In Florida, a party opposing enforcement of a non-compete agreement may raise as a defense that the employer, or other enforcing party, no longer continues in the same business. Florida Statute § 542.335(1)(g)(2) provides that a court:

may consider as a defense the fact that the person seeking enforcement no longer continues in business in the area or line of business that is the subject of the action to enforce the restrictive covenant only if such discontinuance of business is not the result of a violation of the restriction.

Florida’s Second District Court of Appeal recently addressed the cessation of business defense in Richland Towers, Inc. v. Denton, et al., 139 So. 3d 318  (Fla. 2d DCA 2014). In Richland, two key employees left their employer to start a competing business. The employees had previously signed non-compete agreements which precluded the employees from engaging in a competing business during their employment and for a period of time after their departure.

The employer in Richland brought suit against the employees, alleging breach of their employment agreements and seeking an injunction. The employees raised several defenses, one being that their former employer, Richland Towers, Inc., was no longer in business, rendering the non-compete agreements unenforceable.

The trial court rejected the employers’ cessation of business defense and the appellate court agreed. The Richland court recognized the defense where an employer no longer continues in the same business if the discontinuation was not caused by the employee breaching the non-compete agreement. The cessation of business defense did not apply in Richland because the employees’ former employer designated a third party beneficiary, Richland Towers, LLC, who stood in the shoes of Richland Towers, Inc.. Although the employer, Richland Towers, Inc., ceased doing business in 2008, the non-compete agreements that restrained the employees were valid through 2011. Equally important, the employment agreements identified the new entity, Richland Towers, LLC, as a beneficiary under the agreements. Even though the original employer was no longer in business, the non-compete agreements remained valid and enforceable against the employees.


W Mason is a partner with Fox Rothschild LLP and serves in the Firm’s Litigation and Financial Services Industry departments in Fox Rothschild’s West Palm Beach office. An accomplished business trial attorney, W represents both plaintiffs and defendants in state and federal courts in employment disputes involving restrictive covenants, shareholder disputes, contract disputes, banking litigation, fraud claims, Uniform Commercial Code (UCC) claims, and other commercial disputes.

Below are some of W’s recent posts on Florida Noncompete Agreements:

Drafting Noncompete Agreements under Florida Law

Enforcement of Florida’s Noncompete Statute in Foreign Jurisdictions

Reasonable Duration of Noncompete Restraint

In order to be enforceable, must be reasonable in both the duration and scope. Duration refers to the length of time for which a noncompete agreement remains valid and enforceable. Scope, on the other hand, refers to the geographic scope – the area in which the noncompete agreement will be enforced. This post will look at what constitutes a reasonable duration of time for the noncompete restraint set forth in the employment contract under Florida law.

Florida’s noncompete statute, Fla. Stat. § 542.335, creates rebuttable presumptions as to when a noncompete agreement’s duration provision is enforceable. By that, the statute provides that the court “shall presume” a noncompete agreement between an employee and employer is reasonable if the noncompete agreement is enforceable for six months or less. If an employee and employer enter into a noncompete agreement that is enforceable for more than two years, such agreements are presumed under the statute to be unreasonable.

Note that Florida’s noncompete statute creates no presumption for or against employer/employee noncompete agreements that have duration provisions between six months and two years. Further, although the statute creates presumptions for and against enforcement, the presumptions may be rebutted if a party shows a reasonable basis for the relevant duration provision.

Section 542.335’s presumptions concerning duration vary depending on the type of noncompete being enforced. If the noncompete agreement is being enforced against an employee, the duration of the agreement must be shorter (six months) in order to be presumed reasonable. In contrast, noncompete agreements enforced against a distributor or the seller of a business are allowed greater durations. Noncompete agreements enforced against a distributor, dealer, franchisee or licensee of a trademark are presumed reasonable if the duration is for one year or less. Under section 542.335(1)(d)(3), noncompete agreements enforced against a seller of a business are presumed reasonable if the duration is three years or less.


W Mason is a partner with Fox Rothschild LLP and serves in the Firm’s Litigation and Financial Services Industry departments in Fox Rothschild’s West Palm Beach office. An accomplished business trial attorney, W represents both plaintiffs and defendants in state and federal courts in employment disputes involving restrictive covenants, shareholder disputes, contract disputes, banking litigation, fraud claims, Uniform Commercial Code (UCC) claims, and other commercial disputes.

Below are some of W’s recent posts on Florida Noncompete Agreements:

Drafting Noncompete Agreements under Florida Law

Enforcement of Florida’s Noncompete Statute in Foreign Jurisdictions

Florida’s noncompete statute, Fla. Stat. 542.335, provides numerous protections to employers or business purchasers who are looking to safeguard a company’s goodwill, trademarks and the like. Still, it is important to not overreach when drafting a noncompete. By that, should a party have to enforce a noncompete agreement, it will likely do so by seeking an injunction in state or federal court. A good noncompete agreement should balance an employee’s right to earn an income against a business’s right to protect its customer relationships, proprietary information and so on. This post will address some points to consider when drafting a noncompete agreement under Florida law.

Under Fla. Stat. 542.335(1)(a), Florida noncompete agreements are unenforceable unless they are in writing and signed by the person against whom enforcement is sought. By drafting a noncompete agreement, a party satisfies the writing requirement. Equally important, make sure the noncompete agreement is signed by the person you may ultimately seek enforcement against. This can be an employee, a franchisee or a person buying a business.

A noncompete agreement must identify at least one legitimate business which the enforcing party seeks to protect. In an action to enforce the noncompete agreement, if the court finds there is no legitimate business interest, than there is nothing for the court to protect and the enforcing party will not prevail. Florida’s noncompete statute lists five categories of legitimate business interests. A noncompete agreement should spell out that it seeks to protect at least one of these interests. Legitimate business interests include (i) trade secrets; (ii) confidential information; (iii) customer relationships; (iv) customer goodwill; and (v) specialized training.

The lists of legitimate business interests is non-exclusive, meaning other legitimate business interests in addition to the five listed above can be included in the noncompete agreement. Also, the noncompete agreement can, and probably should, list more than one legitimate business interest to protect.

When enforcing a noncompete agreement, the party seeking enforcement must show that the noncompete agreement is reasonably necessary to protect the legitimate business interests. When drafting the agreement, it is important not to overreach. For example, if you are seeking to protect customer relationships for a sales representative that deals with customers only in Florida, it may not be helpful to list the geographic region for enforcement to include the continental United States.

Section 542.335 provides several rebuttable presumptions of how long the enforcement period should last for a noncompete agreement. Be sure to read the statute and consider whether the enforcement period included in your noncompete agreement should follow the presumptions provided for in the statute. For example, for noncompete agreements between the seller and buyer of a business, a court must presume that a duration of 3 years or less is reasonable and that a duration for enforcement of 7 years or more is unreasonable. This does not mean that a noncompete agreement for 10 years is entirely unenforceable. Instead, the enforcing party must overcome the presumption that a 10 year duration is unreasonable.

Finally, even if a court were to find that a provision in the noncompete agreement is too long in duration, too broad in scope, or otherwise unenforceable, the court may still enforce a less restrictive form of the noncompete agreement. This practice is commonly referred to as “blue penciling,” meaning the court can modify, or pencil-in, terms to the noncompete agreement in order to protect the legitimate business interests. Section 542.335(c) specifically provides, “[i]f a contractually specified restraint is overbroad, overlong, or otherwise not necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief necessary to protect such interest or interests.” This gives the enforcing party, and the courts, tremendous flexibility when enforcing noncompete agreements to protect the business interests of a company in a reasonable manner.


W Mason is a partner with Fox Rothschild LLP and serves in the Firm’s Litigation and Financial Services Industry departments in Fox Rothschild’s West Palm Beach office. An accomplished business trial attorney, W represents both plaintiffs and defendants in state and federal courts in employment disputes involving restrictive covenants, shareholder disputes, contract disputes, banking litigation, fraud claims, Uniform Commercial Code (UCC) claims, and other commercial disputes.

The good news is that the COVID19 pandemic appears to be on the wane.  The bad news is that there is a ton of confusion and risk right now in the employment setting around masks, for employees and customers, and around vaccines, again for employees and customers.  Guidance, mandates and the like on the Federal, State and Local level are also rapidly changing which has lead to a lot of questions.

Accordingly, I’ve put together the most common questions that I’ve been fielding in the last week or so (since the Centers for Disease Control (“CDC’) updated its mask guidance for fully vaccinated folks) and my responses.  Please note, that this guidance may change as of next week……

What is the CDC actually saying about masks?

First, the CDC updated mask guidance is for “fully vaccinated” individuals.

In general, people are considered fully vaccinated:

  • 2 weeks after their second dose in a 2-dose series, such as the Pfizer or Moderna vaccines, or
  • 2 weeks after a single-dose vaccine, such as Johnson & Johnson’s Janssen vaccine

If you don’t meet these requirements, regardless of your age, you are NOT fully vaccinated. Keep taking all precautions until you are fully vaccinated.

  • Fully vaccinated people can resume activities without wearing a mask or physically distancing, except where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance.

What is the status of mask mandates in Florida?

Gov. DeSantis, in early May, revoked all county and local orders that required masks.  As a result, and as required by Gov. DeSantis’ executive order 21-102, most Florida counties and local municipalities lifted their masking requirements.

Can I require my employees to continue to wear masks?

60% of Floridians are NOT yet fully vaccinated.  Accordingly, businesses and employers should likely move slowly to lift masking requirements in light of the lower vaccine rates in Florida and because much of the State of Florida continues to be considered at high risk for COVID19 transmission.

Additionally, there is now a possible conflict between the CDC and Occupational Safety and Health Administration’s (“OSHA”) January 29, 2021, COVID19 guidance which requires employers to maintain a COVID19 prevention program in order to comply with OSHA’s requirements that employers provide employees with a safe workplace.  OSHA, has for now, directed employers to refer to the CDC mask guidance for fully vaccinated employees.  But, in areas where the general population is mostly not vaccinated, employers continue to have a general obligation to protect their employees from COVID19.  Moreover, if not all your employees are vaccinated, the OSHA guidance remains in place.

As a result, most employers should continue to require employees (with exceptions for duly documented disabilities and religious exceptions) to wear masks for the near future unless all employees are fully vaccinated.

Maintaining mask requirements  for your employees also reduces the risk that you will need to shut down your business for a COVID19 outbreak on your premises.  My local coffee shop shut down last week because of another outbreak, and they lost two full days of business.

Can I prohibit my employees from wearing masks?

If any of your employees are not vaccinated they must continue to wear masks.  Additionally, even fully vaccinated employees with health concerns may want to continue to wear masks and they should be permitted to do so.

Can I require my customers to wear masks?

Yes, notwithstanding Gov. DeSantis’ roll back of all government masks mandates, businesses can continue to require customers to wear masks or face coverings on their premises (again with exceptions for disabilities and religious exceptions).

Can I require my employees to obtain the COVID19 vaccine?

The Equal Employment Opportunity Commission (“EEOC)” has weighed in with guidance that answers some workplace vaccination questions.  Employers may encourage or possibly require COVID19 vaccinations, but policies must comply with the Americans with Disabilities Act (“ADA”), Title VII of the Civil Rights Act of 1964 (“Title VII”) and other workplace laws, according to the EEOC.

Employers can ask employees if they have been fully vaccinated, but should refrain from follow up questions about why an employee has not been vaccinated.  If an employer wants proof of vaccine status, those records should be handled and treated as confidential.

Can I ask my customers if they have been vaccinated before permitting them to unmask or enter my business?

This is a tricky question here in Florida, because Gov. DeSantis has issued an executive order prohibiting so called “vaccine passports”.   As such, Florida businesses are prohibited from requiring “any patron or customer to provide any documentation certifying COVID-19 vaccination.”  As a result, most businesses in Florida have decided not to ask customers about vaccine status, but asking likely wouldn’t run afoul of the executive order.

There has been a lot of buzz in certain circles that asking employees or asking customers about their vaccine status is a violation of HIPAA.  That buzz is generally all wrong unless you are a “covered entity”.


Dori K. Stibolt is a partner with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

An employer has a legitimate business interest in prohibiting an employee from soliciting customers whom the employer has a substantial relationship.  Hilb Rogal & Hobbs of Fla., Inc. v. Grimmel, 48 So.3d 957, 31 IER Cases 1014 (Fla. App. 2010) , citing Brown & Brown, Inc. v. Ali, 494 F.Supp.2d 943 (N.D. Ill. 2007) (applying Florida law).  Likewise, “the right to prohibit the direct solicitation of existing customers is a legitimate business interest, and a covenant not to compete which includes a non-solicitation clause is breached when a former employee directly solicits customers of his former employer.”  Atomic Tattoos, LLC v. Morgan, 45 So.3d 63 (Fla. App. 2010) quoting Dyer v. Pioneer Concepts, Inc., 667 So.2d 961 (Fla. App. 1996).

Initiation of Contact by Customer – Contract Specific Analysis

An employer has a legitimate protectable business interest in prohibiting solicitation of its customers with whom the employee has a substantial relationship. Hilb Rogal & Hobbs of Florida v. Grimmel, 16 So.3d 167 (Fla. App. 2009), citing Scarbrough v. Liberty National Life Insurance Co., 872 So.2d 283, 285 (Fla. 1st DCA 2004). The right to prohibit the direct solicitation of existing customers is a legitimate business interest, and a covenant not to compete which includes a nonsolicitation clause is breached when a former employee directly solicits customers of the former employer. Id.

In J.K.R., Inc. v. Triple Check Tax Service, Inc., 736 So.2d 43, 44 (Fla. 1st DCA 1999), the court held that a non-solicitation provision precludes the former employees “from taking proactive steps” to obtain the employer’s clients. However, it “do[es] not disallow them from accepting former clients who actively seek their assistance.” Id. Notably, the covenant at issue in J.K.R. prohibited the former employee from “calling upon, soliciting, or taking away” clients.

On the contrary, in Scarbrough v. Liberty Nat. Life Ins. Co., 872 So. 2d 283, 284 (Fla. 1st DCA 2004), the 1st DCA held that solicitation can occur where the customer seeks out the former employee. Further, in Hilb, the Fifth District held that an employer has a legitimate business interest in customer relationships even if the employer’s customers elect on their own to end their relationship with the employer and start a business relationship with the departing employee where the contractual restrain prevented customer contact in addition to solicitation. Likewise, in Environmental Services, Inc. v. Carter, 9 So.3d 1258 (Fla. App. 2009) , the Fifth District recognized that solicitation by an employee can exist in violation of a non-compete agreement “regardless of whether the customer or employee initiated the transaction.”  Envtl. Servs., 9 So. 3d at 1266.

In sum, if a contractually specified restrain only prohibits solicitation, some Florida case law suggests that the restrain has not been violated if the customer seeks out the former employee. However, where the contractually specified restrain prohibits the former employee from communicating with, servicing, or anything more with the former customer, the restraint is likely enforceable and can be breached regardless of whether the customer initiates contact with the former employee.


W Mason is a partner with Fox Rothschild LLP and serves in the Firm’s Litigation and Financial Services Industry departments in Fox Rothschild’s West Palm Beach office. An accomplished business trial attorney, W represents both plaintiffs and defendants in state and federal courts in employment disputes involving restrictive covenants, shareholder disputes, contract disputes, banking litigation, fraud claims, Uniform Commercial Code (UCC) claims, and other commercial disputes.

 

As of January 12, 2021, Palm Beach County’s equal employment ordinance has been amended to cover smaller businesses.    Companies in Palm Beach County with between 5 and 14 employees (Federal and State civil rights acts normally cover companies with 15 or more employees) will now have to comply with the County’s equal employment ordinance.

Palm Beach County’s equal employment ordinance is also broader than the Florida Civil Rights Act and covers discrimination based on an individual’s race, color, religion, sex, national origin, age, disability, familial status, marital status, sexual orientation, gender identity or expression or genetic information.   Employees in Palm Beach County covered by the expanded ordinance will now have an avenue to file a charge of discrimination with the County’s Office of Equal Opportunity (“OEO”).  The OEO will undertake an investigation or conciliation efforts in much the same way that the Equal Employment Opportunity Commission (“EEOC”) operates.

Palm Beach County’s expansion of its equal employment ordinance brings the County in line with Broward and Miami-Dade Counties which already had equal employment ordinances that covered smaller employers.

For small businesses, the EEOC provides a resource center with helpful information and guidance for ensuring that your business is in compliance with applicable anti-discrimination laws.

 


Dori K. Stibolt is a partner with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

While it likely will be some time before most working age Floridians can get a COVID19 vaccine, since the roll out has been nothing but chaos, employers should start to thinking about their vaccine plan.   The Equal Employment Opportunity Commission (“EEOC”) issued guidelines for COVID19 vaccines in late December 2020.

Please see this helpful alert for more information.

As I previously posted , Florida’s new $15 minimum wage (passed by voters) has to go through a legislative implementation process which may exclude certain businesses or certain employees.

And, I’m already hearing news that small businesses and business lobby groups are pushing back on Amendment 2 due to the COVID19 pandemic.  Specifically, businesses are arguing that because of COVID19 closures and restrictions on operations, in addition to high unemployment in Florida, any increase in minimum wage pursuant to Amendment 2 should be delayed.   Businesses also point out that with the economy in disarray due to the pandemic, now is a difficult time to be raising prices for customers who may also be struggling.

Supporters of Amendment 2 argue that since the raise is incremental, $1 a year, businesses should have time to adjust to the increase.   Supporters of increased minimum wage also argue that increasing minimum wage permits those employees to spend more on goods and services thereby stimulating the economy.  Low wage workers tend to spend a much larger percentage of their wages in their local communities.

Amendment 2 passed with 61% voter approval which demonstrates high approval by the Florida voters.


Dori K. Stibolt is a partner with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

 

I recently posted about Florida’s new minimum wage law, passed by voters as Amendment 2 during the November 2020 general election.  As I noted in my earlier post, Amendment 2 (which calls for a gradual increase to a $15 minimum wage in Florida) is supposed to begin with an increase to a $10 minimum wage beginning on September 30, 2021.  Please note that Florida’s legislature will create regulations to implement Amendment 2 which may change who is covered by same.

As a result, employers need to be aware of the annual increase of Florida’s minimum wage which is triggered by Florida Statute § 448.110, and will increase Florida’s minimum wage separate and apart from Amendment 2.  Accordingly, come January 1, 2021, Florida’s minimum wage will rise from the current rate of $8.56 per hour to $8.65 per hour.

Under Florida Statute § 448.110 4(a) and (b), the Florida Department of Economic Opportunity must calculate Florida’s minimum wage based upon the increase, if any, in the Federal Consumer Price Index for Urban Earners and Clerical Workers in the southern region.  Based upon this year’s calculation, Florida’s new minimum wage for 2021 will rise by nine (9) cents.

 

Employers of tipped employees, who meet eligibility requirements for the tip credit under the Fair Labor Standards Act, may count tips actually received as wages under the Florida minimum wage.  However, the employer must pay tipped employees a direct wage.  The direct wage is calculated as equal to the minimum wage $8.65 minus the tip credit for Florida, $3.02, or a direct hourly wage of $5.63 as of January 1, 2021.

The photo in this post is of the Surf Board Christmas Tree in Palm Beach, Florida (photo by me).


Dori K. Stibolt is a partner with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

 

Florida voters once again showed their approval for a progressive ballot initiative.  Florida’s Amendment 2, which proposed a gradual increase of Florida’s minimum wage to $15 an hour, received more than 60% approval by voters and therefore passed on November 3, 2020.  Amendment 2 received 60.8% of the vote, which was considerably more than President Trump who received 51.2% voter approval in Florida.

Florida’s Amendment 2 will increase Florida’s minimum wage from $8.56 an hour to $10 an hour beginning on September 30, 2021.  Thereafter, Florida’s minimum wage will increase by $1 an hour per year until it reaches $15 an hour.  The federal minimum wage is currently at $7.25 per hour.

 

While its a tradition for Florida voters to pass progressive ballot initiatives, it also is a tradition for Florida’s Republican controlled state legislature to defang those initiatives.   As such, Florida businesses will have to wait and see how Florida’s state legislature defines “employer” and “employee” and whether the legislature moves to exempt certain industries or make other efforts to reduce the coverage of Amendment 2.

 


Dori K. Stibolt is a partner with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.