I was contacted recently by a prospective client whose former sales representative had set up a competing business. The prospective client had a written agreement with the former sales representative that prohibited the representative from: a.) soliciting customers of the client for a period of time after the representative’s business relationship with the client had ended; and b.) using confidential information that she had learned or acquired while performing services for the client.
This prospective client asked me if there was anything that could be done, under Florida law, to stop the former sales representative from competing with him and to essentially shut her new business down. Unfortunately, the answer for the client was “no.”
Florida Statutes Sec. 542.335 addresses what are known as restrictive covenants. Two basic such types of restrictive covenants are non-solicitation agreements and non-competition agreements. While they frequently go hand-in-hand and many employment and independent contractor agreements contain both, they are most certainly not the same and offer different types of protection.
Non-solicitation agreements are designed to prevent an employee or independent contractor from soliciting customers of the company for her own benefit and to the detriment of the company while employed by or providing services to the company and for a period of time after the employment or business relationship ends. This frequently, although not always, is further extended to prohibit the solicitation of other employees of the company upon the termination of the employment or business relationship.
Non-competition agreements, by contrast, prohibit an employee or independent contractor from competing with her employer both during the employment or business relationship as well as for a finite period of time after the relationship ends. The length of presumptively valid periods of non-competition are described and set forth in Florida Statutes Sec. 542.335.
Simply put, merely because a former employee is prohibited from soliciting customers once her employment relationship ends does not prevent her from competing if there is no non-competition agreement. Technically, she can compete all she wants and not be in breach of her agreement; she simply would be precluded from soliciting customers of her former employer in her new endeavor.
It is extremely important that a business, when thinking through the restrictive covenants to include in an agreement with an employee or independent contractor, to ensure that it has a comprehensive document that prohibits former employees and independent contractors from: a.) soliciting customers of the business; b.) competing with the business; and c.) using confidential information acquired during the employment or business relationship. That agreement should include language that if there is a breach of the agreement, because of the difficulty in ascertaining damages, the employer is entitled to injunctive relief.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.