Extensions of Noncompete Agreements Should be in Writing
As a general rule, oral contracts can be enforceable. The problem with oral agreements is twofold: First, it can be hard to prove what the exact nature of the terms of the agreement were. The second problem is that there are categories of contracts which are never enforceable unless they are put in writing.
One such example of a contract that must be in writing, is a non-compete agreement. Many employers are savvy enough to understand that their noncompete agreements need to be in writing. Where they run into trouble, is where the non compete expires, needs modification or needs extension.
Oral Extensions
For example, assume that you have a noncompete agreement with an employee that expires after a given amount of time. The agreement has expired–but the employee (or contractor) continues to work for you. You begin to negotiate the terms of the extension of the noncompete agreement, when the employee leaves, fires, or resigns.
Is the non-compete enforceable? The original agreement was in writing, but expired. You continued to work under a verbally agreed upon oral extension to the employment agreement. You verbally agreed to extend the noncompete agreement, and were in the process of renegotiating a new agreement.
Case Says Writing Required
These were the facts of a recent case. The employer tried to enforce the expired noncompete agreement on the employee. The Court said that for a non-compete agreement to survive when the employment contract itself has expired, the non-compete agreement has to have language to that effect. Simply because the employee continues to work, or even verbally affirms the terms of an employment contract does not automatically mean that a noncompete agreement also survives and is extended, such to bind the employee.
Advice for Employers
To be especially safe, all noncompete agreements–original, extensions, or otherwise–should be in writing, as there is a specific law that requires them to be
As a general rule–especially where a noncompete agreement and an employment agreement are in separate documents–the language of botched documents, when it comes to expirations, extensions, or verbal modifications-should be identical. For example, if an employment agreement says that it can be extended by the agreement of the parties, but the non compete agreement does not, it may not be clear whether an extension of the one serves as an extension of the other.
Employers should be wary, because when there’s doubt, courts will usually side with the employee. Noncompete agreements are generally disfavored in Florida, although they are legal.
We can help you with your business contracts if there is a legal dispute. Call the West Palm Beach employment law attorneys at Pike & Lustig, LLP, at 561-291-8298.
Resource:
courtlistener.com/opinion/1918950/gray-v-prime-management-group-inc/
