personal injury - employment law - commercial litigation
Non-Compete Agreements & The Law
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In an unpublished opinion issued August 27, 2015 the Eleventh Circuit Court of Appeals reversed an injunction issued by the United States District Court for the Southern District of Florida. The injunction, issued in favor of an employer, prevented the employee from working for a competitor. In deciding whether to issue the injunction, the trial judge refused to consider whether the adverse impact the injunction would have on the employee.
Florida law will enforce non-compete agreements and restrictive covenants contained in employment contracts so long as they are reasonable in time, area and line of business.
The contract must be in writing. The employer must show the existence of a legitimate business interest justifying the restrictive covenant. Legitimate business interests include trade secrets, confidential business information, substantial relationships with customers, customer goodwill or specialized training.
In deciding whether to enforce a restrictive covenant, Florida law provides that the potential hardship to the employee should not be considered by the trial judge. Federal judges, however, consider injunctions extraordinary and drastic remedies which should not be issued unless the party seeking the injunction can demonstrate that it has a substantial likelihood of success on the merits; irreparable injury will be suffered if the injunction is not issued; the threatened injury outweighs whatever damage the proposed injunction may cause the person being enjoined and the injunction would not be adverse to the public interest.
The Eleventh Circuit held that federal law governing injunctions trumps Florida’s law and that the trial court should have considered whether the threatened harm to the employer outweighed the potential harm the injunction would cause the employee.
The message to employers? In deciding whether to enforce a non-compete agreement, the employer should consider filing in state as opposed to federal court if the employer intends to seek an injunction against the employee.