Dockside Chat - Non Compete clauses

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View Full Version : Non Compete clauses


gordo35
03-22-2012, 07:23 AM
I'll start off by saying that this isn't my situation, but a friend who has been down on his luck somewhat AND I know what free legal advice on a fishing and boating forum is worth....

I have a friend that is being sued by a previous employer for violating a non compete agreement. He was terminated for reasons undisclosed to me about a year ago, even though he experienced growth in his area and was told by a VP that he was doing a good job and was in good standing with the company. He was selling power chairs(scooters) as that was the company's only product. After he was terminated, he ended up in a different industry for 3-4 months after being unemployed for 3-4 months. He has now landed back in the medical goods industry with sales of a competitive product of the scooters only making up about 5% of his total sales. Basically, he is selling different products to different customers, but his previous employer is coming after him saying he is in violation of an agreement he signed. He doesn't really have the money to lawyer up to fight for the right to make a living.

Is there anything that he can do, other than quit his current job or spend a lot of money he doesn't have on an attorney? I know it's tough to say withithout knowing the specifics of whatever he signed when he started at the job. He is in Florida if it makes a difference.


jerseysportfisher
03-22-2012, 07:27 AM
without knowing the verbiage of a non-compete, i would presume if he was not targeting his previous employers clients, then he is pretty much good. I went through this, and at least in NJ If your not "stealing business away" a previous employer can not prevent you from working.

BACKTOTHESEA
03-22-2012, 07:39 AM
Depends on the state, settlement when he was terminated, etc.. He needs to speak with a labor attorney in his state.


gordo35
03-22-2012, 07:41 AM
without knowing the verbiage of a non-compete, i would presume if he was not targeting his previous employers clients, then he is pretty much good. I went through this, and at least in NJ If your not "stealing business away" a previous employer can not prevent you from working.

My thoughts exactly. From talking to him it sounds like he is being targeted- he had a relative file a suit on the company for disability and shortly afterwards, my friend was terminated. I may not be getting all of the info, but it seems like they are trying to prevent him from earning a living in the field.

Cajun Martini
03-22-2012, 07:41 AM
There is a statute governing non-competes in Florida. The statute says basically that non-competes are only valid under limited circumstances and for limited durations but, under those circumstances and situations, they may be valid. Depending upon what his contract says and how recently the non-compete was drafted/revised, some or all of it MAY be invalid because it violates the statute. There are also cases decided under the new statute that say, in effect and very generally, that the former employee MAY be able to do work that seems to otherwise be prohibited under the non-compete if they are not really competing with the former employer. Bottom line: your friend doesn't have to stop simply because he's gotten a demand letter to do so. But if he doesn't stop he may (or may not) be sued. Both sides have to weigh the cost and benefit of the time and expense of "lawyering up". Perhaps his new employer will provide him with some assurances that they will help him in that regard? That type of assistance from a new employer who likes and wants to keep the employee is not that uncommon.

airbrush
03-22-2012, 07:50 AM
It's all in the words of the agreement; however, most non-competes only become effective if an employee leaves on his own. If the company dismissed him, I don't see how they could prevent him from earning a career in the area where he has expertise. Some non-competes are a job requirement while others are exchanged for $ or other valuable considerations. For example, when I retired I signed a 5 year non-compete in exchange for stock options and continuing bonius opportunities during that 5 year period.

airbrush
03-22-2012, 08:01 AM
More on FL non-competes:
With certain exceptions, Florida law prohibits restraints on trade. One of the exceptions is non-compete agreements that meet the requirements of Florida Statute 542.335 (this governs non-competes entered into after 1996 - Florida Statute 542.33 applies to non-competes entered into before then). These requirements can be summarized as follows:

the non-compete must be reasonable in time, area, and line of business
legitimate business interests must exist that justify the restrictive covenant
the non-compete must be reasonably necessary to protect the legitimate business interests.
The statute provides a non-exhaustive list of "legitimate business interests". These include: trade secrets; confidential business information, substantial relationships with specific prospective or existing customers, and extraordinary or specialized training. Typically, trade secrets and other confidential information are claimed as the "legitimate business interests."

After a legitimate business interest has been established, the court will look at whether the non-compete is reasonably necessary to protect the interest. This will depend on the facts and circumstances of the individual case. However, much of the court’s focus will be on: (1) the duration of the non-compete and (2) the extent of the geographic limitation.

Florida’s statute provides some guidance as to whether the duration is "presumptively" reasonable and unreasonable. For instance, in the case of an employment non-compete – less than 6 months is presumptively reasonable and more than 2 years is presumptively unreasonable. Anything in between may, or may not, be reasonable, depending on the facts and circumstances.

Geographic limitations are a bit trickier since the statute does not provide any guidance. A good rule of thumb is that a court is unlikely to apply the non-compete to an area in which the enforcing party does not do any business. For instance, if the enforcing party doesn’t do business outside of Miami-Dade County, a court would probably not enforce the non-compete covenant in Hillsborough County (the Tampa area).

Even if the enforcing party manages to satisfies all of the above requirements, a defendant may have other defenses available to him, which will depend on the facts and circumstances of the case. However, it is important to note that saying "I won’t be able to feed my children if you enforce this non-compete" is NOT a valid defense. The Florida statute specifically states that the court must not consider any individualized economic or other hardship that might be caused to the defendant.


Non-competes are being increasingly used in the commercial arena. Whether they are enforceable will depend on a variety of factors including their duration, geographic area and the state in which they are to be enforced. If you wish to learn more, consult an attorney in your jurisdiction who has experience in this area.

gordo35
03-22-2012, 08:05 AM
Thanks for the info. I advised him of this thread and told him to chime in if he likes with what he feels comfortable disclosing.

sr31aj
03-22-2012, 08:10 AM
It's been maybe 25 years since I had a non-compete clause in an employment contract, and it was in PA, not FL, but I recall being told that in order to be enforcable the contract had to spell out the consideration for which the non-compete was being set in place ("in light of training in the business which the employer provides the employee") and had to have a specific time limitation ("for a period of x years following separation from employment"). First point being basic contract law that something needs to be provided in consideration in order for a contract to be considered valid, the second - the time limitation - supposedly satisfied the potential compaint about preventing someone from earning a living.

EDIT: Just saw that Airbrush posted his review of FL statutes while I was typing my note. Tempted to scratch my repsonse in light of his excellent explanation, but I'll leave mine here just in case my different wording helps somehow.

SeaJay
03-22-2012, 09:58 AM
Have him sue his former employer for the maximum limit in small claims court, maybe they will think twice and drop it.

NCcarguy
03-22-2012, 10:31 AM
"but it seems like they are trying to prevent him from earning a living in the field"

That what it appears to me to be as well....many non-compete clauses can't really do that, and if they do are not legal. I would imagine he is close to being able to sue them on the issue since he was terminated.

Graddy-fied
03-22-2012, 11:20 AM
This is my field. Every state is different, and every contract is different, but generally speaking a court will only enforce a non-compete agreement to the extent it protects the former employer's legitimate business interests. Here, if only 5% of your buddy's sales are a competitive product, my guess is that the court would not prohibit him from doing the other 95% of the job. Courts do not like to order people into unemployment - especially fairly low-level employees.

Perhaps if he tells his former employer he will not sell scooters until the expiration of the non-compete term, they will leave him alone.

Cajun Martini
03-22-2012, 11:45 AM
This is my field. Every state is different, and every contract is different, but generally speaking a court will only enforce a non-compete agreement to the extent it protects the former employer's legitimate business interests. Here, if only 5% of your buddy's sales are a competitive product, my guess is that the court would not prohibit him from doing the other 95% of the job. Courts do not like to order people into unemployment - especially fairly low-level employees.

Perhaps if he tells his former employer he will not sell scooters until the expiration of the non-compete term, they will leave him alone.

This is good advice. I think this and some other posts in this string provide good perspective and information. But, as stated, this law varies significantly state-by-state and is very fact specific, in terms of what the contract says, what the work entails, whether there are trade secrets and bona fide client lists involved, etc., etc. Ultimately, your buddy should not take legal advice from anyone making generalized statements on a boating website. As noted above, if what he's doing is really not competing and if his former employer is reasonable (big "ifs"), they may be able to work it out between themselves. And if his new employer has resources and what he is doing is of real value to the new employer, the new employer may be willing to give him some assurances of indemnity (legal expenses and, perhaps, liability) in the event a claim is brought. But his livelihood is at stake, here. He should seriously consider consulting with a knowledgable lawyer and do so sooner, rather than later.

gordo35
03-22-2012, 12:00 PM
I have been in touch off and on with him throughout the day. I have another friend, who is an attorney, and he is going to help him out and get him in touch with someone who specializes in labor. Nice to hear perspectives from others knowledgeable in the field from other areas.

Hopefully it will work out for him.

Blythe1022
03-22-2012, 12:08 PM
It sounds like somebody at your buddy's old company has it out for him. If he is working for a competitor as a salesman and only 5% of his sales are scooter chairs, I would think the ex employer would not have a good case that he is selling scooter chairs for a living. The big question is why are they threatening to sue over such a small market share? It costs them legal fees too unless they have lawyers on the payroll.
Good choise for your buddy to go see a lawyer. It may cost him something now but could be more expensive down the road. A few letters written now may end it.

hottoddie
03-22-2012, 12:20 PM
This is my field. Every state is different, and every contract is different, but generally speaking a court will only enforce a non-compete agreement to the extent it protects the former employer's legitimate business interests. Here, if only 5% of your buddy's sales are a competitive product, my guess is that the court would not prohibit him from doing the other 95% of the job. Courts do not like to order people into unemployment - especially fairly low-level employees.

Perhaps if he tells his former employer he will not sell scooters until the expiration of the non-compete term, they will leave him alone.



In addition to the above he could pass any "scooter" business on to a fellow sales person or sales manager for a period of time. That way he is not the one selling the scooters in the first place. He or his employer could notify his former employer by an atorneys letter stating this and for them to back off.

Gators2000
03-22-2012, 12:25 PM
I deal with Non-Competes daily in my work. If he got a letter, tell him not to respond. Put the burden on the previous employer to file suit against him. That cost money and time. Only then should he respond and then negotiate. Good luck.

alacrity
03-22-2012, 01:14 PM
non-competes are very enforceable in florida, as long as they are reasonable in scope, duration and geography. it all depends on the exact language of the contract. some are better than others.

i write these clauses and work with these clauses almost every day. find a competent attorney to review the language of the non-compete.

Schmaltz~Herring
03-22-2012, 01:14 PM
I deal with Non-Competes daily in my work. If he got a letter, tell him not to respond. Put the burden on the previous employer to file suit against him. That cost money and time. Only then should he respond and then negotiate. Good luck.


;)
The old employer is banking your pal won't pony up any bucks to defend himself.

Tireless
03-22-2012, 02:26 PM
I have crushed a few people that left my company and violated their covenants to not compete. These cases are based on the facts and circumstances. Egregious abusers can be beat up in court. Employers often over play their hand. Judges frequently blue pencil these agreements. Court mediation is often required by judges.

Gator56
03-22-2012, 02:31 PM
I hope he doesn't get hit as far as my buddy did.My buddy sold competitors the same type of product after beginning to runout of $ after his original employer said they were ending his position @ $110k annually and they hired two sales persons 40K annual that replaced him. He got in a bind and hit up some old customers and made a quick lick but then his old employer found out. Last I knew their house was lost and we went to the furniture sale to give a donation and his wife took us to the side and slipped off her wedding rings and asked if we'd be interested she'd give them to us at a very good price. I have to say at that point I was floored by realizing then just how bad it was. His old employer even followed him to Florida contacting his new employer warning them about his breach of compete contract. It was just a nightmare and may still be I haven't heard from him in over a year. They have 5 kids two of their own and 3 adopted but just great people and all he wanted to do was make a living for his family.

Monsoon
03-22-2012, 03:10 PM
I have a mate who when signing his employment contract just scanned the document at home and changed the terms regarding non compete. Funny bugger also has a fake degree and claims to have spent years in africa and asia helping orphans with aids.

He earns top dollar in sales. If he was to get fired he would prob burn the bosses house down with him inside and the boss know this.

38Blackfin
03-23-2012, 09:36 AM
Depends on the state, settlement when he was terminated, etc.. He needs to speak with a labor attorney in his state.

And the lower the court, the better-

I spent 10 years+ with a big public that bought out the private group I was a part of- as time went by, a couple guys tested the non-compete, ended up spending huge $$ and still not working for the year. I found some free-lance work outside my area and commuted until I was clear.

good luck-

Randy

bjm9818
03-23-2012, 08:41 PM
It doesn't sound like you have all the facts, but tell your friend to sit down with a lawyer who handles these cases on a daily basis and see where he stands. Best $3-400 he can spend at this point. Sounds like somebody at his old company has a bug up their ass.

I have signed a bunch of non-compete's. In my last job about a year ago my boss told me he was planning to cut my salary in 1/2. He was super cheap, we got a little slow and thinking because of where I was, I would have no choice but to take it. Walked out the door 5 min later. He violated our employment contract by taking that action and he knew there wasn't a thing he could do if i called all our customers tomorrow. I left that field anyway 10 months ago, became self employed and never looked back.

7 years ago my father was at a company that got bought out and he was one of 5 people offered a 3 year incentive package to stay and a non-compete. 2 years later he got a open ended offer from their largest competitor. It took him 5 months of hard work but he got his company to eliminate his position,LOL collected 1/2 years pay and took two weeks off before he started at the new place.

I also had a not to bright uncle who left a company for another 20 miles away and got slamed by his previous employer. Lost his new job, a lot of legal fees and was unemployed for over a year.



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