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Labor and Employment Law

11th Circuit Rules Courts Must Consider Hardship to Employee in Deciding on Florida Noncompete Injunction

 Florida's noncompete statute is, no doubt, harsh on employees and extremely favorable to employers. However, the 11th Circuit Court of Appeals just made it a bit less harsh.

The court ruled that, although Florida law bans the courts from considering hardship on the employee in determining whether or not to enforce a noncompete agreement, courts must balance the hardships between employer and employee in determining whether injunction is an appropriate remedy. An injunction is, in the case of noncompete agreements, basically an order that you must stop working for your new employer, stop contacting customers of the former employer, or otherwise directing you to cut it out, whatever it thinks you're doing wrong.

The reason this is important is because most employees are facing an army of lawyers and a former employer with a substantial amount of dollars to use against them, and once the judge orders them out of a job they are fighting with no ability to pay a lawyer. It's a loss due to lack of money rather than due to lack of legal defenses.

This ruling means that a court should balance the financial hardship on the employee in determining whether to yank their job away. The alternative remedy to the employer would be to prove money damages, and most employers can't prove that the former employee working for a competitor cost them a dime. That's because noncompetes are being used as weapons to suppress wages and prevent competition more often than for any legitimate interest.

I actually had an opposing counsel recently brag that they had gotten the same employee fired from three different jobs this way. Despicable.

Here's what the 11th Circuit said about why the courts must consider hardship, even under Florida's horrid noncompete statute [subscribers can access an enhanced version of this opinion: | Lexis Advance]:

MacLachlan appeals the lower court’s application of section 542.335(1)(g)1 to the preliminary injunction analysis, which precluded any consideration of the potential hardship to MacLachlan when the court balanced the harms under Rule 65. 

Section 542.335(1)(g) governs the enforceability of restrictive covenants, not the enforcement of an already enforceable restrictive covenant. See Fla. Stat. § 542.335(1)(g). This is evident from the framing, content, and position of the section in the overall structure of the statute. The section begins: “In determining the enforceability of a restrictive covenant, a court . . . .” It then goes on to list four considerations that a court “shall” or “shall not” contemplate when determining whether a restrictive covenant is enforceable. § 542.335(1)(g)1–4. Case: 15-10985 Date Filed: 08/27/2015 Page: 9 of 11 10 One of these—applied by the district court to the motion for preliminary injunction—is that the court “[s]hall not consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought.” § 542.335(1)(g)1. Section 542.335(1)(g)3 adds that the court “[s]hall consider all other pertinent legal and equitable defenses.” What is clear from the framing and content of sections 542.335(1)(g)1–4 is that the mandated considerations therein are directed towards the determination of whether a restrictive covenant is enforceable. Accordingly, these sections should not be applied when determining the appropriate remedy. 

[footnote 1 explains: The statute concludes with instructions for enforcement: first, it addresses public policy considerations, § 542.335 (1)(i), then, specific remedies, § 542.335(1)(j), and finally, attorney’s fees and costs, § 542.335(1)(k). These sections are clearly demarcated from the determination of whether a covenant is enforceable. See, e.g., § 542.335(1)(j) (“The violation of an enforceable restrictive covenant creates . . . .”) (emphasis added). ] 

Here, the district court erred when it applied section 542.335(1)(g) in determining whether a preliminary injunction was an appropriate and effective remedy for the enforceable restrictive covenant. See § 542.335(1)(j). Having erroneously applied section 542.335(1)(g), the district court failed to consider any harm that MacLachlan would suffer if the injunction issued. 

If Florida, and not just federal, courts follow this analysis, it could be the beginning of some relief for Florida employees.

 See more employment law posts on Donna Ballman's blog, Screw You Guys, I'm Going Home

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