Non-Competes Not Always Enforceable

Alex BarthetContracts, Litigation & Arbitration

non-compete

These days any employee critical to a company’s continued success and profitability is likely to be asked to sign a Non-Compete, Non-Solicitation and Non-Disclosure Agreement. In enforcing such agreements, courts look to see if the restrictions actually protect “legitimate business interests.”

So when Jones resigned to go work for a competitor, her prior employer quickly filed suit, seeking to prohibit her from violating the non-compete agreement she had signed. The former employer argued such a prohibition was critical to protect its valuable business information. It presented evidence that Jones had sent multiple emails from her work email to her personal email which included names of the company’s referral sources. But Jones fought back, arguing referral sources did not constitute a legitimate business interest.

The law in Florida is clear that an employer seeking enforcement of a non-compete must establish the existence of critical business interests such as trade secrets, confidential information, customer relationships, established intellectual property rights, or a protected geographic area which the departing employee shall be violating. Employees of course may challenge the non-compete by showing that it is too broad, too restrictive or not truly necessary to protect the former employer’s business.

In this case, Jones found and relied on a prior case which held that referral sources who supply unidentified prospects are not considered “legitimate business interests”. That was enough to convince the court that Jones’ non-compete would not be enforced.

The lesson for employers is clear. Specifically reference referral sources as a group not to be solicited, and make clear to state that what you wish to be protected is in fact a legitimate business interest of the employer.