FLORIDA NON-COMPETE AND RELATED TORT LAW: WHEN DO AN EMPLOYEE’S ACTIONS BEFORE ENDING EMPLOYMENT CONSTITUTE TORTIOUS INTERFERENCE AS OPPOSED TO LAWFUL PREPARATION TO COMPETE?

It is well settled in Florida law that “an employee does not violate his duty of loyalty when he merely organizes a corporation during his employment to carry on a rival business after the expiration of his employment.” Fish v. Adams, 401 So.2d 843 (Fla. 5th DCA 1981). Absent a non-compete agreement, a former employee is free to compete against the former employer. However, an employee who intends to leave his employment to work for a competing company or to start a competing company must avoid direct and unjustified interference with his/her employer’s business relationships. Peter Mavrick is a non-compete, employment, and business litigation lawyer who has extensive experience with defending against tortious interference lawsuits involving claims of unlawful and unfair competition.

In Harllee v. Prof’l Serv. Indus., Inc., 619 So. 2d 298, 300 (Fla. 3d DCA 1992), Professional Services Industries, Inc. (“PSI”) sued its former employee, John W. Harllee (“Harllee”) and ATEC Associates, Inc. (“ATEC”), a PSI competitor for, inter alia, tortious interference with business relationships and tortious interference with contractual relationships. PSI alleged that Harllee solicited PSI’s customers and employees before Harllee left his employment with PSI. The trial court found that there was no direct evidence that Harllee actively solicited PSI’s customers or his coworkers to work for ATEC. However, the trial court found that Harllee’s other actions on behalf of ATEC during his employment with PSI, provided evidence of his breach of loyalty to PSI.

The trial found that in May 1987, Harlee contacted ATEC, a PSI competitor who did not have a Florida presence, and agreed to open a Florida office for them. Harllee began preparations to open the ATEC office while still employed by PSI. The preparations included opening a Florida bank account, orchestrating the acquisition of office space and telephone listings, and creating a development plan including an organizational chart with the names and salaries of the PSI’s employees that would be necessary to run the new ATEC office. During early June 1987, information leaked out that ATEC was about to open operations in Florida. Several PSI employees gave their resignation notices and left to work for ATEC. The trial court concluded that Harllee’s actions were disloyal and therefore actionable. The trial court entered a judgment against Harllee and ATEC for both counts of tortious interference. Harllee and ATEC immediately appealed.

The appellate court reversed the decision and concluded that the trial court misapprehended the correct legal standard. Harllee v. Prof’l Serv. Indus., Inc. held that for a tortious interference claim to be actionable, there must be direct and unjustified interference. The appellate court reasoned that tort laws do not create a general immunity from competition. Mere preparation to open a competing business does not violate the employee’s duty of loyalty and does not constitute tortious interference. Fish v. Adams supra. Harllee v. Prof’l Serv. Indus., Inc. held that opening a bank account, obtaining office space and telephone services are acts of mere preparation that do not constitute intentional interference with a business relationship.

The trial court ascribed to Harllee a subjective intent that PSI’s “employees quit as a group and go to work for ATEC immediately, en masse.” The appellate court held that the evidence does not support that implication, but rather that the employees left at varying dates in June and July, after giving customary notice. The appellate court further held that Harllee’s subjective state of mind, that he hoped or desired other PSI employees would join ATEC, is not actionable as long as he refrained from impermissible solicitation. The trial court found that Harllee did not engage in solicitation of customers or employees. The appellate court, therefore, concluded that the acts of Harllee did not constitute tortious interference with a business or contractual relationship. The appellate court therefore reversed the trial court’s judgment and remanded with directions that the trial cout enter judgment for Harllee and ATEC.

Peter Mavrick practices non-compete, employment, and business litigation in Broward, Miami-Dade, and Palm Beach Counties, Florida. This article does not serve as a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.