While many contractors use non-compete agreements to try to keep employees from taking newly learned skills to a competitor, a new decision from Florida’s Fifth District Court of Appeal reveals that typical on-the-job training provided by a contractor, even in a specific trade, may not be a sufficient basis to enforce a non-compete agreement.
Vessels v. Dr. Terrazzo of Florida, LLC, arises from a dispute between a former employee of a terrazzo restoration contractor and the terrazzo restoration contractor. In August 2019, the employee began working for the contractor. Prior to that, the employee had no experience in the process of terrazzo restoration. As part of his employment, the employee learned the basics of terrazzo restoration. After one year, the employee was promoted to a foreman position within the company. While employed by the terrazzo contractor, the employee had executed an agreement that prohibited the employee from working for a competing company for three years. Employee left the terrazzo contractor in December 2020 and in April 2021, opened his own terrazzo restoration company.
In preparation for opening his company, the employee watched YouTube videos to improve his terrazzo restoration skills. Shortly after he opened his company, the original terrazzo contractor sued to enforce the noncompete agreement. The original contractor argued that it was entitled to an injunction preventing the employee from working for his new company because the employee has acquired “specialized knowledge” while working for the terrazzo company, and that terrazzo restoration was a specialized business which required special tools, knowledge, and marketing.
During a hearing on the injunction, in addition to the discussion about the YouTube videos, the parties agreed that the original contractor had neither paid for additional training for the employee or provided written materials instructing the employee on how to perform his work. Instead, the employee learned while working with his supervisor, and was able to ask the owner of the company questions when he had a specific problem. Further, the parties also agreed that the materials and tools to perform terrazzo restoration were commercially available and that the contractor had never developed any proprietary processes to perform the restorations.
Nonetheless, the trial court entered an injunction against the employee, requiring him to stop work, and finding that:
[T]errazzo restoration requires specialized skill and training and that the employee acquired a great deal of knowledge regarding the repair and restoration of terrazzo floors during his employment with contractor. It further found that the contractor proved a legitimate business interest worthy of being protected by the injunction, without an adequate remedy being available at law for the contractor.
The employee appealed the ruling, and the Fifth District Court of Appeal, reversed the injunction, finding that the contractor failed to prove the existence of a legitimate business interest, specifically, the lack of any extraordinary or specialized training provided by the contractor, that would support the injunction. The court noted as part of its analysis that extraordinary training has been described as
[T]hat which goes beyond what is usual, regular, common, or customary in the industry in which the employee is employed. The rationale is that if an employer dedicates time and money to the extraordinary training and education of an employee, whereby the employee attains a unique skill or an enhanced degree of sophistication in an existing skill, then it is unfair to permit that employee to use those skills to the benefit of a competitor when the employee has contracted not to do so. The precise degree of training or education which rises to the level of a protectible interest will vary from industry to industry and is a factual determination to be made by the trial court. Needless to say, skills which may be acquired by following the directions in the box or learned by a person of ordinary education by reading a manual do not meet the test.
The court compared that definition to the evidence presented to the trial court which established that the employee “learned the basics of terrazzo restoration through” his supervisor and that the employee received on-the-job training that was usual, regular, common, or customary in the industry. Accordingly, the training was not “extraordinary” and would not support the enforcement of the non-compete agreement.
There are two key takeaways for contractors from this case. First, if you plan to use non-compete agreements with your employees, understand that the agreement may only have a limited enforcement value if you are not providing specialized or extraordinary training. Second, you should consider enhancing training and other education tools if you want to make non-compete agreements that much more enforceable. It can certainly be frustrating to invest time and money into training an employee only to have them leave, but regular, on-the-job training, like what many contractor’s provide, is typically not going to be sufficient to form the basis for an enforceable non-compete agreement.