Florida Non-Compete Agreements

January 15, 2020

Florida Non-Compete Agreements: A Complete Guide

A “non-compete” and other “restrictive covenant” agreements are contractual agreements where an employee promises not to compete with a business during employment, or for a defined time and in a specified location post-employment. A non-compete can prevent employees, contractors, licensees, and distributors from becoming a direct competition to a former employer.

Noncompete and other restrictive covenants take four primary forms:

  1. Non-disclosure agreements – prohibit the disclosure and use of a company’s secret information.
  2. Non-solicitation agreement – prohibits marketing and selling to employer’s customers.
  3. Non-piracy agreement – for a specifically defined time, this agreement prohibits selling to former employees and vendors.
  4. Non-compete agreement – prohibits competing business activities for a defined period and in a specified location or region.

However, you should know that many companies use a one-size-fits-all with their non-compete agreements, which can deem them ineffective and unenforceable in the eyes of the law. At FGBO Law, we specialize in employee rights and are here to help employees fight unfair restrictive covenants.

The Current Florida Non-Compete Statute

In 1996, Florida’s non-compete statute was rewritten. State legislators enacted a very pro-employer non-compete statute. The basic precepts of the statue are pretty straightforward. Still, you need to understand the legal standards and enforcement considerations.

To read Florida law (F.S. §542.335) click here.  It says restrictive covenants are acceptable and enforceable only if certain requirements are met:

  • Must be in writing and signed by the employee or contractor.
  • The employer must prove it is protecting a legitimate business interest, i.e.,  trade secrets, confidential information, customer and vendor relationships, goodwill, or specialized training.
  • The restriction must be defined for a reasonable time. The battleground from most litigations occurs in restrictive convents with a timeframe between 6 months and two years.
  • The restriction must be geographically reasonable and can only apply in areas where you are doing business or have begun to expand. For example, if your customer relationships are local, a regional restriction is probably reasonable, but not the entire state or country.
  • The restriction must be related to your employer’s type of business. If they are selling billing software to law firms, the limitation will generally be practice management software for law firms. But your restriction can’t be on all software.

Typical Businesses’ Mistakes with Noncompete Agreements

  1. The “legitimate business interest” provision is where most business’ non-compete agreements fail. Most of the litigation and case law on non-compete contracts ask, “What exactly is a legitimate business interest?” The law doesn’t limit acceptable business interests to those explicitly listed in the statute. The facts and circumstances of each case should be used in determining what counts as a legitimate business interest. This means an employer’s legitimate business interests must be identified as precisely as possible to ensure that, should litigation be necessary, your non-compete agreement will be found enforceable.
  2. The employee that signs the non-compete must be in a position to disrupt your business. This means to bind the person signing the non-compete, they must have knowledge or know-how to whatever the employer defines as its legitimate business interests in the non-compete agreement. If an employer has every employee at every level sign a non-compete, then the courts may think such widespread access to supposedly protected information calls into question the legitimacy of the employer’s “legitimate business interest” and decreases the likelihood of enforceability.

Employers Love Florida, But Other State Courts Don’t

Non-compete statutes differ from state to state, and Florida has a very pro-employer non-compete statute.

When a company does intra-state business, oftentimes it will include a “choice of law” or “venue” provision, which states the if litigation should arise, it will take place in the location of employers choosing.

However, courts in New York, Illinois, Alabama, and Georgia have refused to enforce the “choice of law” or “venue” provision because of Florida’s pro-employer bias. 

In each of these courts’ decisions, they pointed to F.S. §542.335 (1)(g)(1). This paragraph of the non-compete statute says, “Shall not consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought.”

Courts in other states have proven resistant to enforce Florida law on non-compete agreements because of the focus on the employer’s interests.

All Is Not Lost – Consistency Is Key…and Expensive for Employers!

The strength of a non-compete is somewhat dependent on an employer’s ability and willingness to enforce it. Enforcing a non-compete takes time and money. Moreover, employer enforcement consistency is vital to ensure agreements retain their enforceability.

Many employers overlook the need for consistency when deciding whether to have employees sign non-compete agreements. These companies may have a harder time finding the resources to prosecute non-compete agreements consistently. A failure to take action can expose future attempts at enforcement to claims of retaliation or discrimination.

Employees Have the Right to Protect Your Interests Too!

While businesses can and should protect itself against loss of legitimate business interests that could harm the company by implementing non-compete agreements, you should consult with a Tampa employment attorney before you sign a restrictive covenant of any kind. Such contracts are specifically provided for by Florida law, and employers are given a wide berth in what the agreement can say, but that does not mean it’s always enforceable.

If you think your non-compete is unfair, remember employers must draft agreements, so they meet the legal requirements for each business.

Many employers don’t construct their non-compete agreements properly, so the agreement you signed may not be unenforceable.

We Can Help You?

At FGBO Law, we focus on employee rights.

We would love to speak with you about how we can help you fight an unjust non-compete agreement call us at (727) 254-5255 or contact us to set up an initial consultation.

 

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