As discussed in prior articles, Florida’s Non-Competition Covenant Statute, § 542.335, permits covenants restraining competition so long as the restrictive covenant meets certain statutory requirements. One of the statutory requirements is that the party seeking to enforce the restrictive covenant must “plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant.” § 542.335(1)(b), Fla. Stat. Subparagraph (b) provides a non-exclusive list of legitimate business interests that could justify a restrictive covenant, one of which is “extraordinary or specialized training.” The statute, however, fails to offer any guidance as to what type of training is considered “extraordinary or specialized.” As a Fort Lauderdale non-compete lawyer, Peter Mavrick frequently handles cases where enforcement of a non-compete depends on whether there was “extraordinary” or “specialized” training. A recent judicial decision issued in the Southern District of Florida provides helpful insight for employers to determine whether the training they provide to employees can sufficiently justify a restrictive covenant.
In IDMWORKS, LLC v. Pophaly, 192 F. Supp.3d 1335 (S.D. Fla. 2016), the plaintiff was an information technology company providing corporate identity-and-access management (“IAM”) software solutions. The company brought a lawsuit seeking an injunction against a former employee for breach of a restrictive covenant when the former employee began working for a client who the employee had provided IAM services for during his employment with the company. One of the legitimate business interests alleged by the company justifying the restrictive covenant was extraordinary or specialized training. At the time the company hired the employee, the employee had no prior experience with IAM services. The company asserted that it provided the employee with substantial training, including a two to three-week formal training session with the employee’s direct supervisor, a conference for Quest APS for which the company covered travel expenses, the company’s subscription to the Oracle platform and Oracle training materials, and an “in-house training program” which the court found to be merely a forum for employees to communicate between themselves about clients and technologies they are using.
Despite the company’s assertions, the court held that such training was not sufficient to justify the restrictive covenant. According to the court, “training constitutes a legitimate business interest protectable by an injunction only when the training rises to the level of being specialized or extraordinary. This means that training must go beyond that typically offered in any given industry.” In declining to enforce the injunction against the employee, the court offered several reasons why the training the employee received did not rise to the level of “specialized or extraordinary.”
First, the court found that any actual training the employee received was typical in the information technology industry. Second, access to the Oracle platform could not be considered extraordinary or specialized because many other companies have access to the same database of training materials and provide the same access to their employees. Third, the use of such training materials was optional. As stated by the court, “optional training does not constitute a legitimate business interest sufficient to justify injunctive relief.” Based on the foregoing, the court held that the training received by the employee was insufficient to justify the restrictive covenant.
Although IDMWORKS, LLC v. Pophaly was in the context of the information technology industry, it provides useful information for all industries regarding “extraordinary or specialized training.” In essence, if an employer seeks to enforce of restrictive covenant based on their legitimate business interest in “extraordinary or specialized training,” such training must surpass the typical training an employee normally receive at other companies within the industry.
The Mavrick Law Firm has successfully represented many businesses in Florida non-competition covenant litigation in the Miami-Dade, Broward, and Palm Beach County areas encompassed by the Third and Fourth District Courts of Appeal, as well as Hillsborough, Sarasota, and other counties encompassed by the Second Circuit Court of Appeal. This article is not 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.