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Under Florida law, a restrictive covenant is not enforceable “unless it is set forth in a writing signed by the person against whom enforcement is sought.” Fla. Stat. § 542.335(1)(a).  By this general rule, injunctions to enforce non-compete provisions are primarily entered against the parties to the contract.  However, Florida law allows a court to enter an injunction against competing businesses that are alter-egos of the party who signed the non-compete contract.  These alter-egos include businesses that are being operated by spouses, family members, or shell corporations of the signator to the non-compete agreement. This exception applies to these other persons or entities even though they are not parties to the agreement, because they are either under the control of the signer of the non-compete contract or are otherwise being used to aid and abet that person in violating the non-compete clause. Peter Mavrick is a Fort Lauderdale non-compete lawyer who has extensive experience dealing with non-compete agreements and claims for injunctive relief.

For example, in the case of Dad’s Properties, Inc. v. Lucas, et al., 545 So.2d 926 (Fla. 2d DCA 1989), Albert C. Lucas (“Lucas”) and his company Al Lucas Enterprises, Inc. sold “Sugar Daddy’s”, an adult entertainment nightclub to Dad’s Properties, Inc. (“Dad’s”.)  At the closing the parties executed a covenant not to compete restricting Lucas and his company from competing with Dad’s within a 50 mile radius for 5 years.  One year later, Lucas’ wife opened an adult entertainment nightclub within 50 miles of Sugar Daddy’s.  Dad’s filed suit and at the evidentiary hearing on Dad’s motion for preliminary injunction, evidence was presented that Lucas exerted considerable control over the design, and operation of his wife’s club.  There was also evidence that he and his wife solicited employees and dancers of Sugar Daddy’s to work for his wife’s club. Without stating the basis for its decision, the trial court denied the motion for preliminary injunction against Lucas, his company, Lucas’s wife and her company from continuing to compete with Dad’s.

Dad’s immediately appealed and the appellate court reversed the trial court’s decision, holding that “…individuals and entities may be enjoined from aiding and abetting a covenantor in violating a covenant not to compete.”  Further that “…an injunction not only binds the parties defendant but also those identified with them in interest, in privity with them, represented by them or subject to their control.”  It was clear that Mrs. Lucas and her company were aided and abetted by Mr. Lucas and his company in their intentional violation of the covenant. Because of the close relationship to the covenantors, Mrs. Lucas and her company were also subject to an injunction to refrain from competing in violation of the agreement.

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Most discrimination claims against Florida employers are based on Title VII of the federal Civil Rights Act or under the Florida Civil Rights Act of 1992.  A relatively recent case in the federal appellate court that has jurisdiction over Florida federal courts held that claims based on sexual orientation are not covered by the federal law governing employment discrimination.  Peter Mavrick, of the Mavrick Law Firm, is a Fort Lauderdale employment lawyer who regularly defends businesses against employment discrimination accusations, claims, and lawsuits.

In Evans v. Georgia Regional Hospital, 850 F.3d 1248 (11th Cir. 2017), the Eleventh Circuit Court of Appeals determined that a lesbian employee who claimed she was discharged because of her sexual orientation did not have an actionable claim under Title VII of the Civil Rights Act of 1964.  The federal appellate court explained in pertinent part: “Evans next argues that she has stated a claim under Title VII by alleging that she endured workplace discrimination because of her sexual orientation.  She has not.” The Eleventh Circuit Court of Appeals did not allow a claim based on sexual orientation based on Fifth Circuit precedent in Blum v. Gulf Oil Corp., 597 F.2d 936, 938 (5th Cir. 1979).  The appellate court in Blum stated that “[d]ischarge for homosexuality is not prohibited by Title VII.”

The Eleventh Circuit Court of Appeals also relied on case law from other federal appellate courts holding that sexual orientation discrimination is not actionable under Title VII.  As examples, the Eleventh Circuit cited Higgins v. New Balance Athletic Shoe, Inc., 194 F.3d 252, 259 (1st Cir. 1999) (“Title VII does not proscribe harassment simply because of sexual orientation”); Simonton v. Runyon, 232 F.3d 33, 36 (2d Cir. 2000) (“Simonton has alleged that he was discriminated against not because he was a man, but because of his sexual orientation. Such a claim remains non-cognizable under Title VII”); Bibby v Phila. Coca Cola Bottling Co., 260 F.3d 257, 261 (3d Cir. 2001) (“Title VII does not prohibit discrimination based on sexual orientation”); Wrightson v. Pizza Hut of Am., 99 F.3d 138, 143 (4th Cir. 1996), abrogated on other grounds by Oncale v. Sundowner Offshore Servs., 523 U.S. 75, 118 S.Ct. 998, 140 L.Ed.2d 201 (1998) (“Title VII does not afford cause for discrimination based upon sexual orientation….”); Vickers v. Fairfield Med. Ctr., 453 F.3d 757, 762 (6th Cir. 2006) (“[S]exual orientation is not a prohibited basis for discriminatory acts under Title VII”); Hamner v. St. Vincent Hosp. & Health Care Ctr., Inc., 224 F3.d 701, 704 (7th Cir. 2000) (“[H]arassment based solely upon a person’s sexual preference or orientation (and not on one’s sex) is not an unlawful employment practice under Title VII.”); Williamson v. A.G. Edwards & Sons, Inc., 876 F.2d 69, 70 (8th Cir. 1989) (“Title VII does not prohibit discrimination against homosexuals”); Rene v. MGM Grand Hotel, Inc., 305 F.3d 1061, 1063-64 (9th Cir. 2002) (“[A]n employee’s sexual orientation is irrelevant for purposes of Title VII. It neither provides nor precludes a cause of action for sexual harassment. That the *1257 harasser is, or may be, motivated by hostility based on sexual orientation is similarly irrelevant, and neither provides nor precludes a cause of action”); Medina v. Income Support Div., 413 F.3d 1131, 1135 (10th Cir. 2005) (“Title VII’s protections, however, do not extend to harassment due to a person’s sexuality…. Congress has repeatedly rejected legislation that would have extended Title VII to cover sexual orientation”).  Peter Mavrick is a Fort Lauderdale employment attorney who represents businesses and their owners.

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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.

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The Fair Labor Standards Act (FLSA) requires employers to pay overtime compensation to certain employees. 29 U. S. C. §201. There are, however, exceptions to the rule. In automobile dealerships, “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles…” is exempt and not entitled to overtime wages. §213(b)(10)(A) ( “FLSA exemption”). The FLSA was meant to be construed narrowly, but statutory ambiguity still existed as to whether the exemption included service advisors. The United State Supreme Court in Encino Motorcars, LLC v. Navarro, U.S., 584 U. S. ____ (2018), in a 5-4 decision, held that service advisors fell within the exemption and, therefore, were not entitled to overtime pay. The main question considered was whether service advisors were considered “salesmen” primarily engaged in servicing automobiles. The lower appellate court found that service advisors were exempt from the FLSA overtime wage requirement, and consequently dismissed the action. Navarro appealed and the United States Court of Appeals for the Ninth Circuit reversed and held that service advisors did not fall under the FLSA exemption and were entitled to overtime wages. The US Supreme Court disagreed and on April 2, 2018, it held that service advisors were considered salesmen engaged in servicing automobiles and therefore were exempt from the FLSA overtime wage requirement. Peter Mavrick is a Fort Lauderdale employment lawyer who defends businesses against overtime wage lawsuits.

In Encino, current and former service advisors of Encino Motorcars, LLC (“Encino”), a Mercedes-Benz dealership, sued Encino for backpay.  They alleged Encino violated the FLSA by failing to pay them overtime wages. Encino argued that the service advisors fell under the FLSA exemption and were not entitled to overtime pay. The circuit court agreed with Encino and dismissed the lawsuit. The United States Court of Appeals for the Ninth Circuit reversed and held that service advisors did not fall under the FLSA exemption.  This allowed the service advisors to collect backpay. The Ninth Circuit used the FLSA Occupational Outlook Handbook (“Handbook”) as a guide and concluded that because “automobile service advisors” were listed in the Handbook as one of the job titles and not listed in the FLSA exemption, service advisors were not exempt. The Ninth Circuit “also determined that service advisors were not primarily engaged in “servicing” automobiles, which it defined to mean ‘only those who are actually occupied in the repair and maintenance of cars.’” Navarro, et al. v. Encino Motorcars, LLC, 845 F.3d 925, 931 (9th Cir. 2017). Furthermore, the Ninth Circuit held, “the exemption does not cover salesmen who were primarily engaged in servicing.

In its reversal of the Ninth Circuit’s opinion, the United States Supreme Court concluded that service advisors were “salesmen” who sold customers services for their vehicles and were also primarily engaged in servicing vehicles. The Supreme Court classified service advisors as integral to the servicing process, as they “mee[t] customers; liste[n] to their concerns about their cars; sugges[t] repair and maintenance services; sel[l] new accessories or replacement parts; recor[d] service orders; follo[w] up with customers as the services are performed (for instance, if new problems are discov­ered); and explai[n] the repair and maintenance work when customers return for their vehicles.”

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The use of non-compete covenants by employers to protect business interests is not an uncommon practice. The validity of these covenants is governed by Florida Statute 542.335, which requires: “the employer to plead and prove (1) the existence of one or more legitimate business interests justifying the restrictive covenant and (2) that the contractually specified restraint is reasonably necessary to protect the established interests of the employer.” North American Products Corp. v. Moore, 196 F.Supp.2d 1217, 1228 (M.D. Fla. 2002). Additionally, if the employer establishes it has a “legitimate business interest” to protect, irreparable injuries will be presumed and it will be up to the employee to prove the absence of injuries. A “legitimate business interest” includes, but is not limited to: valuable confidential business information, specific relationships with prospective or existing customers, and customer goodwill associated with a specific geographical area. Fla. Stat. 542.335 (1)(b). Peter Mavrick is a Palm Beach non-compete attorney who has extensive experience dealing with non-compete agreements.

It is not always clear when customer goodwill and specific relationships with customers are considered legitimate business interests. However, the United States District Court for the Middle District Florida helped clarify this issue in North American Products Corp. (“NAPCO”).  NAPCO, a tool manufacturing, selling, and distributing business, filed with the court a motion for a preliminary injunction against a former employee (“Moore”) to enjoin him from soliciting business directly or indirectly from NAPCO customers for 1 year after Moore’s employment ended. Moore was employed with NAPCO and he entered into various employment agreements with non-compete covenants. The most recent and controlling agreement contained a non-compete clause prohibiting Moore from “soliciting business in competition with the Company [NAPCO] from any customers of. . . [NAPCO], with which the employee [Moore] made sales efforts in the year prior to the termination within. . . Florida. . . for a period of one year (360 days) after the date of termination.” After 15 years of employment with NAPCO, Moore resigned. Despite the non-compete clause, he started and became Chief Executive Officer of Tru-Cut in Florida, which was poised to be a direct competitor of NAPCO. Additionally, before his resignation, Moore and a former NAPCO employee, John Bennett (“Bennett”), worked together to prepare for the creation of Tru-Cut. Bennett began to formulate sales strategies to market to NAPCO customers while Moore applied for financing and listed at least five NAPCO customers as key customers of Tru-Cut.

NAPCO immediately sought a preliminary injunction against Moore. NAPCO argued that during his employment with NAPCO Moore gained substantial knowledge of NAPCO’s customers, their purchasing history, needs and preferences and, as such, NAPCO had a legitimate business interest. Furthermore, NAPCO averred that, “customers of NAPCO were enticed to do business with Moore’s new company, a direct violation of the non-solicitation agreement…”  The federal court agreed with NAPCO and concluded that, “NAPCO has a legitimate business interest in protecting the substantial relationships it has with its existing customers and thus the Court must presume that NAPCO will be irreparably harmed unless Defendant can establish that NAPCO will not be harmed.” Moore argued that NAPCO could not have been irreparably harmed because NAPCO did not have contracts with its customers and, thus, Moore could not have interfered with customer relationships. The federal court rejected this argument. The court stated that the “focus of preliminary injunctive relief is on maintaining long standing relationships and preserving the goodwill of a company built up over the course of years of doing business. Whether a company has a contract or not with its customers has no bearing on whether the company has been or will be damaged by solicitation of its customers.” Furthermore, the court found the “net effect of this solicitation has a high possibility of permanently damaging the reputation and goodwill of [the employer].” The court affirmed the trial court’s decision and granted NAPCO’s motion for a preliminary injunction against its former employee.

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Many employment agreements contain covenants not to compete to protect employers from employees competing against them when the employment ends. If the employer seeks to enforce this covenant, it must prove, among other things, that it will suffer irreparable harm if the covenant is not enforced. This irreparable harm is presumed if the employee violates an enforceable covenant. In the case of Litwinczuk, M.D., v. Palm Beach Cardiovascular, 939 So.2d 268 (Fla. 4th DCA 2006), Palm Beach Cardiovascular (the “Clinic”) sued Mr. Litwinczuk, M.D. (the “Doctor”) to enforce a non-compete clause enjoining the Doctor from operating a competing practice for 2 years within Palm Beach County. Despite the non-compete, the Doctor resigned and opened his own practice in the same field just four blocks away from the Clinic and retained many of the Clinic’s patients. The trial court ruled in favor of the Clinic, finding that the Doctor violated the covenant and, therefore, irreparable harm to the Clinic was presumed. A temporary injunction was issued preventing the Doctor from continuing to operate his new practice for 2 years. However, the court reduced the geographic scope of the noncompete. The court held that the Palm Beach County geographical restriction was overbroad and unreasonable. Peter Mavrick is a Palm Beach non-compete attorney who has extensive experience dealing with non-compete agreements.

The factual background of the case is fairly straightforward. In an effort to expand its business, the Clinic paid a recruiter $22,000 to find a doctor suitable for its practice and purchased an existing practice for $40,000 to provide a patient base for the newly hired doctor. The clinic hired the Doctor and they entered into an employment agreement with a non-complete clause in which the Doctor agreed that if he resigned, he would not enter into any practice with a “competing enterprise” for 2 years within Palm Beach County. Additionally, during those 2 years he was not to interfere with the Clinic’s relationships with its employees or patients. Despite this agreement, the Doctor resigned and began operating his own practice four blocks away from the Clinic, in the same field, and proceeded to see the Clinic’s patients.

The Clinic filed suit to enforce the non-compete covenant arguing that the Doctor had violated the covenant and, as such, the Clinic suffered irreparable harm. “In seeking an injunction, the movant must show: (1) irreparable harm if the status quo is not maintained; (2) no adequate remedy of law; (3) a clear legal right to the relief requested; (4) that any public interest will not be disserved; and (5) a substantial likelihood of success on the merits.” Shafer v. Shafer, 898 So.2d 1053, 1055 (Fla. 4th DCA 2005). Additionally, Section 542.335(1)(j), Florida Statutes, provides in part, “The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.” This presumption is rebuttable and not conclusive. Passalacqua v. Naviant, Inc., 844 So.2d 792, 796 (Fla. 4th DCA 2003). The trial court found the Doctor violated the non-compete clause, presumed irreparable harm, and issued a temporary injunction. The court, however, reduced the geographical location to a more reasonable area.

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Employers often face the situation where an employee seeks to return to work after medical leave but may no longer be able to handle the duties of his or her job. It is unlawful to terminate an employee for taking medical leave or for having a disability.  However, it is lawful for an employer to have a uniformly applied practice or policy that requires each employee to provide medical certification from the doctor that he or she is able to resume work. 29 U.S.C. §2614(a)(4).  The failure to provide that medical certification is a legitimate, nondiscriminatory reason to terminate employment.  Peter Mavrick is a Fort Lauderdale employment attorney who defend businesses accused of employment discrimination.

In the case of Diaz v. Transatlantic Bank, 367 Fed.Appx. 93 (11th Cir. 2010), a former employee sued her former employer alleging interference and retaliation in violation of the Family and Medical Leave Act of 1993 (FMLA) and discrimination and retaliation in violation of Americans with Disabilities Act (ADA). Diaz was a bank teller at Transatlantic Bank (“Bank”). Diaz took medical leave to recover from a severe knee injury. Transatlantic Bank requested documentation and medical updates concerning her condition during her leave and Diaz complied. Her injury prevented her from climbing into the high chairs used by bank tellers, so she informed the Bank that she was willing to work at any other position that did not required her to climb into those chairs.  When Diaz’s medical leave expired, she did not have clearance from her doctors to return to work, which resulted in her dismissal from the Bank.  She then filed her lawsuit claiming FMLA interference, discrimination and retaliation by the Bank.

In support of her FMLA interference and retaliation claims, Diaz argued that the proof of her medical clearance to return to work was in her doctor’s statements on her disability application that detailed the tasks that she could complete. The doctor’s statement indicated that she could complete every task of a bank teller except climbing into the high chairs. However, the trial court was not persuaded that the application was proof of medical clearance, because the form itself stated that she would not be able to return to work for weeks beyond her allotted medical leave.  The trial court found it to be unreasonable to ask an employer to determine if she was able to return to work based on a statement contained in an application for disability benefits.

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Contracts with covenants not to compete will typically address the anticipated damages that could occur from an employee’s breach of the agreement. When a contract contains a damages provision that is designed for the sole purpose of penalizing the employee from breaking his or her promise, it may be unenforceable.  Peter Mavrick is a Palm Beach non-compete lawyer who has extensive experience dealing with non-compete agreements.

In the case of Coleman v. B.R. Chamberlain & Sons, Inc., 766 So. 2d 427 (Fla. 5th DCA 2000), a former employer sued to enforce non-competition agreement against its former employee.  The trial court found zero actual damages for Chamberlain, the former employer, but found that it was entitled to liquidated damages in the amounts estimated by Chamberlain’s CPA.

The applicable portion of the employment agreement addressing the subject of damages stated:

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A temporary injunction is often an effective protection for to prevent an adversary from using stolen trade secrets, such as a customer list.  Peter Mavrick is a Fort Lauderdale trade secret lawyer who represents businesses in trade secret litigation.

In the case of I.C. Systems, Inc. v. Oliff, 824 So. 2d 286 (Fla. 4th DCA 2002), an employer sued its former employee for damages and injunctive relief and alleged that the former employee misappropriated its client lists and other trade secrets to be used by the employee’s new employer (i.e. a competitor). The employer had no way to control or mitigate the potential damage that would inevitably occur during the lawsuit because the former employee possessed their confidential information. So, contemporaneous to filing its lawsuit, the employer filed a motion for a temporary injunction to immediately prevent further harm by its former employee while the lawsuit proceeded. A temporary injunction is strategically valuable because it penalizes noncompliance by holding them in contempt and the imposition of sanctions against the former employee if he or she fails to comply with the Court’s Order.

The trial court denied the motion for temporary injunction under the mistaken reasoning that the employer did not need the injunction because it could be fully compensated through its claim for monetary damages.  However, in Florida’s Trade Secret Act, the legislature expressly authorized parties to seek both injunctive relief and damages. So, a business should not be limited to recovery of its monetary relief, particularly when its trade secrets could be negatively impacted before a judgment is ever entered by the Court.

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Managing overtime is a constant struggle for many businesses especially when the employee’s duties necessitate irregular work hours or the typical work shift simply cannot be anticipated with reasonable certainty.  Businesses that require on-call services can very easily find themselves paying an excessive amount of overtime to meet the demands of their clients with diminishing returns. Peter Mavrick is a Fort Lauderdale employment attorney who represents businesses in defense against lawsuits filed by employees.

Employers need to know that there is an exception to the federal overtime wage law.  Section 7(f) of the federal overtime wage law, i.e., the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207(f), allows employers to negotiate a minimum weekly pay equivalent to 40 hours at a regular rate of pay, and up to but not more than 20 overtime hours for at least one and one-half times the regular rate of pay.

This type of compensation is known as a “Belo plan” based on the United States Supreme Court’s decision in Walling v. A.M. Belo Corp., 316 U.S. 624 (1942).  Under the Belo plan, a fixed payment of this kind is permitted when the employee’s duties necessitate irregular work hours and the total wages would vary widely from week to week if computed on an hourly rate basis.

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