How do Florida courts reconcile the terms of a non-compete agreement when the language in the agreement may conflict? Florida's Fourth District Court of Appeal recently addressed this issue in Anarkali Boutique, Inc. v. Ortiz, 104 So.3d 1202 (Fla. 4th DCA 2012). In Anarkali, an employer sought to enforce a non-compete agreement which prohibited an employee from competing with the company "for a period of two (2) years after I am no longer employed by the Company ..." Id. at 1203. After the employee completed training, the employer changed the employee's work status from employee to independent contractor. At trial, the employer testified that changing the employee status to contractor allowed the employee to earn greater income through commissions. Id. at 1204. Two years after the employee changed status to contractor, the employee left the employer and started working for a competing business. Id.
The trial court denied the employer's motion for temporary injunction seeking to enforce the non-compete. The trial court agreed with the employee that the duration of the non-compete agreement began to run when the employer changed the employee's status from employee to contractor. Id. at 1205. On appeal, the employer argued that the trial court misinterpreted the non-compete agreement by finding that the two year term in the agreement began running when the employee's status changed from employee to contractor. Id.
The Fourth District in Anarkali agreed with the employer's argument that, when construed as a whole, the non-compete agreement's two-year term did not begin running until the employee left the company. Id. at 1205. The appellate court also noted that the trial court did not properly consider the provision in the non-compete that "[a]ny subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement." Failure to consider this provision in conjunction with the two year term, according to the Fourth District, constituted reversible error by the trial court. Id.
In support of its decision, the Anarkali court cited to Philip Morris, Inc. v. French, 897 So.2d 480, 488 (Fla. 3d DCA 2004) wherein the Third District found that "[c]ourts are required to construe a contract as a whole and give effect, where possible, to every provision of the agreement. Anarkali, 104 So.3d at 1205. When the non-compete agreement in Anarkali was construed as a whole, "its obvious purpose was to preclude the worker from competing with the company after the company trained the worker and allowed her to build her own clientele." Id.
It is important to note that the court's decision in Anarkali is in accord with, and relies upon, the express language of Florida's non-compete statute. Specifically, Fla. Stat. § 542.335(1)(h) provides:
A court shall construe a restrictive covenant in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement. A court shall not employ any rule of contract construction that requires the court to construe a restrictive covenant narrowly, against the restraint, or against the drafter of the contract.
In other states, the terms of a non-compete agreement are often narrowly construed against the party enforcing the agreement. Florida, however, seeks to provide a "reasonable protection to all legitimate business interests" as reflected in Fla. Stat. § 542.335(1)(h) and the Fourth District's decision in Anarkali.
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.