Non-Compete Lawsuits
Gerlach Employment Law protects employer investments and intellectual property. When a business discovers an employee or former employee is working as an employee for a competitor, starting a competing business, soliciting clients, soliciting or hiring your employees or selling important business data, we step in. We help clients protect valuable information like customer lists, trade secrets, innovation and technology.
Gregg has represented companies in the Eleventh Circuit by challenging injunctions on an appeal, taking part in trade secret litigation, prosecuting counterclaims, and negotiating favorable out-of-court resolutions and settlements.
What is a Non-Compete Agreement?
This covenant, or legal contract, is an agreement involving one party agreeing not to engage in certain competing business activities against the other party.
Violating the Non-Compete Agreement
In certain non-compete cases, your lawyer may draft a cease and desist letter, request an employee halt on competitive activities, contact the employee’s new employer, attempt to enforce your non-compete in arbitration or court, seek a preliminary injunction or restraining order and potentially pursue monetary damages for breach of contract.
The court decides if it is a reasonable amount and reviews proof of loss of profits. The court may require employees to leave the new employer. The employee may be responsible for civil penalties, monetary losses, liquidated damages and punitive damages.
14% of workers with trade secrets make less than $40,000.
15% of workers with trade secrets do not have a college degree.
Nearly 30 million people – about 18% of all employees – are currently governed by a non-compete agreement, with around 24% of these employees reporting that they possess trade secrets.
Non-Solicitation Agreements are designed to preclude piracy of customers, employees and unfair competition.
These regulations help prevent future business owners and former employees from taking client lists. Direct solicitation of current and former clients is not allowed for a specified time period outlined by each agreement. These agreements do not necessarily include former employees hiring current employees.
Florida’s Statute 542.335
This statute outlines what makes a valid non-compete, or “restrictive covenant.” These covenants may also include contractual restrictions like non-solicitation agreements, confidentiality agreements, and exclusive dealing agreements.
Many non-competes are between executives, high level employees or specialists. When an employee files a formal complaint regarding compensation, make sure you are prepared for any litigation that may follow. If you do not plan to pay them for the amount claimed, you will need to find a lawyer. Florida’s non-compete statute outlines some items that qualify as “legitimate business interests” to enforce a non-compete.
Florida Statutes Define Legitimate Business Interests as:
- Trade secrets (Florida statutes describe these in sect. 688.002 as a formula, technique, process, device, or other information that provides independent economic value and is the subject of reasonable privacy efforts).
- Substantial relationships with established or potential customers, patients, or clients
- Extraordinary or specialized training.
- Valuable, confidential business information not considered a trade secret, such as customer lists.
- The goodwill from an ongoing line of business or professional practice (e.g., a complimentary service, a specific geographic location, or a specific marketing or trade.
How Long Are Non-Competes Valid?
To make sure agreement forms are valid, Gerlach Employment Law works with employers to make sure that there is consideration (value in exchange for upholding the contract), a reasonable time period and a geographically specific area they are focusing on. We have worked with clients to make sure agreements are valid and specific by choosing the right wording that is relevant to the industry and type of work. The wording must clarify how it would be enforced. The document must be specific in its requirements, designate a time period and clarify the location it applies to. Lawyer can work to manage business relationships
Many non-compete agreements last from around six months to two years
Many non-compete agreements last from around six months to two years. These variations may depend on the type on the industry and type of business relationships. Some vocations may have valid, enforceable non-compete agreements that last up to 3, 5 or 7 years, depending on what is at stake. Courts decide what is reasonable with each case. Remember that not all states follow the same regulations, so it may be harder to uphold your agreement in another location. Some states allow consideration for the potential economic hardship caused by adhering to the non-compete.
In applying this framework, there is not a single factor that will decide the case’s outcome. Instead, parties need to apply the various factors to the facts of their case and make the strongest arguments possible.
Substantial customer relationships may be defended when:
- The customers are individuals instead of corporations
- The customers’ personal data is not public information
- The customer relationship is an exclusive
- The customer has a long term contract or expectation of ongoing business.
The converse is equally true. Substantial customer relationships are less likely to exist where:
- The customers are large companies
- The customers’ personal data is publicly available
- The customer relationships are not exclusive
- There is no long-term contract or expectation of future business
Temporary Injunction Requirements
Filing an injunction is one way to enforce a non-compete agreement. An injunction can prevent the employee from refraining from certain actions and competing with your business for a set amount of time. Injunctions may be temporary or permanent. An injunction must clearly describe what acts must be restrained. To obtain a temporary injunction enforcing a non-compete agreement, the employer must prove:
- that irreparable harm will be done to your business if the injunction is not obtained.
- the unavailability of an adequate remedy at law;
- a substantial likelihood of success on the merits in its underlying breach of contract claim
- that the injunction would serve the public interest.
Updating Your Agreement Forms
Florida laws are designed to protect businesses while still allowing for competition and free trade. Without a defined and eligible business interest, the contract will be void. The restrictions you define must be reasonable. The other party must have signed the agreement. The document must outline tasks only relevant to the employee position. Exit interviews can help with providing clarification of non-compete restrictions.
We work with employers to prepare the appropriate Confidentiality and Non-Compete agreements/covenants and litigate in state and federal court to enforce those agreements where both injunctions and damages are sought.
Can Florida employers enforce non-competes after an employee has been fired?
If certain noncompete agreement requirements are met, then many Florida courts will enforce them.
What happens if employees violate a non-compete agreement in Florida?
If it is an enforcable non-compete, an employer may pursue an injunction, lawsuit or penalty.
Can an employer file a case against an employee after resignation?
Yes, this is a breach of contract.