Readers of this blog are aware that Florida has a statute that specifically allows employers and employees to agree in writing to restrict – for a defined period of time – the future employment of a departing employee. These agreements, typically called “non-compete agreements” or “non-competition agreements” are strictly construed. In order to enforce such an agreement, the Parties subject to the agreement must execute a written document, while working as an employee of the company that may enforce the restriction. The non-compete agreement must fall within the statutory definition of “reasonable” with regard to both the length of time of the restriction and with regard to the geographic area of the restriction.
One might preume that strictly-construed Florida non-compete agreements are only enforceable against Florida residents. However a recent case from Florida’s Third District Court of Appeal found otherwise. In Allied Universal Corporation v. Given (FL. 3rd DCA 2017), the appellate court reversed the lower court ruling and put in place an injunction against the former employee. There are some significant takeaways from this case that deserve consideration.
Allied is located in Miami-Dade County, Florida. Although not discussed in detail in the opinion, the former employee in this Florida lawsuit does not reside in Florida. Nor does the former employee work in Florida. Instead, the former employee resides in Georgia and was responsible for “all sales territory north of Florida.” When he left his job with Miami-based Allied, he joined a Georgia-based competitor in a slightly different sales arena. However, the territory for which he was responsible at the new company also included Florida and other regions.
Allied sued to enforce the written non-compete agreement. Typically, a first step in legal action to enforce a non-compete agreement is to seek a temporary injunction. Allied sought a temporary injunction against its former employee and argued at the hearing that over the course of his employment Allied had allowed the former employee to establish “substantial relationships with specific prospective or existing customers” and that Allied needed the temporary injunction to protect its legitimate business interests.
The trial court did not grant the injunction. However the appellate court reversed. The appellate court noted that the harm presumed under Florida’s non-compete statute includes potential damage to the Company’s “longstanding relationships with its customers and the protection of confidential client information.” The appellate court reasoned that only an injunction would protect the Company and “prevent this loss.”
There are many valuable takeaways from this opinion. First, understand that despite the significant authority of a trial court to determine the propriety of a temporary injunction – and the great deference that appellate courts generally give to trial courts on whether or not to grant a temporary injunction – there is always a possibility that litigation can continue and a courtroom victory can turn into an appellate defeat. Second, at least in this matter, the courts allowed Florida non-competition law to bind a Georgia resident whose sales territory (while working for the Florida-based company) did NOT include Florida. (The territory for the position at the new Georgia-based employer did include sales in Florida, a fact that likely weighed heavily in favor of the former employer.)
Florida law specifically allows employers and employees to execute contracts that validly restrain – under certain circumstances – future employment of a current employee. Because this area of the law is state-specific, each state will have a different approach to the legality and enforceability of a non-competition agreement. If you’re considering having your employees enter into non-competition agreements, then this author strongly suggests that you find an attorney in your jurisdiction that is familiar with the enforceability and drafting requirements of a non-compete in the region in which you would seek enforcement. At Burr & Forman LLP, we have offices throughout the Southeast with attorneys in each state familiar with this area of the law.
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