POSTED BY RICHARD D. TUSCHMANON APRIL 2, 2012
Non-compete agreements need to actually prohibit the competitive activities at which they are aimed. Thus, they must reflect the reality of the businesses for which they are drafted.
So, if you are drafting or reviewing a non-compete agreement, it's critical that you consider not only what the business does, but how it does it- and how a former employee might be able to take away business notwithstanding that boilerplate language you were thinking about using.
A recent decision by Florida’s Fifth District Court of Appeals illustrates the problem of boilerplate language. The former employee, an equine veterinarian, signed a non-compete agreement, which provided:
B. During the term of this agreement, and for a period of two (2) years after termination thereof, Employee shall not own, manage, operate, control, be employed by, assist, participate in, or have any material interest in any business or profession engaged in general equine veterinary practice located within a thirty (30) mile radius of 19801, County Road 561, Clermont, Florida [the employer’s business address]..
All that boilerplate – “own, manage, operate, control, be employed by, assist, participate in, or have any material interest in” – sounds pretty impressive, right?
Not in this case. Think about it – did you ever take your dog or cat to the vet's office and see a horse in the waiting room? I didn't think so. The problem for the employer here was that equine veterinarians typically make house calls (or stable calls). So, the location of an equine veterinarian’s office is unimportant – it's where the horses are that counts. Because the plain language of the agreement did not prohibit the former employee from providing her services within the 30-mile radius, the 5th DCA reversed the trial court's injunction against the former employee. The non-compete agreement, and all of its boilerplate language, was ultimately useless.