Non-Compete

By: Clark, Campbell, Lancaster & Munson, P.A.

Q: Can an employer restrict or prohibit an employee from competing with the employer once the employee’s employment has ended?

Employees, under Florida law, are limited in their ability to compete with their employer while employed by the employer because employees owe their employer a duty of loyalty. However, this duty of loyalty generally ends when an employee’s employment ends, and, upon ending, the employee could potentially compete against their former employer. Accordingly, employers should consider whether it is in their best interest to restrict or even prohibit an employee from competing once their employment ends.

Generally, there are two main types of restrictions employers place on employees to limit their ability to compete. The first is a non-compete restriction, which limits the employee’s ability to participate and compete in the same business of the employer. The second is a non-solicit restriction, which limits the employee’s ability to solicit the employer’s customers, potential customers, employees, and other business relationships. Both restrictions are generally set forth as restrictive covenants in a written agreement between the employer and employee.

Florida’s public policy disfavors restrictive covenants that limit competition or solicitation, so employers must carefully draft such restrictive covenants in order to comply with Florida law. Florida law provides that a restrictive covenant must be in writing and signed by the employee against whom it will be enforced. Further, a restrictive covenant must protect an employer’s legitimate business interest that justifies enforcement of the restrictive covenant. For example, an employee may have access to or obtain knowledge of an employer’s trade secrets or customer lists that are not available to the public. The employer has a legitimate business interest in protecting such information, and such interest may justify the employer restricting its employees’ ability to compete with employer.

Lastly, any restrictive covenant must be reasonable in terms of geographic scope, line of business, and time. Generally, a restrictive covenant should limit the employee’s ability to compete in the geographic region that the employer operates in and where the employee is employed or works. Additionally, a restrictive covenant should limit the employee’s ability to compete in businesses actively engaged in by the employer. Finally, the length of time the employee is prevented from competing must be “reasonable.” A reasonable time period, as determined under Florida law, varies depending on the role of the employee and the legitimate business interest the employer is trying to protect.

As such, while an employer is able to restrict or even prohibit competition or solicitation from its former employees, any such restrictions must be reasonable and must comply with all of the requirements of Florida law.

 

Easier Access to Special Needs Trusts Finally Arrives for Disabled Individuals

By: Kevin R. Albaum, Esq.
Clark, Campbell, Lancaster & Munson, P.A.

A bill known as the Special Needs Trust Fairness Act (the “Act”) has been working its way through the legislative process for a couple years now.  Finally, on December 17, 2016, President Obama signed the Act into Federal Law. The law became effective immediately.

A first party special needs trust is a special type of trust created and funded with a disabled person’s assets in order to maintain eligibility for means based government benefits such as Medicaid and Supplemental Security Income (“SSI”).  While a first party special needs trust has restrictions on how the money in the trust may be used, it can generally be used for the benefit of the disabled individual. The trust can be used to purchase most items for the beneficiary as long as the purchase of such items does not cause the person to lose eligibility for their government benefits by accumulating too many countable assets under Medicaid and SSI rules.  However, the trust’s funds cannot be used to purchase food, pay for routine shelter costs like rent, mortgage, basic utilities, or to purchase items for someone other than the trust beneficiary.

The Act was designed to revise the prior law requiring individuals with disabilities to use a parent, grandparent, guardian, or court of competent jurisdiction to create a first party special needs trust.  Under the old law, a person could be disabled and still be competent to create a trust (such as a victim of an accident or a blind individual), but this individual still would not be able to establish the trust without the assistance of a third party.  Under the new Act, individuals with disabilities, who have the requisite level of capacity, can now create a first party special needs trust for themselves rather than depending on others to do so for them.

Special needs trusts exist because the federal government decided that they do not want to penalize disabled individuals by requiring them to spend down their limited assets on health care and essential living expenses before they can become eligible to receive government benefits to help pay for the disabled individual’s health care and essential living expenses. Once the trust is implemented and funded with a disabled individual’s assets, the individual can immediately apply for or become eligible to receive governmental benefits and will be able to continue to use the trust for their personal benefit during their lifetime.  Preserving assets in a special needs trust allows a disabled individual an incredible opportunity to extend the use of the trust assets over their lifetime without preventing them from obtaining and receiving governmental benefits.

It’s important to consult a legal professional with experience in elder law when considering creating and funding a special needs trust to ensure governmental benefits are preserved.

Kevin Albaum is an Elder Law Attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland.  Questions can be submitted to thelaw@cclmlaw.com.