Non-compete agreements are a great tool for businesses to protect their interests against unfair competition from former employees.
After you have hired, trained, and provided employment for someone, they should not be permitted to undermine your business by using confidential information against you.
Non-compete agreements can serve several functions. They can restrict current and former employees from:
- Working in a competitive business;
- Soliciting your vendors or employees;
- Soliciting your customers; and
- Sharing confidential information about your business.
So are non-competes enforceable in Florida? In most circumstances, the answer is yes.
Florida law recognizes the validity of a non-compete clause. Florida businesses can reach agreements with their employees limiting the employees’ ability to compete with the business for a certain period of time.
“For many businesses, their most important assets are the knowledge and experience of their employees and the relationships they have formed with vendors and customers. A non-compete agreement is an important tool to safeguard a business’s investment in its employees.”Employment Lawyer Trevor Brewer
However, a non-compete agreement must comply with specific requirements to be enforceable. Most notably, it must be reasonably necessary to protect a legitimate business interest.
If you are considering using non-compete agreements to protect your business, it is important that you get sound legal advice from an experienced employment lawyer.
The legal team at BrewerLong can help you determine how to use non-compete agreements in your business. They can assist you in drafting agreements that are enforceable and that protect your interests.
Non-Compete Agreements in Florida
Historically, non-compete agreements were not enforceable. Even today, some states view them as an unfair restraint on trade. These states may place extensive limitations on the enforceability of non-compete agreements or ban them altogether.
However, Florida non-compete law recognizes the validity of these types of agreements. Florida Statute § 542.335 sets out the requirements for enforceability. The most recent version of this statute, enacted in 1996, is considered to be very pro-business.
Reasonableness: The Touchstone of Florida’s Non-Compete Law
Florida’s non-compete statute requires all non-compete agreements to be “reasonable in time, area, and line of business.” The Florida Supreme Court has emphasized the statute’s reasonableness requirement and recognized the discretion of trial courts to apply the statute in each specific situation.
Keeping the overall reasonableness consideration in mind, there are a number of factors that affect the enforceability of a non-compete clause in Florida.
Must Be in Writing
First, a non-compete agreement in Florida must be in writing. Further, the employee must sign it.
Legitimate Business Interest
A non-compete agreement must protect a “legitimate business interest.” Further, the non-compete limitation used must be “reasonably necessary” to protect that legitimate business interest.
The following legitimate business interests are listed in the non-compete statute:
- Valuable confidential information;
- Trade secrets;
- Substantial relationships with customers, patients, and clients; and
- Extraordinary or specialized training.
However, courts may recognize additional interests as well. For example, referral sources have been recognized as legitimate business interests even though they are not specifically listed in the statute.
If you can show that your business has a specific interest not listed in the statute, a court may enforce a non-compete agreement intended to protect that interest.
Number of Employees Bound
Some businesses require all employees to sign a boilerplate non-compete agreement. This is not a good idea because it could affect the enforceability of the business’s most important non-compete agreements.
An employee who is tasked with building relationships with clients may be in a position to steal away clients if they leave the business. Likewise, an employee with access to the business’s confidential information or trade secrets may be able to use that information to build a competing business.
But the average employee probably doesn’t have access to this kind of information. If such an employee takes a job with a competitor, it is probably not reasonably likely that their new employment will negatively impact your legitimate business interests.
Thus, it is important that you tailor your non-compete agreement to the employees that will be bound by it. The agreement should explicitly identify the legitimate business interest it is aimed at protecting.
Further, you should take care to identify the specific employees that are in a position to affect that legitimate business interest. Only those employees should be asked to sign a non-compete agreement.
Length of Restriction
A non-compete agreement in Florida must put a limit on the amount of time it will constrain an employee from competing. That time limit must be reasonable.
Florida non-compete law states that for most non-compete agreements six months or less is presumed to be reasonable and two years or more is presumed to be unreasonable. If the restriction is set for some time between six months and two years, the court will have to assess reasonableness based on the specific circumstances.
Geographical Area of Restriction
Just as you should put reasonable time restrictions on your non-compete agreements, you should also put reasonable geographical limitations on them. Again, the restriction should be aimed at protecting your legitimate business interests.
For example, if you conduct business only in the State of Florida, it would not be reasonable to restrict employees from working in another area of the country.
Your non-compete agreement should be limited to the geographical area in which you actually do business or in which you reasonably expect to do business in the near future.
In addition to carefully drafting your non-compete agreements, you should take care with how you enforce them. If you let it slide when one employee violates your non-compete, you could come under scrutiny if you later try to enforce the non-compete against another employee.
For example, an employee could claim that you are enforcing the non-compete for a discriminatory or retaliatory reason. Or the employee could argue that your apathy in the past means that the agreement does not really protect a legitimate business interest.
Choice of Law Provisions and Out-of-State Employees
Many non-compete agreements contain a choice-of-law provision that directs courts to use Florida law in case of a dispute. However, because of pro-business terms in the Florida non-compete statute, some courts in other states have refused to enforce Florida non-compete agreements on public policy grounds.
Non-Florida courts have been particularly concerned about a provision in the Florida statute that precludes courts from considering whether enforcing the non-compete will cause economic hardship to the employee.
If you have out-of-state employees, you should be aware that other states may not fully enforce your Florida non-compete agreement.
What Are Remedies for Breach of a Non-Compete Agreement?
If your former employee has violated a non-compete agreement, you may have several possible remedies.
Florida law permits courts to enforce a non-compete by “any appropriate and effective remedy.” The most common remedy is an injunction. An injunction will order the employee to stop whatever conduct is violating the non-compete agreement.
If an injunction is an inadequate remedy, you may also consider pursuing money damages. However, these kinds of damages may be difficult to prove.
Finally, Florida non-compete law permits the prevailing party to collect attorney fees from the other party. So if the court enforces your non-compete agreement you should be able to collect attorney fees from the employee who violated it.
Talk to an Employment Attorney Today
An employment attorney in Florida can help you draft effective and enforceable non-compete agreements with your employees. Or if your employee has violated a non-compete agreement, an attorney can help you seek an injunction.
Whether you’re just starting your business, seeking to improve your current business agreements, or hoping to enforce an agreement that another party has violated, the experienced employment attorneys at BrewerLong can help.
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