One of the critical assets of any health care organization is its work force. This realization has certainly played a part in the increasing use of restrictive covenants in employee and personnel agreements and particularly non-compete agreements. Non-compete agreements operate to restrict personnel from competing against and pirating proprietary information from a health care provider or organization after termination, regardless of the basis for termination. These agreements are used to protect, among other things, client lists, referral sources, marketing techniques and certain intellectual property that an individual may learn while working for a health care organization.
During the present downturn in our economy and the uncertainty surrounding health care reform, non-compete agreements are more important than ever. Health care organizations looking to downsize can utilize non-compete agreements to minimize the risks associated with terminating personnel and maintain a competitive advantage by ensuring their business operations are not shared with the competition. On the other hand, in an industry where the work force is now more mobile than ever, health care organizations seeking to retain valuable employees can utilize non-compete agreements to limit the scope, area, and places of employment for key personnel that would have otherwise had limitless options.
But merely asking all newly-hired employees to sign the same boilerplate non-compete agreement used year after year, no matter how well-crafted, may not be sufficient to protect a health care organizations assets in todays market. Although non-compete agreements in Florida are governed by a statute that has been in effect since the 1950s (and last amended in 1996), the cases interpreting that statute are extremely dynamic. In contrast with judges historical antagonism toward non-compete agreements, Florida courts must now presume that such agreements are enforceable.
Based upon this statutory presumption of enforceability, courts primary intent when interpreting non-compete agreements is to strike a balance between the protection of a businesss legitimate business interests and the scope, duration, and area of the restrictive covenant. Because cases interpreting non-compete agreements are constantly evolving, subtle nuances in the language of an agreement may tip the scales in an employers favor in certain circumstances. These trends emphasize the importance of crafting non-compete agreements with care and paying particular attention to the unique circumstances of each newly hired employee and the changing marketplace.
For health care organizations that presently maintain non-compete agreements, it is never too late to ensure that they will be enforceable in the event of future litigation. Legal counsel well-versed in the nuances of Floridas non-compete law should be asked to review existing personnel agreements and non-compete contracts to evaluate whether the organization and its confidential information are adequately protected against potentially disloyal personnel. Such a review can be an invaluable and potentially cost-saving measure in the long term.
In the face of a potential violation of a restrictive covenant by a former or existing employee, self-help by health care organizations is strongly discouraged. It is not uncommon for companies victimized by an employees theft or attempted theft of trade secrets, patients, or referral sources to seek retribution in the form of holding back wages, bonuses, or other compensation. These measures can be detrimental to the enforcement of a restrictive covenant. To avoid undermining the enforceability of a non-compete after its violation, a coordinated effort with legal professionals should be the health care organizations first step to protect its interests.
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