One issue that comes up from time to time in non-compete
litigation is whether the non-compete provision is valid if the
employer had the employee sign the agreement months or years after
the employee's hire date. Employees often raise as a
defense to enforcement that the non-compete agreement lacks any
consideration (bargained for exchange) because the employee did not
receive any additional benefit by agreeing to sign the
non-compete. This post will look at whether non-compete
agreements signed after employment began are enforceable.
While the facts of each case may vary, the short answer is that
under Florida law a non-compete agreement is enforceable in an
at-will employment scenario, despite the fact that the agreement
was signed by the employee long after the employee's hire
date.
In 2002, the Third District addressed whether a non-compete
agreement was valid despite the fact that an amendment to the
agreement was signed several months after the employee began
working for the employer. See Open Magnetic Imaging, Inc.,
v. Nieves-Garcia, 826 So.2d 415 (Fla. 3rd DCA 2002). In
Open Magnetic Imaging, an employee began working for a MRI
provider as a Physicians Relations Representative in January of
2000. As part of the employee's employment agreement, she
signed a non-compete agreement. Five months later, the
employer presented the employee with an amended non-compete
agreement that broadened the geographic scope of the
agreement. Id. at 417.
The trial court in Open Magnetic Imaging denied the employer's
motion for temporary injunction enforcing the non-compete agreement
and the employer appealed. On appeal, the Third District found
that where "employment is terminable at will by either the
employer or the employee, Florida courts have routinely enforced
non-compete agreements even where an employee has been requested to
execute such agreements after commencement of
employment." Id. at 417, citing Aero Kool Corp.
v. Oosthuizen, 736 So.2d 25 (Fla. 3d DCA 1999)(reversing
denial of temporary injunction and enforcing non-compete agreement
executed four years after employee's commencement of employment
where court found legitimate business interest.)(Emphasis
added).
In order for a contract, including a non-compete agreement, to be
enforceable, the contract must have
"consideration." There a many definitions of
consideration. In its simplest form, consideration is a
bargained for exchange between two parties. In the context of
non-compete agreements then, an employee opposing enforcement of a
non-compete agreement might argue that the non-compete agreement
lacks consideration if the employee was asked to sign the agreement
after the employee began working for the employer. Under this
theory, the employee received no "bargain" in exchange
for signing the agreement because the employee was already working
for the employee when he or she signed the non-compete
agreement.
The Third District in Open Magnetic Imagining cited a
string of cases that show that even if the employee is asked to
sign the non-compete agreement after employment began, the employee
nevertheless received consideration for signing the
non-compete. The consideration received by the employee was
the ability to keep his or her job. Had the employee not
signed the non-compete agreement, the employer could have
terminated the employee. By signing the agreement, the
employer received the benefit of the restrictive covenant and the
employee was able to keep his or job. See e.g., Coastal
Unilube, Inc., v. Smith, 598 So.2d 200 (Fla. 4th DCA
1992)(holding that the employee's continued employment was
adequate consideration to support covenant not to compete entered
into after employee had begun his employment on an at will
basis); see also, Tasty Box Lunch Co. v. Kennedy,
121 So.2d 52 (Fla. 3d DCA 1960)(finding that an employment
agreement was enforceable even though signed three months after
employee began working; continued employment and agreement to pay
commission constituted consideration).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
