MIAMI BUSINESS LITIGATION: EMPLOYERS COULD BE LIABLE FOR DAMAGES CAUSED BY AN EMPLOYEE UNDER THAT EMPLOYEE’S NON-COMPETE AGREEMENT WITH HIS PRIOR EMPLOYER

You may recall last week we discussed Florida’s Choice Act and the changes it may create to the non-compete landscape in Florida. The Choice Act establishes significantly more stringent non-compete restrictions on employees and independent contractors earning, or are reasonably expected to earn, a salary greater than twice the annual mean wage of the Florida county which (1) the employer has its principal place of business or (2) the Florida county which the employee or independent contractor resides. 2025 Florida House Bill No. 1219, Florida One Hundred Twenty-Seventh Regular Session. The employee or independent contractor can be prohibited from competing for up to four years and a court is required to preliminarily enjoin the employee or independent contractor from providing services to any business during the noncompete period with limited exception if the employer requests the court to do so. 2025 Florida House Bill No. 1219, Florida One Hundred Twenty-Seventh Regular Session. These new provisions are broad and will likely have far reaching effects. But high earning employees and independent contractors are not the only ones that may be affected by the proposed legislation should it be approved Florida’s Legislature. Businesses employing a high earning employee or independent contractor that signed a non-compete covered by the Choice Act may have exposure too. The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Historically, businesses hiring an employee that signed a non-compete agreement or other restrictive covenant with his or her former employer had little exposure. Those businesses could only be enjoined from continuing to work with the former employee even though the businesses did not sign the agreement. Dad’s Properties, Inc. v. Lucas, 545 So. 2d 926 (Fla. 2d DCA 1989) (“[I]ndividuals and entities may be enjoined from aiding and abetting a covenantor in violating a covenant not to compete.”). The former employer had to prove the former employee violated the non-compete agreement, the business hiring the former employee knew about the non-compete agreement, and the business hiring the former employee helped the former employee violate the non-compete agreement. Wiand v. Wells Fargo Bank, N.A., 938 F. Supp. 2d 1238 (M.D. Fla. 2013) (providing the elements for aiding and abetting). However, the business could not be liable for the former employer’s damages or attorney’s fees because contractual privity between the business and the former employer did not exist. Bauer v. DILIB, Inc., 16 So. 3d 318 (Fla. 4th DCA 2009) (“Bauer did not sign the restrictive covenant and, therefore, subsection (1)(a) precludes the plaintiff from enforcing the restrictive covenant against her. Because the plaintiff could not enforce the restrictive covenant against Bauer, the circuit court could not order her to pay the plaintiff’s attorney’s fees and costs under subsection (1)(k).”).

Florida’s Choice Act appears to expand liability for businesses electing to hire an employee that signed a “covered non-compete agreement.” The proposed legislation contains a provision specifically contemplating this type of situation and states that “a court must preliminarily enjoin a business, an entity, or an individual from engaging a covered employee during the covered employee’s noncompete period.” 2025 Florida House Bill No. 1219, Florida One Hundred Twenty-Seventh Regular Session. In addition, the proposed legislation states that the “injunctive relief provided… is not an exclusive remedy, and a prevailing covered employer is entitled to recover all available monetary damages for all available claims.” This provision suggests businesses choosing to hire an employee that had non-compete obligations with his or her former employer could be liable for the former-employer’s monetary damages. But we will have to wait and see whether the legislation is passed in its current form and how the courts interpret this provision.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.