The Mavrick Law Firm regularly represents entrepreneurs who open businesses in industries in which they were formerly employed. As such, we are frequently confronted with covenants not to compete signed by the entrepreneurs when they were previously employed. The covenants not to compete, also known as restrictive covenants, typically purport to restrict the entrepreneurs from competing against their former employers for certain time periods and within a specific geographic areas. Peter Mavrick is a Miami non-compete attorney who has an excellent track record in successfully defending entrepreneurs against non-compete covenant lawsuits. In some of these cases, the entrepreneur/former employee have successfully counterclaimed based on violations of the Fair Labor Standards Act (“FLSA”) because of the former employer’s failure to pay legally required overtime or minimum wages. What the entrepreneur may not know is that not only may he or she be able to recover any wages that were not paid under the FLSA, he or she may also prevent the enforcement of a restrictive covenant by the employer.
The idea that a violation of the FLSA can prevent against a former employer’s enforcement of a restrictive covenant is rooted in two separate principles. The first principle was discussed by the Florida Fourth District Court of Appeal in Northern Trust Investments, N.A. v. Domino, 896 So. 2d 880, 882 (Fla. 4th DCA 2005), stating in pertinent part:
A party is not entitled to enjoin the breach of a contract by another, unless he himself has performed what the contract requires of him so far as possible; if he himself is in default or has given cause for nonperformance by defendant, he has no standing in equity…Having committed the first breach, the general rule is that a material breach of the Agreement allows the non-breaching party to treat the breach as a discharge of his contract liability. If the employer wrongfully refuses to pay the employee his compensation, the employee is relieved of any further obligation under the contract and the employer cannot obtain an injunction.