Mar. 31, 2020

Restrictive Covenants: Protect What’s Yours When Employees Leave

Florida’s thriving economy has been good for companies and the workforce. With record low unemployment, however, your current employee is that much more valuable to your company, and your competition. 

Whether you’re hiring new employees, or fending off poachers hoping to steal away your people, restrictive covenants can protect your company’s proprietary assets — and people. Consider the role the following covenants may play in your organization:

  • Non-disclosure. These restrict and/or prohibit the use, disclosure, duplication, or dissemination of any confidential information not generally available to the public. This can include intellectual property, sales and pricing data, and customer buying and purchasing information not generally in the public realm, especially for privately-held companies.
  • Non-solicitation of customers. When employees leave, they may seek to bring your customers with them; in fact, that’s often what the new employer seeks when they hire talent from a competitor. Florida law allows employers to protect these relationships for up to two years after an employee departs. In the case of high-producing employees in the securities or insurance fields, however, the non-solicitation period may be reduced based on preliminary negotiations with these employees. Additionally, if the employee brought an existing book of business with them, precisely worded carve-outs consistent with Florida law for these preexisting clients might be negotiated between the parties.
  • Non-solicitation of existing employees. These agreements can help prevent newly departed employees from soliciting, raiding or poaching former coworkers. Further, carefully drafted No-Contact provisions can assist in situations where the former employee is not directly or indirectly soliciting the clients or the employees, but those clients and/or employees are reaching out to the former employees.

Even in the absence of written restrictive covenants, state and federal laws recognize that employees have both a duty of loyalty and a fiduciary duty while employed. State and federal trade secret acts further protect employers in the event an employee attempts to steal a company's trade secrets.

Restrictive covenants can be put in place at or following initial hiring. Florida law recognizes that continued employment is adequate consideration for an employee entering into restrictive covenants after they have been hired. However, in the event the employer takes the employee to court to enforce the restrictive covenant, providing employees with some additional consideration for having entered into restrictive covenants after-the-fact may be viewed favorably by the court as evidence of additional bargained-for consideration in exchange for a restrictive covenant.

You cannot prevent employees from leaving. But you can protect proprietary data and relationships. Consult with experienced employment counsel to formulate an action plan to do so.

Paul O. Lopez is COO of Tripp Scott and chair of the firm’s litigation Department. With 27 years’ experience, he focuses his practice on employment and workplace law, civil and complex business disputes in both federal and state courts, including shareholders disputes under Ch. 605 and Ch. 607 of the Florida Statutes.

Categories


Fresh


Tripp Scott Attorneys Named Fort Lauderdale Illustrated’s 2020 list of Top Lawyers

Fort Lauderdale, Fla., July 2, 2020   

As published in Fort Lauderdale Illustrated

Tripp Scott today announced that Paul Lopez, COO of the firm, and  Dan Taylor, a director with the firm,  were selected by their peers to Fort Lauderdale Illustrated’s 2020 list of Top Lawyers. 

Tripp Scott Attorneys Named Legal Elite by Florida Trend Magazine

Fort Lauderdale, Fla., June 29, 2020

As published in Florida Trend Magazine

Tripp Scott today announced that Matthew Zifrony and Jeffrey Fauer, both directors with the firm, were selected by their peers as Florida Trend Magazine’s 2020 Florida Legal Elite.

The Florida Legal Elite are the top lawyers practicing in Florida, according to the results of the magazine's statewide attorney surveys. The special issue, which goes on stands in July, provides Florida Trend readers with an extensive list of the state’s most prominent attorneys.

The Supreme Court Speaks: What Employers Need to Know Moving Forward

As published in the Daily Business Review

The holding, authored by Republican-appointed Justice Neil Gorsuch, provides millions of additional employees with greater protections from discrimination and harassment in the workplace.

In a landmark ruling on June 15, the U.S. Supreme Court ruled that Title VII of Civil Rights Act of 1964 protects LGBTQ+ employees from workplace discrimination. In a 6-3 ruling, the high court found that Title VII extends to claims of discrimination based on an individual’s sexual orientation and gender identity. The holding, authored by Republican-appointed Justice Neil Gorsuch, provides millions of additional employees with greater protections from discrimination and harassment in the workplace.

Start a Conversation




The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.