Featured in Tampa Bay Business & Wealth, May 2021
Non-compete lawsuits are typically quick and very expensive. Although a normal lawsuit can last years, a non-compete case may be resolved in as little as three months. It is therefore critical for employers to move quickly to preserve and obtain evidence to support its claims against a former employee. This article summarizes five steps an employer should take to improve its chances of success in a non-compete case.
- Review the employee’s non-compete agreement
Too often, employers come to me seeking to enforce a non-compete agreement against an employee, with one major problem: the employee did not sign the non-compete agreement. Under Florida law, you cannot enforce a non-compete agreement against a former employee unless he or she signed it. There are limited exceptions to this rule, but it is best to operate with a signed agreement. If you require your employees to sign a non-compete as a condition of employment, make sure you have signed copies for every employee. Do so now, before a problem with an employee arises. It is much easier to convince an employee to sign a non-compete while he or she is employed, than it is to get an employee to sign one after he or she has quit or provided two-week notice.
- Make sure you have not breached the contract first
Under Florida law, an employer might not be able to enforce a non-compete against a former employee if the employer has committed a material breach of the employment contract first. The most common example of this is when an employer fails to pay an employee all of the compensation to which that employee is entitled. Whether it is a vested bonus, commission, or salary, make sure the former employee was fully paid, and make sure you have upheld all other contractual obligations to which the employee is entitled. Otherwise, the former employee might successfully argue that the non-compete is unenforceable, even if there is evidence that the employee breached the non-compete agreement.
- Hire a computer forensic expert to examine the employee’s phone and computer
This is a critical, but often overlooked, step. Do not allow another employee to use or access the former employee’s work phone or computer, or wipe those devices clean. Instead, have a computer forensic expert examine these electronic devices and preserve all of the evidence contained on them. Although it won’t be cheap, it could offer the best evidence that a former employee has violated or intends to violate, the non-compete. For example, a computer forensic expert can determine whether the former employee downloaded any proprietary business information, including a customer contact list, your company’s pricing information, or your customers’ order history. An expert can also determine whether the employee sent emails to your customers regarding his or her new line of work, and determine if the former employee attempted to cover his or her tracks by deleting evidence of bad conduct. Even if the former employee attempted to delete emails or download history, a computer forensic expert can recover it. It is imperative that you retain an expert quickly and preserve the electronic devices to which the former employee had access.
- Speak with co-workers
Your current employees could have valuable information regarding the bad conduct of your former employee. Talk to them. The former employee might have confided in your current employees about his or her plans to work for your competitor. They might have witnessed the former employee downloading a customer list, or overheard the former employee soliciting business from your customers for his or her new employer. They might also have been solicited by the former employee to join him or her to work for your competitor. This evidence would enable you to establish a violation of a non-compete, non-solicitation, or confidentiality agreement without involving your customers in the dispute.
- Consider speaking with customers
The final step to consider is whether to involve customers in the dispute with your former employee. Most employers are understandably hesitant to do this. Sometimes, however, it is unavoidable. For example, if the former employee denies it, the customer’s testimony might be the only evidence that you have that your former employee violated his or her non-compete. In that circumstance, take great care not to disrupt your relationship with your customer, while being truthful regarding what you need from that customer in order to win your case. You cannot just receive an affidavit; you will likely need a representative from the customer to testify about the former employee’s improper acts. It is better to be upfront with them about this commitment, rather than surprise them after the fact with a subpoena.