Analyzing Florida Non-Compete Agreements – When do the non-compete restrictions begin?

Florida courts, when Analyzing Florida Non-Compete Agreements, will enforce reasonable non-compete agreements.  Courts consider whether non-compete agreements are reasonable in terms of the length of time activities are prohibited and the geographic scope where competition is prohibited, among other factors.  These factors relate to the scope of the non-compete, but a more fundamental question that may provide a basis to challenge a non-compete is when do the non-compete restrictions begin?  Non-compete agreements typically are signed when an employee is hired and they rarely are revised or updated.  An employee also may continue working as an at-will employee beyond the original employment term.  When the employee finally takes another job, the employer may review the non-compete and determine that there are questions regarding its enforceability.

For example, in Alonzo-Llamazares, M.D. v. International Dermatology Research, Inc., 2022 WL 163814 (Fla. 3d D.C.A. January 19, 2022), a medical practice management company hired a doctor for an initial two-year employment term.  Thereafter, the parties entered into three written amendments that extended the doctor’s employment for several more years.  After the extensions expired, the doctor continued working for the management company as an at-will employee for nearly two more years.  Then, the management company terminated the doctor’s employment.  A few weeks later, the doctor started a competing business and solicited the management company’s customers.  When the management company sought a temporary restraining order, the doctor argued that the non-compete period began to run when the term of the initial employment agreement ended.

Based on language in the original employment agreement and the amendments regarding the survival of the non-compete beyond the expiration or termination of the original agreement, the Third District held that the non-compete period began when the doctor’s at-will employment ended, and they upheld the entry of a restraining order.  However, the doctor’s defense regarding the commencement of the non-compete may have been avoidable.  The case provides a good learning opportunity for employers.  Employers should regularly review the non-compete agreements they have in place for existing employees, and they should pay particular attention to how and when the non-compete periods are triggered.  This is even more critical when an employee continues working beyond an initial employment term, like the doctor in International Dermatology.  Once you suspect that an employee is planning to leave or needs to be terminated, it may be too late to modify a problematic non-compete agreement.