Questions as to the enforceability of restrictive covenants in employment agreements have arisen during the COVID-19 pandemic. Restrictive covenants are clauses that prohibit an individual to compete for a period of time with a former employer or prevent an ex-employee from soliciting or dealing with the former employer’s clients/customers using knowledge that the former employee acquired during employment with that former employer. There are different types of restrictive covenants which protect a business.
One such restrictive covenant is a non-compete agreement. A non-compete clause or agreement restricts an employee to be employed by or do business with a competitor of his/her former employer. These clauses are generally restricted to a specific length of time and geography. Typically, the enforceability of non-compete clauses or agreements depends upon whether they are:
- Reasonable in terms of geographic limitations
- Serve a legitimate business interest
- Reasonable in time
Specific issues of whether non-compete clauses during the COVID-19 crisis are enforceable have emerged. If your profession is considered an “essential business,” the overwhelming public need for having as many people working these essential fields at this time arguably outweighs the former employer’s interest in enforcing a non-compete. For a list of what is currently considered an “essential business,” click here.
One of the most critical essential workers are those in health care. Typically, physicians and physician assistants have employment agreements, including non-compete clauses, that restrict their ability to work outside of their current contract. The overwhelming need for health care workers during the current pandemic to combat this virus arguably outweighs the enforceability of such restrictive clauses.
In addition to the immense need for essential workers during this COVID-19 crisis that outweighs the enforceability of non-compete clauses or agreements, the argument may be made that such a crisis invalidates a contract or non-compete. A force majeure clause is a contractual provision that excuses one or both parties’ performance obligations when circumstances out of any parties’ control arise making performance impractical or impossible. Under Florida law, a party seeking to invoke a force majeure clause must show that the force majeure event was unforeseeable, and that it occurred outside that party’s control. Whether the employment agreement has a force majeure provision that would obviate a non-compete clause or agreement or whether the force majeure argument may be made regardless in order to allow essential workers to work during this crisis raises legal issues and questions due to this pandemic.