Non-Compete Agreements

What is Fair and Reasonable?

By Vice Presidents Doug Harrier, CMCA, AMS, PCAM, & Tracey Clement, LCAM, CFCAM / Published January 2019

A community association manager (CAM) may face one of the most difficult decisions in his or her career when discussing employment with a community association management firm (company). Many of the association management firms require employees to sign a “non-compete” agreement as part of the onboarding process. Although a non-compete agreement is not unusual and other businesses use them as well, the content of the agreement is typically unique to the company. The agreement is often prepared with the guidance of the company’s attorney, top executives, and/ or investment partner.

     A non-compete agreement is a contract between an employee and employer in which the employee is agreeing not to compete against the employer during or after employment. The contract also includes other language that limits the employee from working with another community association management firm or from starting his or her own business if it competes against them. In addition, it stops employees from sharing confidential information and trade secrets of the company. However, most CAMs are not as likely to be exposed to the same trade secrets as a higher-level executive may be; therefore, the limits and terms of some non-compete agreements may not be appropriate for all levels of employees.

     What does a non-compete include?

• Effective date of when the agreement will commence
• Reason(s) for the enactment of the agreement
• Exact dates in which the employee will be banned from working in the industry, starting their own business, soliciting business or employees, or working within a geographical area (example: 25 miles from any office or within a certain county)
• Penalties for violating the agreement

     The language contained in the agreement will provide you a lot of insight about the company.

     The question when reviewing these agreements would be, what is fair and reasonable for both the company and the employee? After reviewing several agreements for the industry in the state of Florida, we have observed that the non-compete agreements have a broad range of restrictions that are imposed post-employment. It does seem reasonable that the company would be entitled to protection against a former employee interfering with clients who were active or recently active when the employee’s employment was terminated. It also seems fair that a former employee would not be permitted to solicit current employees of the company. What does not seem fair is the restrictions that go as far as to state the CAM cannot go work for a competitor in the “business area” for a specified period of time or perform the same type of work in the industry.

    CAMs, like many other professionals, possess drive and determination, which makes them so valuable in the industry. CAMs with these characteristics are likely to be interested in growing both financially and professionally in the industry, and many management firms do not provide those opportunities. A newly licensed CAM is likely to be very anxious just to start working in the field and will accept a position at the first opportunity. This, unfortunately, is where the greatest mistake in decision making can happen. A new CAM may not be aware of the different companies’ position on portfolio sizes, compensation, or reputation, and signing a heavy-handed non-compete can be extremely detrimental to his career.

     Many companies invest in their employees from the beginning, and that is also very common when hiring a CAM in the industry. It is understandable that the company would want to protect their investment costs of onboarding, training, development, license renewals, license designations, and client retention by limiting the potential for an employee to seek other employment or start up their own business.

     The reality is that when a job offer is made, there is a decision that the CAM needs to make, and it is an important one. It is recommended that the CAM seek her own legal advice before signing a non-compete that limits her right to work within the industry, county, or state. There is nothing wrong with seeking advice to make an educated decision. If the hiring company is not willing to allow you to seek advice before signing the agreement, then it may not be the best employer for you. 

Doug Harrier, CMCA, AMS, PCAM

Vice President, Leland Management

Doug Harrier, CMCA, AMS, PCAM, is VP Leland Management and a licensed community association manager with more than 30 years of experience in business management. Doug has been with Leland Management since 2004. Doug held the position of Director of Manager Development prior to taking responsibility for management of the Jacksonville Division in 2006. 

Tracey Clement, LCAM, CFCAM

Vice President, Leland Management

Tracey Clement, LCAM, CFCAM joined Leland Management in 2005 and currently serves as Vice President in Orlando. In this role, Tracey is responsible for human resources, training, resident support, and other operational support departments. She has more than 17 years of experience in management and human resources. Prior to joining Leland, Tracey served in various human resource and corporate administration positions with international companies.