Referral Sources: Protect Them Like Customers
One Florida district court of appeal recently ruled that a business can protect referral sources just as it does its customers when it comes to enforcing an employee’s non-compete agreement. This is a new development in the area of non-compete agreements as this case represents the first time an appellate court in Florida has clearly ruled that a business may protect referral sources from solicitation from former employees the same way the business protects customers from solicitation from former employees.
Many businesses have referral sources that for all practical purposes are “customers” because the referral sources are really the source of the customers for the business. In the medical profession, specialists often rely on referrals from general or other practitioners. The patients are not seeking out the specialist, but rather their physician refers them to the specialist. Under the new case, a medical practice can now can enforce a non-compete that prohibits a physician in the group from leaving the practice and then soliciting the referring physicians. Many professionals rely on referral sources for the core of their business and now legal support exists to protect the relationships with the referral sources the same as protecting the relationships with clients/customers.
The appellate court noted that its decision conflicts with the decision of another appellate court (out of the fifth district in South Florida) and it is most likely the issue will be addressed at some time in the future by the Florida Supreme Court. Until that time, legal support now exists to protect solicitation of referral sources by a former employee.
Charles Samarkos is a partner at Johnson, Pope and is also a Florida Bar Board Certified Civil Trial Attorney. He has litigated and tried numerous cases involving non-compete agreements and other restrictive covenants and provides counseling and advice to employers and employees regarding their rights and exposure concerning their specific non-compete agreements. He also works with his colleagues at Johnson, Pope in drafting non-compete agreements.