Referral sources are generally important for all businesses. Due to their importance, certain businesses require employees to execute non-solicitation or even non-compete agreements to protect the integrity of their referral sources. Now, whether referral sources for a particular business constitutes a legitimate business interest (very important words) is a question where the context must be examined. Nonetheless, in a case that is certainly important for businesses, the Florida Supreme Court held that referral sources can serve as a legitimate business interest. While this case dealt with home health care companies, the rationale would be the same no matter the business, provided that referral sources are contextually a legitimate business interest for that business. For more information on this case, please check here.
The term “legitimate business interest” is a specific term used in Florida Statute s. 542.335, a statute I have discussed in other articles dealing with valid restraints on trade, such as restrictive covenants contained in non-compete or non-solicitation agreements. These are the types of agreements that a business would require an employee to execute as a condition of employment to protect the integrity of referral sources. Again, the restrictive covenant language –such as language precluding the employee upon leaving from competing or utilizing referral sources–needs to actually serve a legitimate business interest based on the particular business’ strategies, relationships, and objectives.
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