1. YOU CAN(‘T) TAKE IT WITH YOU.
There are some things employees shouldn’t take
with them when they leave…
proprietary or confidential information, customers,
and other employees.
Jennifer C. Rey, Esq.
SPHR, GPHR
Tuesday, August 31, 2010
4:15 p.m. to 5:15 p.m.

2. or CAN YOU?

3. A Non-Compete Dilemma

4. AGENDA
ROIs – Learning Objectives
Restrictive Covenants
Elements of an Enforceability
How Employers Can Protect Themselves
Questions

5. ROI’s
Understand the purpose of non compete, non-
solicitation and non-disclosure/confidentiality
agreements.
Identify the basic components of non-compete,
non-solicitation and non-disclosure/confidentiality
agreements.
Determine for what jobs employers should require
non-compete, non-solicitation and non-
disclosure/confidentiality agreements.

6. Disclaimer
The content of this presentation is not intended to
be legal advice; that can only come from a qualified
attorney who is familiar with your organization and
with all the facts and circumstances of a particular,
specific case and the relevant law.

7. Restrictive Covenants
What is a restrictive covenant?
A restrictive covenant is an agreement to restrict
or limit a person’s current or future conduct.
Are they enforceable?
So long as the covenant not to compete complies
with the requirements of Fla. Stat. §542.335, it may
be enforced by the injunctive powers of the court.
Supinski v. Omni Healthcare, P.A., 853 So.2d. 526
(Fla. 5th DCA 2003).

8. Types of Restrictive Covenants
Non-compete covenants.
Competitors.
Market area.
Non-solicitation covenants.
•Customers.
•Employees.
Non-disclosure/confidentiality covenants.
Service commitments.

9. Restrictive Covenants
A restrictive covenant not supported by a
legitimate business interest is unlawful and is void
and unenforceable. Fla. Stat. §542.335(1)(c).
To be enforceable restrictive covenants must be:
•Supported by a legitimate business interest;
•In writing and signed by the person against
whom enforcement is sought; AND
•Be reasonable as to:
oTime;
oArea; AND
oLine of Business

10. Legitimate Business Interest
What is a legitimate business interest?
How would you define?

11. Legitimate Business Interest
Trade secrets.
•Information including a program, device,
method, technique, or process that:
oDerives independent economic value,
ofrom not being generally known to, and not
being readily ascertainable by proper means,
oby other persons who can obtain economic
value from its disclosure or use; and
oIs the subject of efforts that are reasonable
under the circumstances to maintain its
secrecy. Fla. Stat. §688.002(4).

12. Legitimate Business Interest
Valuable confidential business or professional
information that otherwise does not qualify as trade
secrets.
Substantial relationships with specific prospective
or existing customers, patients or clients.

13. Legitimate Business Interest
Customer, patient or professional goodwill
associated with:
•An ongoing business or professional practice,
by way of trade name, trademark, service mark
or “trade dress;”
•A specific geographic location; or
•A specific marketing or trade area.
Extraordinary or specialized training.

14. Signed Writing
Statute requires a writing.
Signed by the person against which enforcement
is sought.
Loss or unintentional destruction of written
document did not affect validity of the agreement
provided the court is satisfied as to the essential
terms. Environmental Services, Inc. v. Carter, 9
So.3d 1258 (Fla. 5th DCA 2009).

15. Reasonable
What is “reasonable”?
According to Webster’s dictionary:
•Being in accordance with reason; not extreme
or excessive, but moderate or fair.

16. Reasonableness
Restrictive covenants must be reasonably
necessary to protect legitimate business interest.
Restrictive covenants cannot be overbroad,
overlong or otherwise not reasonably necessary.
In determining reasonableness, the could should
weigh an employer’s interest in preventing
competition against oppressive effects on the
employee. Miller Mechanical v. Ruth, 300 So.2d 11
(Fla. 1974).

17. Reasonable As To Time
Generally
•Six months or less is presumed reasonable.
•More than two years is presumed
unreasonable.
Trade Secrets
•Five years or less is presumed reasonable.
•More than ten years is presumed unreasonable.
Rebuttable presumptions.

18. Reasonable As To Area
Distance.
Geographic .
City.
County.
State.
Region.
Country.
Specific marketing area.

19. Reasonable As To Line of
Business
Job function.
Occupation/profession.
Industry/Competition
Market Area

20. Examples
A non-compete agreement restricting a doctor
from practicing medicine within 100 mile radius of
any clinic operated by medial practice was not
overbroad, where the clinics were located in a
confined area within a county and the doctor could
have working in any other county. Supinski v. Omni
Healthcare, P.A., 853 So.2d 526 (Fla. 5th DCA
2003).

21. Examples
Restrictive covenant was deemed reasonable
when the restriction was for a two-year period and
only prohibited solicitation of former employer’s
customers, including actively sought customers with
whom former employees dealt or about whom
former employees obtained confidential information
due to their association with employer. Milner Voice
and Data, Inc. v. Tassy, 377 F.Supp. 2d. 1209 (S.D.
Fla. 2005).

22. Examples
Non compete was enforceable against former
employee to prohibit him from working for a direct
competitor where the former employee acquired
confidential information including data about clients,
pricing, employee training and business operations
while working for former employer as senior
consultant, project manager, project director and
then VP responsible for overall service delivery.
Proudfoot Consulting Co. v. Gordon, 2009 WL
2256016 (11th Cir. 2009).

23. Examples
Non compete was enforceable against former
employee where during employee’s tenure with
employer he became intimately familiar with all
aspect of employer’s business including pricing,
cost structure, customer contact information, setting
profit margins and overhead on specific jobs,
financial information, engineering drawings and
specifications and future plans. Hasley v. Harrell,
971 So.2d 149 (Fla. 2nd DCA 2007).

24. Enforcement
Against third parties.
•A court that enters an injunction enforcing a
non-compete agreement can enjoin others who
were not parties to the non-compete agreement;
however, those non-parties must receive notice
and have an opportunity to be heard. Leighton v.
First Universal Lending, LLC 925 So. 2d 462
(Fla. 4th DCA 2006).

25. Enforcement
By successor owners.
•Success owner of employer could not enforce
non-compete clause of employment agreement
entered into by prior owner where agreement did
not expressly provide the agreement could be
enforced against/or by assignees. Marx v. Clear
Channel Broadcasting, Inc., 887 So. 2d 405 (Fla.
4th DCA 2004).

26. Enforcement
Restrictive Covenants not enforceable in all states
or countries.
•California
•Texas
•Florida
Forum or venue clauses.
•Establish jurisdictional contacts.

27. Enforcement
In determining enforceability of a restrictive
covenant, a court:
•Shall not consider any individualized economic
or other hardship;
•May consider whether or not the person
seeking enforcement no longer continues in
business in the area or line of business.

28. Enforcement
•Shall consider all other pertinent legal and
equitable defenses.
•Shall consider the effect of enforcement upon
the public health, safety, and welfare.

29. How Employers Can Protect
Themselves
Inquire of applicants whether or not they have
signed a non-compete with prior employers.
Discuss and secure restrictive covenant
commitments during pre-hire negotiations.
Customize restrictive covenant agreements to the
specific job, specific market area, specific
customers.
Communicate restrictive covenant obligations
regularly.

30. Protecting Trade Secrets
May 9, 2004 SHRM Online Poll
51% had employees sign nondisclosure
agreements.
35% remind departing employees to protect
trade secrets.
30% take no steps to protect trade secrets.
19% have a written policy to protect trade
secrets.

31. Protecting Trade Secrets
May 9, 2004 SHRM Online Poll (cont’d)
13% developed procedures for reporting trade
secret violations.
11% trained employees on laws prohibiting
disclosure of trade secrets.
9% punished violations of trade secret policy.
9% trained employees on trade secret
definitions and protections.

32. Protecting Trade Secrets
May 9, 2004 SHRM Online Poll (cont’d)
7% monitored employee communications for
trade secret violations.
7% required new employees to sign
agreement not to disclose prior employer’s trade
secrets.

33. In Brief*
*“A one-size-fits-all non-compete agreement won’t pass a judges inspection.” by Stephen Richey, HR
Magazine, Sept. 2006.
Restrictive covenant agreements should be used
sparingly.
Restrictive covenant agreements should only be
used for those employees who present a genuine
competitive threat.
Restrictive covenants should only have narrow
restrictions that are no greater than necessary to
protect the employer’s legitimate business interests.

34. Questions? & Follow Up.
Thank you for your investing your time
with me this afternoon.
Jennifer C. Rey, Esq.
SPHR, GPHR
jennifer@hoganlawfirm.com
The Hogan Law Firm
Post Office Box 485
Brooksville, Florida 34605
P. 352-799-8423
F. 352-799-8294
www.hoganlawfirm.com