Florida Non-Compete Agreements: Is a Non-Compete Agreement Actually Enforceable in Florida?July 13, 2015
Everything you need to know about Florida non-compete agreements.
Is a non-compete agreement actually enforceable in Florida. Let’s begin with what a non-compete is: non-compete agreements are usually between an employer and an employee, and includes a specific provision where the employee agrees not to directly or indirectly compete with the employer’s business for a given period of time following his/her employment. They may also be used with independent contractors or consultants, and in the sale of a business.
In Florida, non-compete agreements and other restrictive covenants are permitted by Florida’s non-compete statute, Fla. Stat. § 542.335, so long as the restriction is supported by a legitimate business interest, otherwise an agreement may be found to be void and unenforceable by a court. Pursuant to Section 542.335(1)(b), the term “legitimate business interest” includes, but is not limited to:
- Trade secrets, as defined in s. 688.002(4), Florida Statutes.
- 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.
- 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.
This type of agreement in the employment context seeks to protect a company’s business interests and protect a company from unfair competition, but enforcing one can be difficult if it is not drafted correctly. The validity of a non-compete agreement depends upon whether or not the non-compete agreement is considered “reasonable” as to duration, geographical area/location, and line of business. Other types of effective restrictions in non-compete agreements can and should include non-disclosure or confidentiality provision (to protect your confidential, proprietary or trade secret information), or non-solicitation provision (to protect against the solicitation, interference or diversion of employees or clients/customers).
Purpose of a Non-Compete Agreement
In most cases, the goal of a non-compete agreement is to address two concerns, 1) to protect against the disclosure or use of your confidential and trade secrets information, and 2) to impose a limitation on where an employee can work after he/she leaves the employer in order to protect your customer relationships, good will and business interests.
• Protecting Trade Secrets and Other Confidential Information
Companies which want to protect product information, sales tactics, client data, client lists, and other important secrets will often use non-compete agreements to keep it out of the hands of competitors. It is most effective when you also include a non-disclosure or confidentiality provision in the agreement.
• Protecting the Geographical Market
Businesses may also want to protect their market by negotiating non-compete agreements. Depending upon the size and scope of a company, a non-compete agreement may seek to restrict competition in a city, county or large geographical region.
Are Non-Compete Agreements Enforceable?
One of the first factors that businesses must keep in mind is that the burden of proof is on the employer who negotiated and prepared the non-compete agreement, not the employee who signed it. Companies must be able to prove that the agreement is reasonable, lawful and necessary to protect its business interests. Once the employer establishes that the non-compete agreement is reasonably necessary to protect a legitimate business interest, the burden shifts to the employee to prove that the agreement is overbroad or not otherwise reasonably necessary to protect a legitimate business interest.
Courts will look at both the duration and geographical restrictions of the non-compete agreement. In general, the shorter a non-compete agreement lasts and the limitation of the geographical parameters, the easier it will be to enforce. Even if the court finds the non-compete to be overbroad, the court may still enforce a revised or more narrow version but, in essence, redrafting the provision to fit what it believes to be reasonably necessary to protect an employer’s legitimate business interest.
With regard to the length of time in a non-compete agreement, Section 542.335 creates rebuttable presumptions as to when a non-compete agreement’s duration provision is enforceable. An employee/employer non-compete provision that provides a restriction of six months or less, is presumed to be reasonable. Any employee/employer non-compete that lasts in excess of two years, is presumed to be unreasonable. Any agreements that have a duration of six months to two years, is not specifically addressed in the statute. Market protection or line of business varies widely, as different businesses and industries will have different areas of operation.
It is also important to understand the laws in your state and how they treat non-compete agreements. California, for example, is known for having laws that make enforcing a non-compete agreement very difficult, while Texas may enforce an agreement even as the courts rewrite the specific contract to make it more reasonable. In Florida, the law can be stronger for enforcing a non-compete agreement, giving greater leverage to the employer. Make sure you and your business attorney have a complete understanding of your state and local laws and how they will likely determine the enforceability of a non-compete agreement.
There are also several ways to enforce non-competes. For example, you can attempt to obtain a temporary or preliminary injunction, permanent injunction, damages, disgorge profits, and recover your reasonable legal fees and costs if your agreement contains such a provision. You may also have claims against third parties, such as an employee’s new employer, so long as they have receive notice and have an opportunity to be heard.
Contact us today for more information on non-compete agreements, and other restrictive covenants. Marshall Socarras Grant, P.L. is a boutique law firm in Boca Raton, Palm Beach County, FL that provides sophisticated representation in all facets of corporate and business law, real estate law, employment law, bankruptcy, restructuring, and litigation. Contact us at firstname.lastname@example.org, or visit our website for more information about the law firm and its services at www.msglaw.com.