FLORIDA NON-COMPETE AGREEMENTS: OTHER STATES MAY REFUSE TO ENFORCE FLORIDA NON-COMPETE AGREEMENTS

Florida employers that seek to enforce Florida non-compete agreements outside the state of Florida cannot presume that out-of-state courts will enforce the agreement as that agreement would have been enforced in Florida. Florida’s non-compete law, § 542.335, Florida Statutes, is considered by many to be the most “pro-employer” in the nation. Other states may refuse to enforce key parts of a Florida non-compete agreement if enforcing the agreement would violate that state’s public policy. Florida employers should be aware of the potential limitations to enforcement that their non-compete agreements face outside the state of Florida. Peter Mavrick is a Fort Lauderdale non-compete lawyer who has extensive experience with non-competition covenant litigation.

In analyzing how a court outside the state of Florida will likely enforce a Florida non-compete agreement, a Florida employer must consider whether the non-Florida court will enforce any non-compete agreement at all. States may choose not to enforce an agreement based upon that state’s public policy. California, Montana, North Dakota, and Oklahoma rarely enforce non-compete agreements ancillary to employment, if at all, and would not likely enforce any employee non-compete agreements within their borders regardless of how it is drafted. See Signature MD, Inc. v. MDVIP, Inc., CV 14-5453 DMG SSX, 2015 WL 3988959 (C.D. Cal. Apr. 21, 2015) “[T]he enforcement of these non-compete clauses is also objectively baseless, at least as to their enforcement in California, as California law expressly voids [employee non-compete] contracts”).

Some non-Florida courts will enforce non-compete agreements, but will not enforce the Florida choice-of-law if the court considers Florida law to be against that state’s public policy. M/S Bremen v. Zapata Off–Shore Co., 407 U.S. 1 (1972) (permitting courts to refuse to enforce a choice-of-law provision if doing so would be against the forum’s state’s public policy). Non-Florida courts often take issue with the Florida law that requires courts to not consider the hardship of an employee when determining whether to enforce an employer’s non-compete agreement. e.g. Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364, 368, 34 N.E.3d 357 (2015) (Florida non-compete law is “truly obnoxious” and contrary to New York policy because of “Florida’s nearly-exclusive focus on the employer’s interests, prohibition against narrowly construing restrictive covenants, and refusal to consider the harm to the employee”); see also Carson v. Obor Holding Co., LLC, 734 S.E.2d 477 (Ga. Ct. App. 2012) (Finding Florida non-compete law to be contrary to Georgia law, in part because “Florida law allows a court to consider only the legitimate business interests of the party seeking to enforce the covenant” when “modifying overly-broad restrictive covenants”); Brown & Brown, Inc. v. Mudron, 887 N.E.2d 437 (Ill. App. Ct. 2008) (finding that Illinois public policy is contrary to Florida’s because it is too employer-focused); Unisource Worldwide, Inc. v. S. Cent. Alabama Supply, LLC, 199 F. Supp. 2d 1194 (M.D. Ala. 2001) (Refusing to enforce Florida non-compete law because Florida does not consider the hardship to the employee); see § 542.335 (g)(1), Fla. Stat. (“In determining the enforceability of a restrictive covenant, a court [s]hall not consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought”).

Merely because a state has formerly stated that it would not enforce a Florida non-compete choice-of-law provision, does not mean that this will always be so. A state’s public policy may evolve over time and result in Florida non-compete choice-of-law provisions enforceable in states where they were formerly were not enforceable, even if Florida law had not changed in the intervening period. In re AutoNation, Inc., 228 S.W.3d 663, 668 (Tex. 2007) (recognizing that it formerly was Texas public policy to refuse to consider a choice-of-law provision in a Florida non-compete agreement, but because of changes in Texas law to more favor employers, it may no longer be contrary to Texas public policy to enforce Florida non-compete agreements under Florida if that is the contract’s choice-of-law).

Some courts will enforce non-compete agreements under Florida law if those agreements provide for a choice-of-law provision directing that the governing law for the contract be Florida, and there is a sufficient connection that the controversy has to the state of Florida. Office Depot, Inc. v. Impact Office Products, LLC, 1:09 CV 2791, 2011 WL 4833117 (N.D. Ohio Oct. 12, 2011) (enforcing the Florida choice of law provision in a non-compete agreement in Ohio); Audio Visual Innovations, Inc. v. White, 1:13-CV-102, 2013 WL 12109434 (W.D. Mich. Feb. 26, 2013)(enforcing Florida choice of law provision in Michigan); Dry Cleaning To-Your-Door, Inc. v. Waltham Ltd. Liab. Co., 07-CV-01483WDMMJW, 2007 WL 4557832 (D. Colo. Dec. 20, 2007) (enforcing a non-compete agreement concerning a franchise sale under Florida law in Colorado).

How the respective courts analyze and treat Florida non-compete agreements may have real consequences to Florida employers that can be mitigated with planning. In drafting a non-compete agreement, Florida employers should consider whether their employees are likely to seek employment with a competitor in a particular state. As an example, consider a hypothetical Florida employer that fears that its employees will join a competitor with headquarters in Georgia. The hypothetical Florida employer would be making a grave mistake if it did not consider Georgia law in drafting its non-compete. Florida law permits courts to limit a non-compete agreement which is overly broad to make it enforceable. § 542.335(c), Fla. Stat. (“If a contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief reasonably necessary to protect such interest or interests”). The court will simply truncate the non-compete agreement as it sees fit, leaving it as enforceable as if it had originally been drafted that way. This leaves little incentive for Florida employers to limit the breadth of their non-compete agreements. However, Georgia will refuse to blue-pencil overly broad non-compete agreements ancillary to employment, and instead throw out such an agreement in its entirely. Palmer & Cay, Inc. v. Marsh & McLennan Companies, Inc., 404 F.3d 1297 (11th Cir. 2005). A Florida employer that did not understand or consider both Florida and Georgia law when drafting a non-compete agreement would tend to draft their non-compete agreement to be more restrictive than would be enforceable in Georgia – resulting in an agreement that did nothing to protect the employer’s interests in Georgia. However, had the hypothetical Florida employer considered that its agreement might need to be enforced in Georgia, that hypothetical Florida employer could have drafted a less restrictive non-compete agreement that would be enforceable in both Florida and Georgia.

Florida employers should consider whether it is likely that they may need to enforce a non-compete agreement outside the state of Florida.

Peter Mavrick is a Fort Lauderdale non-compete attorney. This article does not serve as a substitute for legal advice tailored to a particular situation.