Covenants Not to Compete: Not the Time or Place for Boilerplate

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Gregory L. Shelton Attorney at Law Horack, Talley, Pharr & Lowndes, P. A. Florida Board Certified Construction Law Specialist Licensed in Florida, North Carolina and South Carolina

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October 12, 2016

“The crowning fortune of a man… “… is to be born to some pursuit which finds him employment and happiness, whether it be to make baskets, or broadswords, or canals, or statues, or songs.” -- Ralph Waldo Emerson

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Covenants Not to Compete 

Competition

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Solicitation of customers

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Inducing employee departures

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Competition 

Writing (before vs. after)

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Reasonable as to terms, time, and territory

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Made part of employment contract

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Based on something of value

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Not against public policy

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Time and Territory 

Time  

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5-year outer time boundary Look-back provision

Territory

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Area of restriction Area assigned to employee Area actually worked Nature of business

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Nature of employee’s duty and knowledge of operations

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Time and Territory

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Public Policy 

Determined by court

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Business goodwill and customer relations

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Restraint of trade

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Sandhills Decision Employee shall not work for, provide services for, consult with, or otherwise assist any individual or entity who is in the home health or personal care business competing with Employer.

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Sandhills Decision Employee shall not work for, provide services for, consult with, or otherwise assist any individual or entity who is in the home health or personal care business competing with Employer.

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Sandhills Decision Employee shall not work for, provide services for, consult with, or otherwise assist any individual or entity who is in the home health or personal care business competing with Employer.

Unenforceable because it restricts Employee from any type of employment with competitor, not just the same services provided to Employer. www.HorackTalley.com

Sandhills Decision Worker will not compete with Employer for a period of one (1) year after Worker’s separation from Employer within a 100-mile radius

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Sandhills Decision Compete defined as “holding any ownership interest in, operating, managing, or advising a home health aide business or any other business that performs substantially the same services as SHC.”

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Sandhills Decision Worker will not compete with Employer for a period of one (1) year after Worker’s separation from Employer within a 100-mile radius Geographic limit might be reasonable, but “advising” and “having an ownership interest” not supported by sufficient allegations from Employer

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Sandhills Decision 

Non-Compete Part II

Further, Worker agrees for a period of one (1) year from the date of Worker’s separation not to perform any work or services for any customer or account for which SHC performed work or services during the six months preceding the date of Worker’s separation.

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Sandhills Decision Further, Worker agrees for a period of one (1) year from the date of Worker’s separation not to perform any work or services for any customer or account for which SHC performed work or services during the six months preceding the date of Worker’s separation.

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Sandhills Decision Further, Worker agrees for a period of one (1) year from the date of Worker’s separation not to perform any work or services for any customer or account for which SHC performed work or services during the six months preceding the date of Worker’s separation. Unreasonable, fails to narrowly protect Employer’s legitimate business interests www.HorackTalley.com

Sandhills Decision Non-Solicitation For a period of one year after termination, Worker will not solicit or attempt to procure the customers, accounts, or business that are part of the book of business of Employer at the date of separation. Worker further agrees for a period of one year after separation not to solicit any prospective customer whom Employer or Employee has solicited within six months preceding separation. 

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Sandhills Decision For a period of one year after termination, Worker will not solicit or attempt to procure the customers, accounts, or business that are part of the book of business of Employer at the date of separation. Enforceable on its face, but evidence may show otherwise

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Sandhills Decision Worker further agrees for a period of one year after separation not to solicit any prospective customer whom Employer or Employee has solicited within six months preceding separation.

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Sandhills Decision Worker further agrees for a period of one year after separation not to solicit any prospective customer whom Employer or Employee has solicited within six months preceding separation.

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Sandhills Decision Worker further agrees for a period of one year after separation not to solicit any prospective customer whom Employer or Employee has solicited within six months preceding separation.

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Sandhills Decision Blue Pencil Rule:

Courts may use “blue pencil” to strike unenforceable sections of a covenant that are divisible or separable

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Sandhills Decision For a period of one year after termination, Worker will not solicit or attempt to procure the customers, accounts, or business that are part of the book of business of Employer at the date of separation. Worker further agrees for a period of one year after separation not to solicit any prospective customer whom Employer or Employee has solicited within six months preceding separation.

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Enforcement      

Tortious interference Unfair or Deceptive Trade Practices Misappropriation of Trade Secrets Breach of Fiduciary Duty Conspiracy Injunctive Relief

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The End Gregory L. Shelton Attorney at Law Horack, Talley, Pharr & Lowndes, P.A.  

Florida Board Certified Construction Law Specialist

Licensed in Florida, North Carolina and South Carolina (704) 716-0805

[email protected]

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