Non-compete agreements have lengthy been a supply of controversy throughout many industries, and public adjusting isn’t any exception. Employers usually wish to shield their enterprise pursuits, whereas staff search the liberty to work of their chosen occupation. The latest ruling in Noble Public Adjusting Group, LLC v. Michael Bowman and Bulletproof Public Adjusting Firm, LLC 1 offers an instance of how courts might view restrictive covenants amongst insurance coverage adjusters.
This case highlights the challenges public adjusting companies, and doubtless all adjusting companies, face when making an attempt to implement non-compete clauses in opposition to former staff. It highlights the significance of making certain these agreements adjust to technicalities of the legislation—significantly in states like Florida, the place courts scrutinize restrictive covenants to find out whether or not they shield a official enterprise curiosity.
The Common Panorama of Non-Compete Agreements
Non-compete agreements, also called restrictive covenants, are contractual provisions that prohibit staff from working for a competitor or beginning a competing enterprise for a sure interval and inside an outlined geographic scope. These agreements are significantly contentious in industries the place relationships and data of enterprise practices are beneficial, equivalent to public adjusting.
Merlin Legislation Group doesn’t apply on this authorized area. We sue insurance coverage corporations after they fail to pay claims. Public adjusters with purchasers who’ve been denied or underpaid claims might search our assist as a result of that’s what our attorneys do for a dwelling.
For public adjusters and different adjustment corporations on this authorized subject about noncompete clauses, one legislation overview article famous the next: 2
A noncompete clause or settlement (“noncompete”) is turning into an ever-increasing customary within the enterprise and employment area. Presently, each state permits for his or her use beneath the suitable circumstances. A noncompete can, and normally does, embody a number of aspects: noncompetition, nondisclosure, nonsolicitation, antipiracy, and safety of commerce secrets and techniques (collectively, “restrictive covenants”). By means of these restrictive covenants, employers search to guard their buyer lists, commerce secrets and techniques, goodwill, and livelihood, amongst many different virtuous–and never so virtuous– pursuits. Then again, staff search to make the most of their abilities and abilities in probably the most rewarding and helpful surroundings, usually in contravention of those restrictive covenants. Each search, largely, official ends; usually these ends battle.
In response, every state has taken a distinct stance on the enforceability of restrictive covenants. Some states are employer pleasant, whereas others are, clearly, extra worker pleasant. Some states create categorical time and geographic constraints, whereas most conceal behind the concept of reasonableness. Some deal with goodwill and buyer lists as protectable, whereas others focus extra on commerce secrets and techniques. Some states permit judicial reformation on a big scale, whereas others expressly restrict any judicial reformation and name for wholesale invalidation of restrictive covenants. And, some states explicitly management noncompete necessities, whereas others provide a dearth of steering on the topic.
Consequently, drafting or reviewing a restrictive covenant is tough and daunting. However, if one is aware of what to seek for in a selected state’s restrictive covenant legal guidelines, it makes this activity extra manageable and can present employers and staff alike the lens by which to correctly examine any restrictive covenant.
In Florida, non-compete agreements are ruled by Part 542.335 of the Florida Statutes, which requires the employer to show the existence of a official enterprise curiosity justifying the restriction. These pursuits might embrace commerce secrets and techniques, confidential enterprise data, buyer goodwill, and specialised coaching. If an employer can’t show such an curiosity, the settlement is deemed unenforceable. Moreover, even when an employer establishes a official enterprise curiosity, the restrictions should be affordable in scope and period. Overly broad agreements are topic to modification or outright invalidation by the courtroom.
Public adjusting companies might try to make use of non-compete agreements to forestall former staff from working for opponents, however courts is not going to uphold such agreements until they shield an precise, provable enterprise curiosity. That is the place many employers falter, as seen in Noble Public Adjusting Group v. Bowman.
In Noble v. Bowman, the plaintiff, Noble Public Adjusting Group, LLC, sued its former worker, Michael Bowman, alongside along with his new firm, Bulletproof Public Adjusting Firm, LLC, for allegedly violating a non-compete settlement. Noble sought each injunctive reduction and liquidated damages, arguing that Bowman had entry to proprietary enterprise practices that he was now utilizing to compete in opposition to his former employer.
Bowman and Bulletproof moved for abstract judgment, arguing that the non-compete settlement was unenforceable. The courtroom agreed and dominated of their favor, discovering that Noble failed to determine a official enterprise curiosity essential to uphold the settlement. The important thing challenge within the case was Noble’s assertion that its enterprise mannequin and claims dealing with processes constituted proprietary commerce secrets and techniques. Nevertheless, the courtroom discovered that these processes have been neither secret nor distinctive. Noble used industry-standard software program, equivalent to Xactimate, Claims Wizard, and Salesforce, to deal with claims—instruments which are broadly obtainable to any public adjuster.
Moreover, the courtroom famous that Noble’s workflow construction was not a protected commerce secret as a result of it was not confidential. Purchasers who had beforehand labored with Noble have been conscious of its multi-person claims course of, which means there was no secrecy about how the enterprise operated. The courtroom dominated that as a result of Noble had no official enterprise curiosity to guard, the non-compete settlement was void and unenforceable beneath Florida legislation.
This ruling serves as a wake-up name for public adjusting companies looking for to implement restrictive covenants. Merely calling one thing a commerce secret doesn’t make it so. Courts require concrete proof {that a} enterprise course of is each confidential and beneficial earlier than imposing a non-compete settlement.
For public adjuster staff, this case reaffirms that overly broad or baseless non-compete clauses will be challenged efficiently. If a public adjusting agency makes an attempt to forestall an adjuster from working elsewhere, the agency should reveal that it’s defending one thing really proprietary—not simply widespread {industry} data.
Seek the advice of an Skilled Lawyer Earlier than Signing or Drafting a Non-Compete
One lesson is that if you’re an proprietor of a public adjusting agency contemplating the usage of non-compete agreements or if you’re an adjuster being requested to signal one, looking for competent and skilled business authorized counsel is crucial. An improperly drafted settlement might not solely be unenforceable however might additionally expose a enterprise to pricey litigation.
The choice in Noble v. Bowman highlights that many states is not going to implement restrictive covenants until they’re narrowly tailor-made and primarily based on a official enterprise curiosity. Public adjusting agency house owners ought to be certain that their agreements meet state authorized requirements earlier than making an attempt to limit a former worker’s proper to work. Likewise, adjusters going through an unreasonable non-compete ought to perceive their rights and be ready to problem its enforceability.
This case is a transparent reminder that whereas companies can attempt to shield their pursuits, they have to achieve this throughout the bounds of the legislation.
For public adjuster enterprise house owners and people making an attempt to achieve success within the public adjusting occupation, I recommend you take into account buying and finding out Declare Your Success: The Final Information to Beginning and Working a Public Insurance coverage Adjusting Enterprise.
Thought For The Day
“Success is nothing various easy disciplines, practiced each day.”
—Jim Rohn
1 Noble Public Adjusting Group v. Bowman, No. 23-CA-842 (Fla. Cir. Ct. Bay County Feb. 6, 2025).
2 Kyle B. Sill, Drafting Efficient Noncompete Clauses and Different Restrictive Covenants: Concerns Throughout the USA, 14 Fla. Coastal L. Rev. 365, 368 (2013).