When Can Breaches of Non-Compete Agreements Lead to Litigation?

 Posted on May 25, 2022 in Litigation

There are multiple types of industries where non-compete agreements are used regularly by employers to protect their business interests. These agreements may restrict a company’s employees from engaging in certain types of competitive behavior after they leave the company or even while they are still working for an employer. If a former employee commits a violation of a non-compete agreement, a company may need to take legal action to address this issue. There are several possible situations where litigation may be necessary to address the financial losses that were caused by the violation of an agreement or to prevent a business from suffering harm.

Examples of Actionable Non-Compete Agreement Violations

Generally, a non-compete agreement may be used to protect a company’s legitimate business interests, and it may place reasonable limits on the types of work a person can perform within a certain geographical area and during a specific time period. Some situations where litigation may be necessary to address a former employee’s violation of a non-compete agreement include:

• A former employee goes to work for a direct competitor. Non-compete agreements may be used to protect trade secrets, and they may restrict employees from working for other companies within the same industry, since doing so may allow them to use their knowledge of their former employer’s processes to help their new employer gain an unfair advantage in the marketplace. In these situations, the former employer may pursue litigation and seek an injunction requiring the employee to stop working for the competitor.

• A former employee founds a competing business. Just as working for a new employer may allow an employee to use their former employer’s trade secrets against them, starting a new business may also provide them with an opportunity to target the former employer’s customers, offer competing products or services, undercut their prices, and cause them to suffer financial losses. The employer may use litigation to ask a court to restrict the types of business activities the former employee’s business can perform, or it may seek to recover compensation for its financial losses. However, a company will need to make sure the agreement it was seeking to enforce is reasonable. For example, if the former employee’s new business is operating in a region where the employer does not usually provide services to clients, it may not be able to restrict the other company’s operations in that region.

• A salesperson attempts to contact a former employer’s customers and take their business. Knowledge of a company’s prices, products, and procedures may be used against it by a former salesperson, who may leverage their relationships with customers to offer them a better deal when working for another company. When a salesperson is restricted from these types of activities by a non-compete agreement, their former employer may take legal action to pursue compensation for the losses caused by the salesperson’s actions.

Contact Our Ft. Lauderdale Non-Compete Agreement Litigation Lawyer

The Elliot Legal Group, P.A. can provide legal help with issues related to non-compete agreements or other restrictive covenants. If you believe a former employee has violated the terms of an agreement, we can advise you on the steps you can take to address the harm that this violation has caused to your company. Contact our Wilton Manors business litigation attorney at 754-332-2101 to get the legal help and representation you need.

Sources:

https://www.flsenate.gov/Laws/Statutes/2018/0542.335

https://www.investopedia.com/terms/n/noncompete-agreement.asp

https://www.businessnewsdaily.com/4803-non-compete-agreement.html