Non-compete agreements have lengthy been a supply of controversy throughout many industries, and public adjusting isn’t any exception. Employers typically need to shield their enterprise pursuits, whereas workers search the liberty to work of their chosen occupation. The current ruling in Noble Public Adjusting Group, LLC v. Michael Bowman and Bulletproof Public Adjusting Firm, LLC 1 offers an instance of how courts could view restrictive covenants amongst insurance coverage adjusters.
This case highlights the challenges public adjusting companies, and doubtless all adjusting companies, face when trying to implement non-compete clauses towards former workers. It highlights the significance of making certain these agreements adjust to technicalities of the legislation—notably in states like Florida, the place courts scrutinize restrictive covenants to find out whether or not they shield a authentic 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 data of enterprise practices are worthwhile, comparable to public adjusting.
Merlin Legislation Group doesn’t apply on this authorized discipline. We sue insurance coverage firms once they fail to pay claims. Public adjusters with purchasers who’ve been denied or underpaid claims could search our assist as a result of that’s what our attorneys do for a dwelling.
For public adjusters and different adjustment firms on this authorized subject about noncompete clauses, one legislation evaluate article famous the next: 2
A noncompete clause or settlement (“noncompete”) is changing into an ever-increasing normal within the enterprise and employment area. Presently, each state permits for his or her use below the suitable circumstances. A noncompete can, and normally does, embody a number of sides: noncompetition, nondisclosure, nonsolicitation, antipiracy, and safety of commerce secrets and techniques (collectively, “restrictive covenants”). By way 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 probably the most rewarding and useful surroundings, typically in contravention of those restrictive covenants. Each search, principally, authentic ends; typically these ends battle.
In response, every state has taken a special 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 provide a dearth of steering on the topic.
Consequently, drafting or reviewing a restrictive covenant is troublesome and daunting. However, if one is aware of what to seek for in a specific 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 authentic enterprise curiosity justifying the restriction. These pursuits could embody 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 authentic enterprise curiosity, the restrictions should be cheap in scope and length. Overly broad agreements are topic to modification or outright invalidation by the court docket.
Public adjusting companies could try to make use of non-compete agreements to stop former workers from working for rivals, however courts won’t 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 towards his former employer.
Bowman and Bulletproof moved for abstract judgment, arguing that the non-compete settlement was unenforceable. The court docket agreed and dominated of their favor, discovering that Noble failed to determine a authentic enterprise curiosity essential to uphold the settlement. The important thing concern within the case was Noble’s assertion that its enterprise mannequin and claims dealing with processes constituted proprietary commerce secrets and techniques. Nevertheless, the court docket discovered that these processes had been neither secret nor distinctive. Noble used industry-standard software program, comparable to Xactimate, Claims Wizard, and Salesforce, to deal with claims—instruments which might be extensively out there to any public adjuster.
Moreover, the court docket 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 had been conscious of its multi-person claims course of, which means there was no secrecy about how the enterprise operated. The court docket dominated that as a result of Noble had no authentic enterprise curiosity to guard, the non-compete settlement was void and unenforceable below Florida legislation.
This ruling serves as a wake-up name for public adjusting companies in search of 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 will be challenged efficiently. If a public adjusting agency makes an attempt to stop an adjuster from working elsewhere, the agency should reveal that it’s defending one thing actually 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 in case you are an proprietor of a public adjusting agency contemplating using non-compete agreements or in case you are an adjuster being requested to signal one, in search of competent and skilled industrial authorized counsel is important. An improperly drafted settlement could not solely be unenforceable however might additionally expose a enterprise to pricey litigation.
The choice in Noble v. Bowman highlights that many states won’t implement restrictive covenants until they’re narrowly tailor-made and based mostly on a authentic enterprise curiosity. Public adjusting agency homeowners ought to make sure that their agreements meet state authorized requirements earlier than trying 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 need to achieve this throughout the bounds of the legislation.
For public adjuster enterprise homeowners and people attempting to achieve success within the public adjusting occupation, I recommend you think about 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 quite a lot of easy disciplines, practiced on daily basis.”
—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 US, 14 Fla. Coastal L. Rev. 365, 368 (2013).
