Employees often have access to their employer’s confidential information. As part of their new-hire paperwork, a company may require certain employees to sign a non-compete agreement. This document typically contains language that limits the employee from certain activities that could harm their former employer.
When employees move on – as they often do – they must refrain from using information. However, they might commit non-compete agreement violations by either starting a competing company or taking a job with their employer’s competitor.
However, some non-compete agreements are not enforceable. And that’s only one defense that can be used against non-competes.
Basic Defenses to Alleged Non-Compete Agreement Violations
Business owners might use a cease-and-desist letter to stop a former employee who is violating their non-compete agreement. When that fails, the former employer might sue the employee to stop them and to recover damages.
The person who allegedly violated the non-compete agreement might defend themselves as follows:
- The party enforcing the non-compete does not have a legitimate business interest in doing so. For example, the former employer could just be angry that the employee left the company.
- The non-compete agreement is not enforceable because it is too broad. It’s possible that a court may refuse to honor the non-compete if its terms are unreasonable. For example, the terms cannot require the employee to refrain from working in the same industry for an extended period of time or in an enormous geographic area.
- Former employers may face an “unclean hands” defense. If the enforcing party engaged in wrongful conduct, courts might not enforce the non-compete agreement.
- The former employer has been inconsistent when enforcing its non-compete agreement violations. Perhaps the employer has stopped one employee but not another. The person who allegedly violated the non-compete could claim the employer used discriminatory factors or is just retaliating.
Also, sanctions could be levied against an employer who attempts to enforce an invalid non-compete agreement.
Let’s consider two scenarios.
New Business Owner Defends Against Alleged Non-Compete Agreement Violations
Later, the employee leaves the company and starts a competing business. Non-compete agreements usually contain provisions prohibiting this type of activity.
However, the former employee feels the non-compete does not apply, possibly because:
- Their new business doesn’t really compete for the former employer’s business.
- The new business is far enough away from the former company that it’s non-competitive.
- Finally, the non-compete agreement is unenforceable because it is too broad for some reason.
In Florida, non-competes must limit how long the employee’s activities are constrained. Most of the time, a six-month time limit is acceptable. Something longer – like two years – is not.
A Business Owner’s New Employee Allegedly Violated a Former Employer’s Non-Compete
Typically, business owners are not sued for non-compete agreement violations committed by their employees. However, they may find themselves embarrassed or inconvenienced when they receive a cease-and-desist letter about alleged non-compete agreement violations committed by a new employee.
In addition to the defenses mentioned above, they could defend themselves by asserting ignorance of the alleged violations. Some may find they have to remove the employee who allegedly violated their agreement.
No matter the situation, sound legal advice is necessary to handle this type of delicate situation.
It Is Possible to Defend Against Alleged Non-Compete Agreement Violations
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.