Rethinking employment – Bonita Springs Florida Weekly

Will banning non-compete clauses unleash chaos?

If a ban on non-compete clauses in contracts is allowed to go into effect, a big change is on the horizon for both employees and employers. The ban could upend how a wide range of Southwest Florida businesses hire and retain employees.

The Federal Trade Commission approved the rule banning non-competes in April. The rule is scheduled to go into effect September 4, but the U.S. Chamber of Commerce has filed a lawsuit, and the fight could go all the way to the U.S. Supreme Court.

The new rule would eliminate existing non-competes. Non-competes for senior executives who make more than $151,000 annually would remain, but employers couldn’t enter new non-competes with senior executives.

According to Investopedia.com, a non-compete agreement is a legal agreement or clause in a contract specifying that an employee must not compete with an employer after the employment period is over.

Non-solicitation agreements and non-disclosure agreements still would be allowed, said local labor attorney Suzanne Boy.

“The U.S. Chamber of Commerce has identified Florida as the most favorable state in the country for restrictive covenant agreements, by statute and enforcement, so it would have a significant effect on Florida employers.” — Scott Atwood, Fort Myers attorney

The FTC said eliminating non-competes would add 8,500 new businesses annually to the economy.

“The U.S. Chamber of Commerce has identified Florida as the most favorable state in the country for restrictive covenant agreements, by statute and enforcement, so it would have a significant effect on Florida employers,” said Fort Myers Attorney Scott Atwood, who specializes in labor and employment law.

According to the FTC, about 18 percent of the U.S. workforce, 30 million workers, signs non-competes.

Atwood said there is no data on how many employees in Southwest Florida are required to sign non-competes, but he thinks the percentage is close to the U.S. number.

“They come in all shapes and sizes.”

Non-competes are popular in the medical field, sales jobs and broadcast news. They can also range from hair salons to architects. Attorneys are exempt from non-competes.

“It’s not one industry,” Boy said.

Some employers are reluctant to discuss non-competes. Arthrex, a maker of medical instruments and one of the largest employers in Southwest Florida responded in an email, “We respectfully decline to participate on this one.”

The medical field is one of the largest that requires non-competes. In 2019, Florida legislators passed a law that exempts specialists in a county where all the physicians in that specialty are employed or contracted by one medical group.

Lee County was the focus of a lawsuit between the state and 21st Century Oncology in 2019. The medical practice sued after five of its nine oncologists left to start their own practices. 21st Century lost the case.

In the last session, the Florida Legislature ignored a bill that would have eliminated non-competes for all doctors.

Lee Health, the largest healthcare system in Lee County, is reviewing various non-competes and working with experts to determine how the ruling may apply, said system spokeswoman Jaclyn Bevis.

NCH in Collier County didn’t return more than a half-dozen messages about how the elimination would affect the health system. Millennium, another Southwest Florida healthcare provider, didn’t respond to several phone messages.

Boy said she hasn’t been overwhelmed with questions about the non-compete rule changes. She said employers have been asking more questions about overtime and minimum wage changes.

She thought the lack of questions might be due to employers knowing a year ago it was coming.

But is it coming? Atwood doubts that the rule will begin on September 4. He thinks it will wind up in the Supreme Court and have a good chance of being ruled unconstitutional.

The worst-case scenario would be if the rule takes effect as written, invalidating existing non-competes, Boy said.

“That’s the much bigger impact than what it’s going to look like going forward,” she said.

It would change the way employers hire, Atwood said.

They will find workarounds, he said. They will be more careful in protecting confidential information.

Atwood said that most employers don’t mind if someone leaves and starts their own business. The employer might have done the same.

What they don’t like is somebody taking along clients they met while working there.

Theresa Ayers, a consultant with the Small Business Development Center at FGCU, offers simple advice on non-competes.

She tells employees not to sign them and employers not to offer them. They are costly to enforce, she said.

She said that treating people well will prevent them from leaving. If they do want to leave and try something on their own, wish them well.

In other words, if a medical practice employs all the radiation oncologists in a county, then a non-compete agreement between that practice and its physicians may be unenforceable. Peter Mavrick is a non-compete lawyer with extensive experience with non-compete covenant litigation.

Pursuant to Florida Statute § 542.336: A restrictive covenant entered into with a physician who is licensed under chapter 458 or chapter 459 and who practices a medical specialty in a county wherein one entity employs or contracts with, either directly or through related or affiliated entities, all physicians who practice such specialty in that county is not supported by a legitimate business interest. The Legislature finds that such covenants restrict patient access to physicians, increase costs, and are void and unenforceable under current law. Such restrictive covenants shall remain void and unenforceable for 3 years after the date on which a second entity that employs or contracts with, either directly or through related or affiliated entities, one or more physicians who practice such specialty begins offering such specialty services in that county. ¦

In the KNOW

· A nonsolicitation agreement is a contract in which an employee agrees not to solicit a company’s clients or customers for his or her own benefit or for the benefit of a competitor after leaving the company. A nonsolicitation agreement can also include an agreement by the employee not to solicit other employees to leave when he or she quits or otherwise moves. SOURCE: NOLO. COM

· A non-compete agreement is a legal agreement or clause in a contract specifying that an employee must not enter into competition with an employer after the employment period is over. These agreements also prohibit the employee from revealing proprietary information or secrets to any other parties during or after employment

SOURCE: INVESTOPEDIA. COM