On this episode of The Legal Zone, managing attorney Regina Campbell, of The Campbell Law Group, PA, discusses all the important information of Non-Compete Agreements under the Biden Administration.
Be sure to follow us on the following social media platforms for more content. Or you can visit our website at https://thecampbelllawgroup.com/
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The Campbell Law Group P.A. while representing clients whether in civil, corporate, commercial, employment, or family law matters, our company’s primary goal is first to help clients minimize the need for unnecessary litigation and conflict where possible.
Contact us by calling our office at (305) 460-0145 or emailing us at service@thecampbelllawgroup.com.
On this episode of The Legal Zone, managing attorney Regina Campbell, of The Campbell Law Group, PA, discusses all the important information of Non-Compete Agreements under the Biden Administration.
Be sure to follow us on the following social media platforms for more content. Or you can visit our website at https://thecampbelllawgroup.com/
YouTube: The Campbell Law Group
Instagram: @CampbellLawGroup
Facebook: The Campbell Law Group P.A.
LinkedIn: The Campbell Law Group P.A.
Twitter: The Campbell Law Group PA
The Campbell Law Group P.A. while representing clients whether in civil, corporate, commercial, employment, or family law matters, our company’s primary goal is first to help clients minimize the need for unnecessary litigation and conflict where possible.
Contact us by calling our office at (305) 460-0145 or emailing us at service@thecampbelllawgroup.com.
0:00
I am Regina Campbell the legal zone and
0:03
we're proud to bring you season one
0:05
episode four today we're going to talk
0:07
about non-compete agreements in the
0:08
Biden age
0:10
this particular topic has a lot of
0:11
people a little bit nervous particular
0:13
employment and corporate lawyers and
0:16
business owners but rest assured the
0:18
executive order does not mean that any
0:20
non-compete or non-solicitation for
0:22
similar type provisions are valid
0:24
it's basically an indication to the
0:26
federal agencies to look into the unfair
0:28
use of these type of agreements or
0:30
restrictive covenants and particularly
0:32
its effect that they may have on workers
0:33
mobility
0:34
so it's less likely even if something
0:36
were to come down the pipe it's more
0:37
likely to affect companies that are
0:39
larger in scale that have sort of
0:41
national workforce so to speak
0:43
and that use non-competes agreements
0:46
unnecessarily in order to keep employee
0:48
employees from be able to have options
0:50
to leave the company
0:52
it doesn't sound like although it's not
0:53
definitely not off the table that
0:54
there's likely to
0:56
affect any type of buy sell agreements
0:59
or purchase agreements between parties
1:01
and these type of restrictions that are
1:02
contained in them but once again even on
1:04
a state level these type of provisions
1:06
can be scrutinized as well if they're
1:08
not properly or terribly written to
1:10
protect the company's interest
1:12
that's something very specific that we
1:13
need to also look into and i'll be doing
1:15
another podcast on because that is a um
1:17
a very fact to tense analysis
1:19
and very important one because a lot of
1:22
these times these companies these
1:23
covenants non-competes and
1:24
non-solicitation are written rather
1:26
broadly
1:28
and they can be struck down or modified
1:30
if blue penciling is allowed
1:31
particularly in the state of Florida it
1:33
is although I always recommend that you
1:34
add a provision in your contract that
1:36
permits it in the event that
1:38
the geographic location or the
1:40
restrictions that prove to be
1:41
unenforceable or valid
1:43
so
1:44
what does this all mean it sounds all
1:46
kind of funny and very nuanced but
1:48
try to keep in mind and this is
1:49
something you should keep in mind also
1:51
um when you know talking to your lawyers
1:54
about drafting these type of provisions
1:56
explaining to them your actual business
1:57
interests where you might be going in
1:59
the future if you know
2:01
um
2:01
tailoring them to be a little bit
2:03
flexible to you know also to the
2:05
employee
2:06
ultimately if you have these type of
2:08
agreements in place and they're overly
2:10
restricted it might also keep you from
2:11
maybe attracting uh good employees as
2:14
well
2:15
so you want to strike a balance and
2:16
that's actually what the federal
2:18
government's trying to do in those
2:19
states also try to do as well trying to
2:21
strike a balance between protecting
2:22
employers rights legitimate business
2:25
interests which include maybe
2:27
confidential information they may have
2:28
acquired through their own sweat so to
2:30
speak and blood sweat and tears of you
2:33
know going door to door
2:34
or building relationships with our
2:36
customers
2:37
the specific network of vendors or
2:39
pricing that might be very distinct
2:41
especially in a highly competitive
2:42
industry where pricing can be very
2:44
competitive it could be margins of
2:45
percentages so it can make a very big
2:47
difference of knowing someone knows this
2:49
sensitive information about your company
2:51
can easily be used against you so every
2:53
state defines confidential information
2:55
and what is potentially protected
2:56
business interest
2:58
but particularly in the state of Florida
2:59
it's very similar also
3:01
you know as most other states but
3:02
they're looking at protecting something
3:04
that cannot be recreated in the public
3:06
in other words you can't just pick up
3:07
you can't google and find the
3:08
information there and properly compete
3:11
with somebody else it's something that's
3:13
obtained that's sensitive that's
3:15
obtained through again marketing efforts
3:18
sales efforts
3:19
goodwill building your reputation
3:21
whether it's a product or a service
3:23
so the more that you put into this and
3:24
the more you can define something that's
3:26
special and unique to your company the
3:28
more likely any one of these provisions
3:30
are to be upheld by a court okay
3:32
now the more you write these provisions
3:34
or these provisions can be seen as
3:36
overly restrictive on commerce or
3:38
competition that is also going to be the
3:40
other counter
3:42
you know counter balancing you know
3:43
factor that has to be taken to place
3:45
here protection of legitimate business
3:47
interests versus also competition and
3:49
creating sort of free market out there
3:51
in between you also have this is where
3:54
employees come in as well you know
3:56
there's a separate issue with buy sell
3:57
agreements and selling your business of
3:59
course uh but particularly in reference
4:02
to employees
4:03
the difficulty that a lot of companies
4:05
have is of course you train these
4:07
employees you put marketing money behind
4:10
things
4:11
you try different sales tactics you have
4:13
different processes methodologies that
4:14
might be very unique and sort of maybe
4:17
the key to your success
4:18
concern is the company your employees
4:20
are going to take that
4:22
all that learning that took you years
4:23
and all those potential thousands or
4:25
millions of dollars
4:26
to learn to build and they're just going
4:28
to turn around and take the information
4:30
and use it open up their own company and
4:32
use it against you basically
4:34
so
4:35
kind of going back to the you know to
4:36
the different factors and the balancing
4:38
act that the statutes in the federal
4:39
government are trying to
4:41
obtain so to speak is of course most
4:44
states with the exception of California
4:46
north Dakota and Oklahoma have some
4:48
variation of non-competing
4:49
un solicitation provisions or statutes
4:51
basically that protect this company that
4:53
might have spent that has good will
4:55
that has name recognition that might
4:57
have put this effort built something a
4:58
database that's very unique through
5:00
their own work and efforts or sweat
5:02
equity so to speak right through their
5:03
own sweat
5:04
um and
5:06
that might be protected
5:08
but over here if you have something that
5:09
you can google or easily obtain in a
5:11
public source so to speak in a public
5:12
database that's for sale it's less
5:14
likely to be protected and the employee
5:16
may have a right to compete they have a
5:18
right to leave your company and compete
5:19
against you
5:20
what wouldn't be fair is that they can
5:22
take information that's sensitive and
5:23
confidential that you've built and spent
5:25
a lot of time
5:26
and money doing so
5:27
and just be able to take it over you
5:29
know learn and apply it over here
5:32
but remember it has to be specific
5:34
methodologies and something that's
5:35
unique otherwise if it's just learned
5:37
experience and knowledge the less likely
5:38
it is to be protected okay
5:40
the other thing is companies and states
5:42
particularly the state of Florida they
5:43
want to protect the legitimate business
5:45
interests that can be identifiable this
5:47
is where it comes it's very important to
5:49
talk to your attorney about tailoring
5:51
business industries restrictions that
5:54
you need you know segmenting if you even
5:56
need to get that far and also take into
5:59
consideration different employees
6:01
risks
6:02
level of information
6:04
you know how dangerous are they to your
6:06
company if they leave in which case you
6:08
may want to provide them different types
6:09
of packages depending on the level of
6:10
sensitivity and confidential information
6:13
or damage they may be able to do if they
6:14
go into the market
6:15
there's additional consideration there
6:17
also that helps with the analysis if
6:18
that person has been able is able to
6:20
consider to continue to make a
6:22
livelihood or not when a court looks at
6:23
it but also the courts must balance the
6:26
right for free commerce
6:28
as well and free from restriction and
6:30
promote free comp you know not free
6:33
competition basically what they don't
6:35
want to do is have unfair competition
6:37
that would that's something that is
6:38
considered an American as much as you
6:40
know competition and commerce and free
6:42
converse is considered American because
6:44
it's not fair for someone to friends and
6:45
steal your confidential information as
6:46
an employee learned that this customer
6:49
likes has a dog named jack and jack
6:51
likes bones a particular type bone and
6:53
that's how you develop the relationship
6:55
and he's a
6:56
you know jack
6:58
likes to chat a lot he likes to talk
6:59
about his family about fishing that kind
7:01
of stuff is something that an employee
7:03
probably used under your umbrella under
7:06
your
7:07
compensation under your marketing
7:09
dollars and all that stuff so that's
7:10
something that may be very specific
7:12
um so it might be unfair to bring this
7:14
over here for an employee to
7:15
automatically compete with you
7:16
particularly if they bring the price
7:18
list over well you know abc company
7:20
gives you 10 off I’m going to give you a
7:22
12
7:24
because that's information that normal
7:25
competitors would not know
7:27
so keep this in mind you know that's
7:29
also a distinction sometimes people
7:30
confuse confidential information or
7:32
misappropriation of trade secrets or
7:33
confidential information
7:35
which is a separate protected issue
7:37
defined not only by federal law but also
7:39
state law as to what that is
7:41
um and that's a separate issue you know
7:43
that's that could be flat out theft
7:45
versus an employee actually taking
7:47
not just information but the
7:48
relationship that they built you know
7:50
john smith is the one that knows jack
7:52
uh john smith is you know the one who
7:54
talked to jack every week three times a
7:57
week and chatted about his family and
7:58
everything he loves to talk about so
8:00
jack is a little bit more dangerous
8:02
sorry john smith is a little bit more
8:04
dangerous for him to open up another
8:05
company so these are things that we want
8:07
to keep in mind when you're writing
8:08
these provisions and also understanding
8:10
the reasons behind some of these changes
8:12
or movements and dynamics are going on
8:14
behind the scene between employers
8:16
employees
8:17
and overall you know promoting
8:19
competition it just can't be an unfair
8:22
sort of restriction on competition or
8:24
commerce but it also you know there has
8:26
to be some counter countervailing um
8:28
sort of interest sort of speaker factors
8:29
as well
8:30
so these are things you want to consider
8:32
so
8:32
bottom line is currently there is no
8:34
restriction on these types of agreements
8:37
now that does not mean that they're not
8:40
coming down the line you know down the
8:41
pipe so to speak uh the federal trade
8:43
commission has been sort of asked that's
8:45
what the executive order kind of tells
8:46
the agency to look into the unfair use
8:49
of non-compete agreements and
8:50
non-solicitation agreements
8:52
so and type of covenants as well because
8:54
sometimes they're not just agreements
8:55
they may be actual separate covenants as
8:58
covenants that are contained within an
8:59
agreement for instance employment
9:01
agreement so they want basically they
9:03
have been charged with looking into
9:04
whether there's been sort of there's
9:06
unfair restrictive covenants that are
9:08
affecting employees mobility
9:10
unreasonably okay
9:12
non-solicitation was not specifically
9:14
the highlight of this order and people
9:16
are not really talking much about it but
9:17
it does talk about all type of
9:19
restrictive covenants and affecting
9:20
industries and it's basically asking the
9:23
federal trade commission to look into
9:25
um rulemaking abilities and what else
9:27
they may be able to do in order to kind
9:29
of stop this from the federal level but
9:31
it does not mean that it's going to
9:32
necessarily depending on what happens
9:34
withstand constitutional sort of
9:38
grounds or disputes and issues between
9:40
states rights to
9:42
protect their citizens and their
9:43
companies within their own borders so
9:45
it's gonna be a tight
9:47
balancing sort of fig for the Biden
9:48
administration to walk but it kind of
9:50
gives you an idea of what they're
9:51
looking to protect and um
9:54
understanding the factors that go into
9:55
these type of different uh dynamics so
9:58
non-solicitation agreements just so you
9:59
understand the difference it's really
10:01
more about
10:03
not soliciting a particular group of
10:04
people you might have defined it might
10:06
be you know existing customers might be
10:08
prospective customers that you started
10:10
developing a relationship with
10:12
i might be referral source which is also
10:14
protected in the state of Florida
10:16
past clients gets a little tricky uh
10:18
because it depends on whether the
10:20
information the employee has we're
10:21
particularly talking about employees
10:22
right now we're not talking about
10:23
business owners or buy sell agreements
10:25
or sales of businesses between parties
10:28
so that gets trickier because for
10:29
instance the longer that a client no
10:31
longer has a relationship with the
10:33
company or it might become stale the
10:35
less likely it is that's a protective
10:37
interest unless it's a recurring sort of
10:39
business source you know there's an
10:40
ongoing relationship in which case most
10:42
of the time they're not past clients or
10:43
existing clients
10:45
but that would also be very business
10:46
specific you know do your customers
10:48
place orders every six months and in
10:50
which case
10:51
you might define that person as an
10:52
existing customer you know unless they
10:54
haven't placed an order for two years
10:56
and if they haven't placed an order for
10:58
two years and typically the product or
11:00
the services is required every six
11:01
months it's less likely that particular
11:04
customer is going to be a protected
11:05
interest okay
11:07
so this is you know this is
11:08
non-solicitation agreements it basically
11:10
says you can't contact you know you
11:12
can't try to solicit an employee or take
11:13
them away from us and use them for your
11:14
company you can't solicit these type of
11:17
vendors potentially that there may be a
11:18
unique relationship with them
11:20
uh that's protectable
11:23
and also of course clients and how you
11:25
define this this is all very important
11:27
to define these things in the
11:29
agreement if they're overly broad
11:31
they're more likely to be struck down
11:33
right so this is something in general we
11:35
want to look into you don't want to have
11:37
contracts that are susceptible to being
11:38
considered invalid or heavy litigated
11:41
either because they're so ambiguous or
11:43
broad so these are things and generally
11:44
want to take the time to tailor these
11:46
type of provisions and covenants
11:48
whenever you have them for agreements if
11:49
they are stand-alone agreements
11:51
non-compete agreements have the same
11:52
issue and of course they get more
11:54
attention particularly under the
11:55
executive order Biden issued but
11:57
non-competes goes a little bit further
11:59
they basically might restrain an
12:01
employee from going to a company that
12:02
does compete with
12:04
your company
12:06
so and for a particular time period
12:08
sometimes if non-compete provisions are
12:10
narrowly tailored to just
12:12
basically keep you from competing with
12:14
customers you've already had contact
12:15
with within your prior employment
12:19
sometimes it's a year everything is
12:21
subject to reasonableness
12:23
so if you're asking for a five-year
12:25
restrictive covenant and the person for
12:28
instance was um potentially a nail tech
12:31
that might be considered unreasonable
12:33
especially if it's a large area
12:35
geographical area let's say you have
12:36
someone that's a nail tech and you're
12:38
restricting her for 50 miles for five
12:41
years that's most likely going to be an
12:43
unreasonable restrain on the person's
12:44
ability to make a livelihood for the
12:46
nail tech to make a living okay so it
12:48
has to be there has to be some
12:50
definition every business is so
12:51
different and unique
12:53
so you really have to understand against
12:54
me out and draft these provisions in
12:56
that way but that non-compete provisions
12:57
specifically restrictive covenants
13:00
there's concern there because again they
13:02
can keep you within the industry let's
13:03
say you're within
13:05
the
13:07
the shoe industry so to speak you sell
13:08
shoes okay depending on what level type
13:11
of employee you are whether you're at a
13:13
retail you know level which is less
13:14
likely to need protection
13:16
but if you're let's say an executive
13:18
level or a mid management level and you
13:19
may have information that is very
13:20
sensitive and if you went to let's say
13:22
from Nike to adidas
13:24
you know that could pose a problem
13:26
because you're well aware of the
13:27
information
13:28
on a potential national global level
13:30
depending on what segment you're in or
13:32
what your
13:33
your job functions are to cause harm
13:36
when you change companies significant
13:37
harm to the other company to their
13:39
goodwill to their reputation to their
13:41
sales plans you know where they're going
13:43
with things in the future you know where
13:44
they're going to expand where they're
13:45
going to retract this is information
13:48
that's obviously not readily available
13:49
to the public
13:51
so depending on what you know what type
13:53
of employee you have and what level of
13:55
access they have and sort of harm they
13:56
could potentially cause a company
13:59
that should dictate the level of
14:01
restriction if at all in some cases you
14:03
may not be restricting you know an
14:05
employee maybe you're just doing a
14:06
non-solicitation provision
14:09
or not because
14:11
basically the reason let me go back for
14:13
a moment so not compete basically would
14:15
depend on the level of the employee and
14:17
how much of restriction you should
14:18
tailor accordingly but for instance you
14:20
may have circumstances when you have
14:23
a competitor wants to hire your sales
14:25
customer service person you think well
14:27
okay you know i have i have you know 200
14:29
of them what damage can that cause
14:31
unfortunately sometimes the competitor
14:33
is doing that because you might be a
14:35
well-known you know very not just
14:37
personable because that really goes with
14:38
the employee their ability to be
14:40
personable and a good salesperson
14:42
but they may have access to certain
14:43
client information that
14:45
unfortunately the new employer wants to
14:47
um
14:48
the employee to bring the information
14:50
over and in which case it's sort of an
14:52
unfair competition situation and theft
14:54
another thing and a very and it's
14:57
literally list being taken over with
14:58
client-specific information
15:01
so there's all different circumstances
15:02
in which we're trying to protect but you
15:04
can probably the more i give you
15:05
examples you can probably see how
15:06
there's factors there's legitimate
15:08
interest in protecting businesses and
15:10
there's also legitimate interest and not
15:12
overly restricting employees when
15:13
necessary
15:15
and even aside from the biden order
15:17
these are things that you just don't
15:18
want to be litigating whether overly
15:20
broad or extensive
15:22
it just leads to more litigation more
15:24
difficulty potentially you're also
15:26
restricting or keeping good employees
15:28
that might be great for your business or
15:30
your company
15:32
they're more frightened by it basically
15:34
it's more scary uh you know for them to
15:36
potentially work with you they may
15:37
consider working with a competitor
15:38
that's a little bit more friendlier to
15:40
the employee
15:41
more flexible more understanding of the
15:44
overall bigger picture
15:45
so it just really depends on the
15:46
circumstances I’ve seen them all from
15:48
you know different employees to
15:49
executives and of course the non-compete
15:51
and non-solicitation provisions change
15:54
often with executives though they're
15:55
given
15:56
a year two years of worth of salary in
15:58
other words to stay out of competition
16:00
so they're being given a livelihood
16:01
almost even during the period of the
16:03
non-compete
16:04
and that makes sense for a lot of
16:05
companies it might just be a matter of
16:07
freezing them sort of out until the
16:09
market changes it's enough time period
16:11
for the market to change or that person
16:13
can no longer pose a threat given their
16:15
position or knowledge of the company
16:18
so these are
16:19
complicated topics but i just wanted to
16:21
talk to a little bit about and rest
16:22
assure everybody that the non-compete
16:24
agreements are not dead in the Biden age
16:26
and um once again we'll have a little
16:28
bit more podcasts that go into detail
16:30
about non-competes and give you examples
16:32
on the industries and maybe what
16:34
non-compete agreements would be
16:35
reasonable in a particular industry i'll
16:37
take apart this topic a little bit
16:39
further in other segments but hopefully
16:41
this has been helpful we want to
16:42
encourage you all to follow us on social
16:44
our social media accounts
16:46
also subscribe to our YouTube channel
16:48
our podcast channel or hear us on
16:50
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16:51
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16:52
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16:54
sign up for our newsletter as well
16:56
and we want to thank you all for tuning
16:58
in and hopefully this information has
17:00
been helpful thank you so much