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Friday, May 31, 2013
Can My Employer Enforce A Noncompete When We Get Our Customers Through Bidding?
Noncompete laws vary from state to state, but whether in a state like Florida where noncompetes can frequently be enforced or in a state that is more employee-friendly, if an employer wants to enforce a noncompetition agreement, it will have to prove a legitimate interest to protect.
In Florida, the statute allowing noncompete agreements also says: “Any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable.”
Florida’s noncompete statute defines the term “legitimate business interest” to include: (1) trade secrets, (2) valuable confidential business or professional information that does not qualify as a trade secret, (3) substantial relationships with specific prospective or existing customers, clients or patients, (4) customer, patient or client goodwill, and (5) extraordinary or specialized training.
In one Florida case, the court said, “any competition by a former employee may well injure the business of the employer. An employer, however, cannot by contract restrain ordinary competition. In order for an employer to be entitled to protection, there must be special facts present over and above ordinary competition. These special facts must be such that without the covenant not to compete the employee would gain an unfair advantage in future competition with the employer.”
How does this apply if you get your customers through competitive bidding?
Courts have refused to enforce noncompetition agreements in Florida where the employer did not have substantial relationships with specific prospective or existing customers. If the customer is putting jobs out for bid, your employer may have a tough time showing it has substantial relationships with them. If they make purchases with whichever vendor is cheapest or makes the best offer, the courts may refuse to enforce your noncompete agreement. A request for a bid sent out publicly is pretty much like an ad in the yellow pages: anyone can respond, including your employer's competitors.
Where a court may draw the line is if you participated in preparing a bid for your employer, then use that confidential information to prepare your own bid for the same job undercutting them. That’s because you have valuable confidential business information about that bid. However, if you leave your employer and put in bids for jobs you weren’t involved with when you worked there, you may be okay.
Nothing in noncompete law is black and white. It’s pretty much all shades of gray. But employers try to enforce noncompetes that aren’t supported by a legitimate interest all the time. If you think your employer shouldn’t be able to enforce your noncompetition contract because customers are obtained through competitive bidding, talk to an employment lawyer who is familiar with noncompete agreements in your state to discuss your rights.