equitable
defenses." A party seeking a temporary
restraining order must prove that the party has
a clear legal right to the relief requested."
Verduci v. Gold Coast Chemical Corp., 578
So. 2d 41 (Fla. 4th DCA 1991).
In Bradley v. Health Coalition, Inc., 687
So. 2d 329 (Fla. App. 3 Dist. 1997), the
employee (Bradley) and employer entered into an
agreement wherein Bradley was hired to be a
salesperson for the employer's blood plasma
products. The agreement contained a
covenant-not- to-compete and a prohibition on
the solicitation of the employer's active
customers. When Bradley's employment ended, he
went to work for a competitor and began selling
blood plasma products. The trial court entered a
temporary injunction enforcing the
non-competition clause. On appeal, the employee
argued that the employer materially beached the
employment agreement by wrongfully refusing to
pay commissions which he had earned. Reversing
the temporary injunction, the court stated:
'A party is not entitled to enjoin the
breach of a contract by another, unless he
himself has performed what the contract
requires of him so far as possible; if he
himself is in default or has given cause for
nonperformance by defendant, he has no
standing in equity.' 'Having committed the
first breach, the general rule is that a
material breach of the Agreement allows the
non-breaching party to treat the breach as a
discharge of his contract liability.' If the
employer wrongfully refuses to pay the
employee his compensation, the employee is
relieved of any further obligation under the
contract and the employer cannot obtain an
injunction.
See also Benemerito & Flores, M.D.'s, P.A.,
v. Roche, 1999 751 So. 2d 91 (Fla. 4th DCA
1991).
Other Florida cases have recognize the a prior
material breach by an employer will discharge an
employee from abiding by a covenant not to
compete. Generally Seaboard Oil Co. v Donovan,
128 So. 821 (Fla. 1930); Sarasota Beverage
Company v. Johnson, 551 So.2d 503 (Fla. 2d
DCA 1989) (en banc); Channell v. Applied
Research, Inc., 472 So.2d 1260,1262 (Fla.
4th DCA 1985); Thomas v. Fed, Ins. Agency,
51 B.R. 653 (Bankr. M.D. Fla. 1985).
"A party is not entitled to enjoin the breach of
a contract by another, unless he himself has
performed what the contract requires of him so
far as possible; if he himself is in default or
has given cause for nonperformance by defendant,
he has no standing in equity." Seaboard Oil
Co. v. Donovan, 99 Fla. 1296, 1305, 128 So.
821, 824 (1930) (affirming denial of temporary
injunction).
"Having committed the first breach, the general
rule is that a material breach of the Agreement
allows the non-breaching party to treat the
breach as a discharge of his contract
liability." In the Matter of Walter W.
Thomas, Debtor, 51 Bankr. 653, 654 (Bankr.
M.D. Fla. 1985) (citing Troup v. Heacock,
367 So. 2d 691 (Fla. 1st DCA 1979), 11 Fla. Jur.
2d Contracts § 169 (1981)); see also Air
Ambulance Network, Inc. v. Floribus, 511 So.
2d 702, 703 (Fla. 3d DCA 1987) review denied,
520 So. 2d 584 (Fla. 1988); Cordis Corp. v.
Prooslin, 482 So. 2d at 490. If the employer
wrongfully refuses to pay the employee his
compensation, the employee is relieved of any
further obligation under the contract and the
employer cannot obtain an injunction.
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What if I never signed a non-compete agreement?
Can my former employer stop me from soliciting
former customers or working for a competitor?
In Mittenzwei v. Industrial Waste Service,
Inc., 618 So.2d 328, 330 (Fla. 3d DCA 1993),
the appellate court stated as follows:
We also reverse the injunction insofar as it
prohibits Mittenzwei from soliciting IWS
customers. There is no evidence that she
enticed IWS customers to break their
contracts through unfair competition or
practices. Renpak, Inc. v. Oppenheimer,
104 So.2d 642 (Fla. 2d DCA 1958); see
generally Fish v. Adams, 401 So.2d
843 (Fla. 5th DCA 1981)Langford v. Rotech
Oxygen & Medical Equip., Inc., 541 So.2d
1267, 1268 (Fla. 5th DCA 1989). In the
absence of a non-competition clause,
Mittenzwei is free to contact anyone with
whom she had established a relationship
while employed by IWS. Pure Foods, Inc.
v. Sir Sirloin, Inc., 84 So.2d 51
(Fla.1955)Harry G. Blackstone, D.O., P.A.
v. Dade City Osteopathic Clinic, 511
So.2d 1050 (Fla. 2d DCA 1987), review
denied, 523 So.2d 576 (Fla.1988)
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What if my employer fails to pay me overtime in
accordance with the Fair Labor Standards Act? Is
that a defense to the enforcement of a
non-compete.
Failure to pay overtime is a violation of
federal law and should constitute a material
breach of the contract.
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What are "trade secrets"?.
"Trade secret" is information, including a
formula, pattern, compilation, program, device,
method, technique, or process that: (a) Derives
independent economic value, actual or potential,
from not being generally known to, and not being
readily ascertainable by proper means by, other
persons who can obtain economic value from its
disclosure or use; and (b) Is the subject of
efforts that are reasonable under the
circumstances to maintain its secrecy.
If this information is readily obtainable from
the Internet or other sources, or if the
employer has disclosed the information to its
customers, the information probably will not
qualify as a trade secret.
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For a confidential
consultation regarding potential employment
dispute cases, contact the Law Office of N. James
Turner, Esq., P.A. at
(407) 422-6464
The
hiring of a lawyer is an important decision that should not
be based solely on advertisements. Before you decide on the
hiring of a lawyer, you should learn about the lawyer's qualifications
and experience.
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