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Does Florida Enforce Anti-Piracy Provisions in a Non-Compete Agreement?

Posted in Labor & Employment

An anti-piracy provision in a non-compete agreement typically bars an employee from leaving his employer and taking with him other employees of the company. Such an agreement was at issue in Balasco v. Gulf Auto Holding, Inc., 707 So.2d 858 (Fla. 2nd DCA 1998). In Balasco, a sales employee for an auto dealership signed a non-compete agreement prohibiting the employee from soliciting or influencing other employees to leave the dealership for three years following the employee’s resignation. The employee left for a new dealership and took with him two additional employees. The dealership sought and received an injunction against the employee, enforcing the non-compete agreement and the employee appealed. Id. at 859.

The Second District Court of Appeal upheld the injunction, finding that although the agreement was enforceable, the injunction should nevertheless be reduced from three to two years. In sustaining the lower court, the appellate court in Balasco relied upon the testimony of the dealership’s president. The president testified that, unlike other dealerships, his dealership did not “recycle” sales employees, but instead hired and trained employees with no sales experience. This process of hiring inexperienced sales staff was both expensive and time consuming. In order to avoid losing employees and the resulting drop in sales, the dealership had its employees sign non-compete agreements with anti-piracy provisions. Id. at 860.

The Balasco court found that the anti-piracy provision was necessary to protect the dealership’s “substantial investment” it makes in the specialized training it provides to its sales staff. Id. The court went a step further, however, and found that the non-compete agreement also protected the legitimate business interest of promoting productivity and maintaining competent and specialized sales teams. Id. These last two business interests are not expressly provided for in Florida’s non-compete statute, Fla. Stat. § 542.335, yet the court recognized them nonetheless.

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Financial Services departments in West Palm Beach, Florida. Jason focuses his practice on commercial and civil litigation throughout Florida, with an emphasis on non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are some recent posts Jason has written on Florida non-compete litigation:

Common Defenses to Enforcement of a Non-Compete Agreement

Are Non-Compete Agreements Enforceable Against Third Parties?

What Are the Burdens of Proof When Enforcing a Non-Compete Agreement?

Florida’s Fifth District Narrowly Construes Geographic Scope Provision in Non-Compete Agreement