Over the last couple of months, we have posted several articles addressing how Florida courts interpret and enforce non-compete agreements. These prior posts have focused on legal issues such as what constitutes a “legitimate business interest,” whether non-compete agreements are subject to assignment, as well as an employee’s defenses to a non-compete agreement under Florida law. Instead of focusing on traditional “legal” issues arising in non-compete litigation, this post will address a more practical issue: what are some of the businesses that utilize non-compete agreements. The purpose of this post is to show the wide range of businesses and industries that take advantage of Florida’s non-compete statute, Fla. Stat. § 542.335.
The short answer to the question of which businesses use non-compete agreements is simple – all kinds of businesses utilize non-compete agreements. From multi-national financial service firms, to “mom and pop” tattoo parlors, the cases discussed in this blog show a broad array of businesses which protect their business interests through non-compete agreements. For example, in my most recent post concerning the interplay between forum selection clauses and non-compete agreements, the employer there provided temporary and permanent staffing services. See, Ware Else, Inc. v. Oftsein, 856 So.2d 1079 (5th DCA 2003). The employer in Ware was hired as a professional recruiter. Soon after she started working, the employer asked the employee to sign a non-compete agreement.
Although the decision in Ware did not address why the employer had the employee sign the non-compete agreement, the reasons are rather obvious. Florida’s non-compete statute is intended to protect the “legitimate business interests” of an employer. As the cases have shown, the definition of legitimate business interests is broad and encompassing. In North American Products Corp. v. Moore, 196 F.Supp.2d 1217 (M.D.Fla. 2002), the United States District Court for the Middle District of Florida granted a preliminary injunction enforcing a non-compete agreement between an employee and a tool manufacturer. In enforcing the non-compete agreement, the district court recognized that the former employee’s solicitation of customers “has a high possibility of permanently damaging the reputation and goodwill” of the employer. Id. at 1231.
Medical providers are another industry that regularly protect themselves using non-compete agreements. King M.D., P.A. v. Jessup, M.D., 698 So.2d 339 (5th DCA 1997) concerned a medical practice seeking to enforce a non-compete agreement against a physician who had left the practice. The automobile sales industry is yet another industry that frequently uses and enforces non-compete agreements. In Balasco v. Gulf Auto Holding, Inc., 707 So.2d 858 (2d DCA 1998), an auto dealer sought to enforce a non-compete agreement, in part, because of the specialized training it provided its employee. The Second District affirmed the trial court’s holding that the non-compete agreement was necessary to protect the substantial investment the employer made in the specialized training of its sales staff. Id. at 860.
Service industries frequently use non-compete agreements to protect their customer goodwill and trade secrets. In Medi-Weightloss Franchising USA v Medi-Weightloss Clinic of Boca Raton, C.A. No. 8:11-cv-2437-T-30MAP (M.D.Fla. Jan. 3, 2012), the United States District Court for the Middle District of Florida held that a non-compete agreement was valid which prohibited operation of a competing business within 25 miles of any Medi-Weightloss clinics. The weight loss industry is just one of countless service industries that protect their assets through non-compete agreements. Insurance Field Services, Inc. v. White & White Inspection, 384 So.2d 303 (Fla. 5th DCA 1980) involved an insurance auditing firm that sought to enforce a non-compete agreement against a former branch manager. The employee had solicited customers for his new business while working for the employer. The court entered judgment for the employer, finding that the employer had harmed the customer goodwill of the employer. Id. at 308.
Virtually every kind of business can protect its assets through a non-compete agreement. The examples cited above are meant to show the wide range of businesses that have sought to enforce their non-compete agreements in Florida courts. The above represents only a fraction of the businesses in Florida that have protected their “legitimate business interests” through Florida’s non-compete statute. The effort and expense required to prepare a valid and enforceable non-compete agreement is relatively small. This is especially true given the potential harm a company can sustain from an employee leaving and immediately soliciting the customers the employee cultivated while working for the employer.