FLORIDA NONCOMPETE DEFENSE: POST-TERMINATION RESTRICTIONS CAN EXPIRE, EVEN IF EMPLOYEE STAYS ON AS AN AT-WILL EMPLOYEE

A non-competition provision in an employment contract prohibits an employee from competing with his/her employer for a specified term after termination of the agreement. However, if that employee stays on with the employer on an at-will basis after the term of the written agreement expires, then the agreement does not automatically renew for another term. This means that a covenant not-to-compete can expire even while the employee continues working for the employer as an at-will employee. Peter Mavrick is a Fort Lauderdale non-compete lawyer who has extensive experience dealing with non-compete agreements and claims for injunctive relief.

In the case of Zupnik v. All Florida Paper, Inc., 997 So.2d 1234 (Fla. 3d DCA 2008), Stewart Zupnik (“Zupnik”), a paper products sales person entered into an employment agreement with All Florida Paper, Inc. (“All Florida”) with a twelve-month non-competition provision as well as a five-year restriction regarding confidential trade secrets. Zupnik’s consideration for entering the agreement was a guaranteed salary and a commission plan for a two-year period. After the two-year period expired, the salary and the commission were no longer guaranteed, but Zupnik could remain as an at-will employee.

Once the two-year contract term expired, Zupnik remained as an at-will employee of All Florida for an additional two years. After several adverse changes to his compensation were made by All Florida, Zupnik left to form his own company to continue to serve his long-standing customers. In addition, he contacted Dade Paper, a competitor, to make an agreement to become the redistributor of their paper products.

All Florida hired a private investigator and discovered the meetings that were taking place between Zupnik and Dade Paper. All Florida sued Zupnik and Dade Paper for various causes of action relating to stealing trade secrets and for violation of the non-competition provision. The trial court found in favor of All Florida, enforced the non-compete provision in its entirety and issued a temporary injunction precluding Zupnik from competing with All Florida. The trial court found that the two-year period began after Zupnik stopped working for All Florida completely. However, the terms of the agreement stated that the contract expired after two years and did not require Zupnik to stop working for All Florida entirely for the non-compete period to begin.

Zupnik immediately appealed and the appellate court found that the trial court erred in finding that the non-compete did not expire at the end of the initial two-year term. A preliminary injunction pursuant to a non-compete clause is improper if the written employment agreement has expired “by its very terms.” Id., citing Sanz v. R.T. Aerospace Corp., 650 So.2d 1057 (Fla. 3d DCA 1995). The non-compete provision was subject to the contract expiring rather than Zupnik ceasing to work for the company in any capacity. Therefore, the fact that Zupnik remained employed by All Florida as an at-will employee for nearly two years, did not create a new employment agreement for a specified term. The appellate court reversed the trial court’s ruling and remanded with instructions to vacate the temporary injunction.

Peter Mavrick is a Fort Lauderdale non-compete attorney who has extensive experience dealing with non-compete agreements and claims for injunctive relief. 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.