Understanding Non-compete Agreements

Understanding Non-compete Agreements

Understanding Non-compete Agreements

In today’s market, there is always someone interested in using another business’s concept, design, or invention to make a profit. Unfortunately, those looking to compete with another company’s creations are often former employees. As a Florida business owner, you have a vested interest in protecting every aspect of your enterprise, especially proprietary information. One way to protect what you have built is by using employee non-compete agreements. Here is more on understanding non-compete agreements and how they can limit post-employment activities.

Florida Non-Compete Agreements

What is a Non-Compete Agreement?

A non-compete agreement is a written document that an employee signs promising to refrain from accepting or engaging in certain work for a specific amount of time after employment. These agreements also usually include restrictions on the use of copyright and trademark-protected materials, confidential data, trade secrets, and other proprietary information.

Under Florida law, an employer’s non-compete agreement must:

  1. Be in writing;
  2. Show the existence of a “legitimate business interest”;
  3. Be reasonable in its duration;
  4. Be reasonable in its location; and
  5. Be related to a specific business type.

While these terms seem relatively straightforward, not every Florida non-compete agreement will be considered valid. According to the Florida Supreme Court, its statutory framework does not extend to non-compete agreements “whose sole purpose is to prevent competition per se” because those contracts are void against public policy.”

What is a “Legitimate Business Interest”?

Florida law states that “Any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable.”

The applicable statute defines a “legitimate business interest” as including:

  1. Trade secrets;
  2.  Valuable confidential business or professional information that otherwise does not qualify as trade secrets;
  3. Substantial relationships with specific prospective or existing customers, patients, or clients;
  4. Customer, patient, or client goodwill associated with:
    1. An ongoing business or professional practice, by way of trade name, trademark, service mark, or “trade dress”;
    1. A specific geographic location; or
    1. A specific marketing or trade area; and
  5. Extraordinary or specialized training.

If an owner contends that they have a legitimate business interest that is not listed in the statute, the court would have to review the specific circumstances of the restriction.

If an employer’s non-compete agreement is determined to be “overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest or interests, a court” will “modify the restraint and grant only the relief reasonably necessary to protect such interest or interests.”

Additionally, non-compete agreements that last six months are presumed to be reasonable. In contrast, those lasting more than two years are presumed unreasonable.

Employment Practices and Non-compete Agreements

Generally, Florida courts review non-compete agreements to determine their overall reasonableness. If the court believes the restraint to be fairly and properly communicated and for a legitimate business purpose, it may be enforceable. However, if the agreement’s purpose is to constrain employees unreasonably, a Florida court may refuse to uphold its terms.

If you are operating a Florida business and have concerns about the enforceability of non-compete agreements, you should consult with an experienced Florida business attorney. Your Florida business lawyer can help you evaluate your enterprise and determine the best measures to put in place to protect your interest.

Contact an Experienced Florida Business Attorney

Attorney Richard Sierra at the Florida Small Business Center assists clients like you with 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 small business 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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