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Non-Compete Agreement Executed After Commencement of Employment May Be Enforceable

Non-Compete Agreement Executed After Commencement of Employment May Be Enforceable
  • September 10, 2002

A recent decision by a Florida appeals court has cleared the way for an employer to enforce a non-compete agreement executed after the employee began working. In the case Open Magnetic Imaging, Inc. v. Nieves-Garcia, Fla. 3rd Dist. Ct. App., No. 3D02-816, decided August 7, 2002, the employer's failure to inform the employee of the work restrictions prior to her starting work was not a sufficient reason to deny the employer’s later request for a temporary injunction preventing the employee from violating the agreement.

In November 1999, the employer presented a written offer of employment to the prospective employee to work as a marketing representative. The written offer specified the individual would be an “at-will” employee and would be required to sign an employee confidentiality agreement. However, the written offer did not mention the individual also would be required to sign a noncompete agreement or state that her ability to accept work in a similar field would be restricted for two years after separation from the company.

Almost two months after she accepted the written employment offer, the employee executed an employment agreement. The agreement contained a non-compete provision precluding her from working with or for any individual or entity that provided or performed MRI services within a 10-mile radius of the employer’s principal office or the principal place of business of any of its affiliates for a period of two years following the termination of her employment agreement. More than four months later, the employer amended the agreement by adding more facilities to its group of affiliates, and the employee executed this new agreement.

Two years later, the employee resigned and went to work as a marketing representative for one of her former employer's competitors at a location within a 10-mile radius of one of the affiliated facilities. To enforce the agreement and prevent the employee from working for the competitor, the employer requested both a temporary and a permanent injunction. However, the trial court denied the request. The court found it unlikely that the employer would be able to enforce the agreement given the failure to inform the employee in its written offer that she would have to sign a non-compete provision as a condition of employment. The trial court also found the geographic area defined in the agreement too broad to be enforceable.

Citing examples of cases in which employees executed non-compete agreements up to four years after the commencement of employment, the appeals court reversed the decision of the trial court and sent the case back for further appropriate consideration. The appeals court noted that the Florida courts routinely have enforced non-compete agreements where employees have been asked to execute such agreements after the start of employment. As to the finding that the geographic restriction was overly broad, the trial court was instructed to modify and narrow the scope of the restriction to protect the employer's legitimate business interests.

Editor's Note: Employers in Florida benefit from the fact that Florida courts recognize and enforce reasonably written non-compete agreements. They have an added benefit in that the courts will rewrite a non-compete agreement that is overly restrictive rather than reject the restriction completely. Even with this benefit, non-compete agreements should be reviewed periodically by employment counsel to enhance the likelihood they are written in accord with the most recent case law developments on reasonableness in terms of time and geographic restrictions.

©2002 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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