In a new case focusing on employment noncompete agreements in the home health care (HHC) industry, the Florida Supreme Court unanimously held that HHC referral sources can be a protected legitimate business interest under Fla. Stat. 542.335, sufficient to support a restriction on competition in a contract.

The Sept. 14, decision White v. Mederi Caretenders Visiting Services of Southeast Florida, is anticipated to have even broader implications beyond the HHC industry because, in Florida, a restrictive covenant contained in an employment contract must involve a “legitimate business interest,” as defined by the statute, to be enforceable. The definition of “legitimate business interest” under Fla. Stat 542.335 includes, but is not limited to:

  • Trade secrets, as defined in s. 688.002(4);
  • Valuable confidential business or professional information that otherwise does not qualify as trade secrets;
  • Substantial relationships with specific prospective or existing customers, patients, or clients;
  • Customer, patient or client goodwill associated with: an ongoing business or professional practice, by way of trade name; trademark, service mark, or “trade dress”; a specific geographic location; or a specific marketing or trade area.
  • Extraordinary or specialized training.

The court explained that because the statute protects more business interests than those specifically listed, courts “must necessarily engage in fact and industry–specific determinations” when considering “legitimate business interests” that are not specifically enumerated among those in the statute's non-exhaustive list. Stated differently, the court held that “the determination of whether an activity qualifies as a protected legitimate business interest under the statute is inherently a factual inquiry, which is heavily industry and context-specific.”

In this particular HHC case, it was undisputed that two former HHC employees (in two separate cases consolidated for Supreme Court review) engaged in conduct in violation of their respective noncompete employment contracts by working for direct competitors of their prior employers during the relevant time periods precluding such employment.

How the System Works

HHC companies provide skilled nursing, physical therapy and other home health services to homebound patients, seeking referrals from patients' health care providers. Patients typically seek an HHC provider after a referral from a physician, hospital or skilled nursing facility. Thus, the specific referral source varies among physicians, case managers and referral coordinators.