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Noncompete Agreements In A Virtual World – Firm Prevails For Client After 5-Day Temporary Injunction Hearing

Legal29

The firm announces that it recently prevailed on behalf of a client, after a 5-day evidentiary hearing, in securing an order denying a former employer’s motion for temporary injunction relating to the enforcement of various restrictive covenants. The matter is Insight Global, LLC v. The Intersect Group, LLC et al., Case No. 50-2021-CA006834-XXXXMB, filed in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida.

The plaintiff, a national staffing company (“Former Employer”), sued a former employee (the “Client”) for breach of a noncompete covenant and for theft of trade secrets after the Client accepted a position with another staffing company to work four days per week out of its Atlanta office and one day per week out of a newly leased Stuart office. The Client previously served as the recruiting manager for the Former Employer’s Boca Raton office. The Former Employer also sued the Client’s new employer and a sales manager who left the Former Employer to join the new employer.

In its Complaint, the Former Employer sought a temporary injunction against the Client, alleging the Client had violated the noncompete provisions of his employment contract and had misappropriated the Former Employer’s trade secrets. The Client’s employment contract prohibited the Client from working within 50 miles of the Former Employer’s “Business Location,” defined as any “office location(s)” “in which” the Client had provided similar staffing services.

Notwithstanding that the Client was the Former Employer’s recruiting manager for its Boca Raton office, the Former Employer asked the Court to find that the Client’s placement of 7 candidates with a customer of the Former Employer’s Dallas office meant that the Client had provided services virtually “in” its Dallas office and, therefore, could not work for his new employer out of its Dallas office.  In addition, the Former Employer argued that the Client’s forced work from his Boynton Beach home during the pandemic rendered his home a “Business Location” of the Former Employer.  Given that the Client’s home is within the 50-mile radius of the Former Employer’s Boca Raton office, it therefore, sought to enjoin the Client from working for his new employer remotely from his home.

Interpreting the restrictive covenants at issue according to their plain meaning, the Court concluded that the Former Employer was not substantially likely to succeed on the merits of its claim for breach of the noncompete covenant and that the Former Employer was also unlikely to prevail on its claim for theft of trade secrets. Accordingly, the Court denied the Former Employer’s request for a temporary injunction against the Client.[1]

Two years into the COVID-19 pandemic, many of the societal shifts precipitated by the pandemic—including the shift to remote work—continue to endure and likely will for the foreseeable future. Given that pre-pandemic restrictive covenants were drafted for a world where employees customarily reported to work at a physical office, however, many such provisions do not account for our new work-from-home world. For this reason, employers undoubtedly will draft noncompete covenants going forward to expressly address remote work situations. Likewise, how a Court measures the geographic radius of a noncompete covenant with the increased prevalence of work-from-home situations is likely to lead to blurry lines that may subject geographic noncompete restrictions to more judicial scrutiny going forward.

If you or someone you know needs an attorney with experience in litigating noncompete agreements, contact Rabin Kammerer Johnson at 561-659-7878.

[1] The Court, however, issued a limited temporary injunction against the new employer and other co-worker for the co-worker’s alleged solicitation of the Client and providing the Client’s salary information to the new employer.

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