Cantrell PLLC is one of the few firms nationwide that truly specializes in handling high-stakes disputes concerning non-compete and non-solicit agreements. While our offices are in Florida, we routinely provide non-compete and non-solicit counseling and litigation services nationwide, including in Georgia and California. Below is an overview of: (i) the extent of enforceability of non-compete and non-solicit agreements; (ii) issues that should be considered when drafting and enforcing such agreements; and (iii) responding to or defending against allegations of violations of such agreements.
Overview of Non-Compete and Non-Solicit Agreements
Non-compete and non-solicit provisions, often referred to generally as restrictive covenants, are restrictions on the industry in which an individual works both during employment (or as a contractor) with a particular employer and after that employment or contractor job ends. These restrictions can prevent an executive, partner, sales professional, or other professional from working in his or her own industry for a period of time after employment or contract position ends. The restrictions can also prevent such individuals from soliciting employees, customers, or prospects after leaving employment or the contract position. In the context of a sale of a business, restrictive covenants may prevent the persons selling from starting a similar business or from hiring former employees.
Non-compete and non-solicit agreements are often included in employment and contractor agreements, partnership agreements, stock and equity agreements, and in provisions for the sale of businesses, among other contexts.
Requirements for Non-Competes and Non-Solicits
Whether a non-compete or non-solicit is worth the paper it is written on depends on a several factors. In most states, a restrictive covenant is only enforceable if it meets several requirements. For example, in Florida, the enforceability (and extent of enforceability) of restrictive covenants is governed under Florida Statute § 543.335. Under that Florida restrictive covenant statute, an employer can only enforce a non-compete or non-solicit if, among other things: (i) the former employee is working in the same line of business; (ii) the non-compete or non-solicit is supported by legitimate business interests; (iii) the non-compete or non-solicit is not overbroad; and (iv) the agreement is signed by the former employee. Those requirements are in line with most other states, including Georgia under O.C.G.A. § 13-8-50 (known as the Georgia Restrictive Covenant Act). In California, under statute California’s Business & Professions Code § 16600, non-competes and non-solicits are generally not permitted, with limited exceptions.
The phrase “legitimate business interests” is a legal term of art defined by each states law. In Florida, legitimate business interests are defined to include, as examples: (i) trade secrets; (ii) confidential information (that does not constitute a trade secret); (iii) substantial relationships with specific prospective or existing customers or patients; (iv) customer goodwill associated with certain intellectual property, such as a trade name or trademark, or geography location; and (v) extraordinary or specialized training.
In addition to the above general requirements, the extent of a non-competes or non-solicits enforceability often turns on many other provisions in an agreement. At Cantrell PLLC, we take pride in providing sophisticated, yet practical, guidance on both drafting and interpreting non-competes and non-solicits, as well as enforcing or defending against such agreements.
Strategies for Enforcement of Non-Competes and Non-Solicits
Companies typically fail in attempting to enforce a non-compete or non-solicit for one of two reasons: (i) on the front end, the agreement was poorly drafted; or (ii) on the backend, the company did not take the proper steps to enforce the agreement when it learned of potentially unlawful behavior. Both of these reasons are discussed in articles we published concerning best practices for drafting non-compete and non-solicit agreements and best practices for enforcing such agreements.
Companies regularly rely on the firm to address the following types of restrictive covenant issues:
- Drafting employment agreements, independent contractor agreements and restrictive covenants.
- Strategizing on the choice of law and venue selection provisions for multi-state employers, as court enforcement of non-competes can vary significantly from state to state.
- Providing practical guidance to companies on active steps they can take to ensure restrictive covenants remain enforceable, as well as preparing effective cease and desist letters.
- Assessing whether restrictive covenants were violated or trade secrets were misappropriated.
- Providing guidance on detecting theft of proprietary business information.
- Counseling businesses on hiring individuals who have restrictive covenants or possess proprietary business information.
- Prosecuting and defending claims of violating a non-compete or non-solicit, trade secret actions and other claims relating to unfair competition including determining whether a lawsuit is best suited for a particular state or federal court.
Defending Against an Employer Trying to Enforce a Non-Compete or Non-Solicit
There are many ways to avoid enforcement of a non-compete or non-solicit or to obtain leverage in negotiating. At Cantrell PLLC, we carefully vet and consider every avenue and strategy. Individuals including sales employees and executives regularly rely on the firm to address the following types non-compete and non-solicit issues:
- Whether a non-compete or non-solicit is enforceable and, if so, the extent of its enforceability.
- Providing guidance on what actions would and would not violate a particular non-compete or non-solicit.
- Whether restrictive covenants (i.e., non-compete, non-solicit, and non-disclosures) are valid if they were not signed until after the employment or contractor position began.
- Whether a restrictive covenant is enforceable in if the company an individual worked for was merged with or purchased by another company.
What to Look for in a Non-Compete Attorney
As a reminder, when looking for a non-compete lawyer, you are encouraged to compare the background of the lawyers you are considering. Apart from subject matter experience, consider the educational background, past results, and what references say about their own experiences. At Cantrell PLLC, we are glad to share references, from business owners and executives to mid-sized companies and Fortune 500 companies.
We handle non-compete, non-solicit, and similar type disputes throughout Florida and Georgia, including the cities of St. Petersburg, Tampa, Clearwater, Orlando, Sarasota, Fort Meyers, West Palm Beach, Miami, Fort Lauderdale, Jacksonville, Key West, Pensacola, Tallahassee, and Gainesville, Savannah, Macon, Augusta, and Atlanta.