Non-compete agreements have lengthy been a supply of controversy throughout many industries, and public adjusting isn’t any exception. Employers usually wish to defend their enterprise pursuits, whereas workers search the liberty to work of their chosen career. The current ruling in Noble Public Adjusting Group, LLC v. Michael Bowman and Bulletproof Public Adjusting Firm, LLC 1 gives an instance of how courts might view restrictive covenants amongst insurance coverage adjusters.
This case highlights the challenges public adjusting corporations, and possibly all adjusting corporations, face when trying to implement non-compete clauses towards former workers. It highlights the significance of guaranteeing these agreements adjust to technicalities of the regulation—notably in states like Florida, the place courts scrutinize restrictive covenants to find out whether or not they defend a legit enterprise curiosity.
The Normal Panorama of Non-Compete Agreements
Non-compete agreements, often known as restrictive covenants, are contractual provisions that prohibit workers from working for a competitor or beginning a competing enterprise for a sure interval and inside an outlined geographic scope. These agreements are notably contentious in industries the place relationships and information of enterprise practices are worthwhile, similar to public adjusting.
Merlin Legislation Group doesn’t observe on this authorized area. We sue insurance coverage corporations once 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 residing.
For public adjusters and different adjustment corporations on this authorized subject about noncompete clauses, one regulation evaluation article famous the next: 2
A noncompete clause or settlement (“noncompete”) is changing into an ever-increasing normal within the enterprise and employment area. At the moment, each state permits for his or her use beneath the suitable circumstances. A noncompete can, and often does, embody a number of sides: 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, workers search to make the most of their abilities and abilities in essentially the most rewarding and helpful surroundings, usually in contravention of those restrictive covenants. Each search, largely, legit ends; usually these ends battle.
In response, every state has taken a unique 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 disguise 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 supply a dearth of steerage 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 workers alike the lens via 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 legit 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 not show such an curiosity, the settlement is deemed unenforceable. Moreover, even when an employer establishes a legit enterprise curiosity, the restrictions have to be affordable in scope and length. Overly broad agreements are topic to modification or outright invalidation by the courtroom.
Public adjusting corporations might try to make use of non-compete agreements to stop former workers from working for opponents, however courts is not going to uphold such agreements until they defend 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 together with his new firm, Bulletproof Public Adjusting Firm, LLC, for allegedly violating a non-compete settlement. Noble sought each injunctive aid and liquidated damages, arguing that Bowman had entry to proprietary enterprise practices that he was now utilizing to compete towards 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 ascertain a legit 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 had been neither secret nor distinctive. Noble used industry-standard software program, similar to Xactimate, Claims Wizard, and Salesforce, to deal with claims—instruments which might be 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. Shoppers who had beforehand labored with Noble had 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 legit enterprise curiosity to guard, the non-compete settlement was void and unenforceable beneath Florida regulation.
This ruling serves as a wake-up name for public adjusting corporations searching 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 worthwhile earlier than implementing a non-compete settlement.
For public adjuster workers, this case reaffirms that overly broad or baseless non-compete clauses might be challenged efficiently. If a public adjusting agency makes an attempt to stop an adjuster from working elsewhere, the agency should exhibit that it’s defending one thing actually proprietary—not simply widespread {industry} information.
Seek the advice of an Skilled Legal professional Earlier than Signing or Drafting a Non-Compete
One lesson is that if you’re an proprietor of a public adjusting agency contemplating using non-compete agreements or if you’re an adjuster being requested to signal one, searching 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 expensive 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 based mostly on a legit enterprise curiosity. Public adjusting agency homeowners ought to be sure that their agreements meet state authorized requirements earlier than trying to limit a former worker’s proper to work. Likewise, adjusters dealing with 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 defend their pursuits, they have to achieve this throughout the bounds of the regulation.
For public adjuster enterprise homeowners and people making an attempt to achieve success within the public adjusting career, I counsel you think about buying and learning Declare Your Success: The Final Information to Beginning and Working a Public Insurance coverage Adjusting Enterprise.
Thought For The Day
“Success is nothing quite a lot of easy disciplines, practiced daily.”
—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: Issues Throughout the USA, 14 Fla. Coastal L. Rev. 365, 368 (2013).
