People's Law Guide
Attorney Peter T. Mavrick
RECENT FLORIDA CASE ALLOWS "PREDISPOSED EMPLOYEE" DEFENSE AGAINST LAWSUIT FOR HIRING EMPLOYEE UNDER NON-COMPETE AGREEMENT
Historically, when a company hired an employee who was restricted by a non-compete agreement, the new employer was sometimes sued for tortiously interfering with the non-competition contract between that employee and his or her previous employer. The recent Florida Second District Court of Appeal decision in Fiberglass Coatings, Inc. v. Interstate Chemical, Inc., 34 Fla. L. Weekly D 454 (2d DCA February 27, 2009), allowed the defense that a new employer could not be liable for tortious interference because the employee "was predisposed to breach his covenant not to compete." The appellate court affirmed summary judgment on the grounds the employee had a predisposition to breach his contract with his former employer, and therefore the new employer "did not cause or induce him to breach the contract's covenant not to compete."
To establish a claim for tortious interference with the restrictive covenant with the employee, the former employer must prove causation. Causation requires a plaintiff to "prove that the defendant manifested a specific intent to interfere with the business relationship." In other words, the new employer can be liable only if it "intended to procure a breach" of the noncompetition contract with the former employer. That was where the former employer ran into a problem in trying to prove its case. The appellate court explained that "[o]ne does not induce another to commit a breach of contract with a third person . when he merely enters into an agreement with the other with knowledge that the other cannot perform both it and his contract with the third person."
The Fiberglass Coatings case sets forth a potentially critical defense for prospective employers. When a prospective employee has a non-compete agreement, the former employer will usually threaten the prospective or new employer with a lawsuit for tortious interference. The question then becomes, is the potential employee "predisposed" to breach the non-compete agreement? In the Fiberglass Coatings case, the new employer established predisposition as a matter of law by pointing to the fact that the employee had been employed by one other employer, a competitor of the first employer, after leaving his employment with the first employer. He stayed with that competitor only a short time before accepting employment with the third employer, i.e., the defendant in the tortious interference lawsuit. That was enough evidence to satisfy the trial and appellate courts that the employee was "predisposed" to breach his covenant not to compete, and thereby immunize the third employer from a tortious interference lawsuit. The appellate court, however, did allow the former employer to sue the new employer for breach of another restrictive covenant prohibiting the employee from soliciting the former employer's customers.
When a new employer merely hires a former employee with knowledge that the employee cannot honor his covenant not to compete with the former employer, it is not enough to establish a tortious interference claim. Something more would be needed to establish such a claim. For example, overtures to the employee by attempting to "raid" the first employer's business with knowledge of the non-competition agreement might be enough to establish a claim for tortious interference.
While the Fiberglass Coatings case clarifies a potentially strong defense for prospective employees who have restrictive covenants with former employers, the impact of the case can be limited. The former employer may still sue the former employee for breach of the non-competition agreement and obtain a preliminary injunction prohibiting employment with the new employer.
Attorney Peter T. Mavrick practices in business and employment litigation in Fort Lauderdale, Florida. This article is not intended to be a substitute for specifically tailored legal advice. Mr. Mavrick may be reached at (telephone) 954.564.2246; (office address) 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; (email) firstname.lastname@example.org.