Non-Disclosure v. Non-Compete Agreements: What is the Difference?

Non-Disclosure v. Non-Compete Agreements: What is the Difference?

Non-Disclosure v. Non-Compete Agreements: What is the Difference?

Operating a business often involves confidential information and proprietary processes. As an owner, you want to do all you can to keep confidential business-related details in-house and prevent unfair competition. Non-disclosure agreements can be an effective means to protect trade secrets, intellectual property, client data, and other sensitive information. By contrast, non-compete agreements can protect your business from inequitable business practices. If you are unfamiliar with these instruments, it’s important to know: non-disclosure v. non-compete agreements: What is the difference?

What is a Non-Disclosure Agreement?

Parties enter into non-disclosure agreements (NDAs) to identify and agree upon confidential information that will not be disclosed to others. For example, NDAs can be used during business acquisition transactions when the buyer and seller must keep certain details confidential. More commonly, employers use NDAs with their employees to prevent them from disclosing details about business operations, exclusive products and processes, client identities, and other private business-related information.

What is a Non-Compete Agreement?

A non-compete agreement is a written contract that an employer and employee enter into that restricts post-employment activities. The purpose of the agreement is to prevent unfair competition. Typically, a non-disclosure will require that an employee not work for a competitor or open a competing business for a certain amount of time after leaving employment.

Florida law has specific requirements regarding non-compete agreements. An employer seeking to restrict a former employee’s post-employment activities must have legitimate business interests in doing so. Additionally, any limitation must be for a reasonable period. For instance, requiring an employee not to work in a competitive capacity for 20 years would not be reasonable. However, prohibiting certain activities for one year would probably be more realistic. Further, non-compete agreements need to specify the type of work at issue. For example, if an employee worked in one area of the business in a certain capacity, their agreement would probably need to apply to that occupational area rather than every aspect of their former employer’s operation.

Non-Disclosure v. Non-Compete Agreements

By definition, these two types of agreements serve different purposes but have some commonalities. An employer wanting to use a non-disclosure agreement is concerned about keeping proprietary and other business-related information confidential. By contrast, someone using a non-compete agreement is concerned about a former employee using what they know while working elsewhere. In many instances, a business owner may want to use both types of agreements to protect their interests.

Violations of NDAs and Non-Compete Agreements

Both NDAs and non-compete agreements are legally binding contracts. When properly drafted, they are enforceable. If a party violates one of these agreements, the business owner will have the option of pursuing contract remedies under the law. If there is a breach, the injured party may have a claim for injunctive relief and damages.

Non-disclosure and non-compete agreements can be an essential part of protecting your Florida business. However, to adequately safeguard your enterprise, these crucial documents must be properly drafted in accordance with Florida law. By working with an experienced Florida business attorney, you can help ensure you have what you need to create enforceable agreements that protect your business interests.

Contact a Florida Business Attorney Today

Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.

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