By: Justin C. Carlin
As a Florida business owner, how would you feel if you devised a fool-proof system of generating profit within your industry, only to find that one of your employees left your business, plagiarized the system that you spent months (if not years) devising, and began directly competing with you? The answer is obvious—angry, furious, betrayed, disappointed, frustrated. The list goes on. Fortunately, however, there’s a solution to this extremely common problem: a Florida non-competition (or “non-compete”) agreement.
A non-competition agreement, popularly known as a non-compete agreement (or a “non-compete”), provides that an employee may not, under certain circumstances, compete with a former employer after his or her employment has been terminated. Non-competition agreements were generally unenforceable at common law (i.e., old, English, court-made law that serves as a foundation for current American law), but the Florida legislature has codified the enforceability of such provisions.
The public policy behind the enforceability of such a contract is to incentivize (rather than deter) employers from hiring employees who might have access to the employer’s proprietary or confidential information. The law operates much like patent law, which protects innovators’ intellectual work product to incentivize innovators to keep innovating. In the same way, non-compete provisions in contracts protect employers from those whose might steal their ideas as to how to run their businesses. Without these laws, innovators and employers—in many ways, the most productive members of society—might cease to innovate and employ, causing tremendous harm to our economy.
The Florida Statute relating to non-competition agreements is Section 542.335, which reads:
542.335 Valid restraints of trade or commerce.—
(1) Notwithstanding s. 542.18 and subsection (2), enforcement of contracts that restrict or prohibit competition during or after the term of restrictive covenants, so long as such contracts are reasonable in time, area, and line of business, is not prohibited. In any action concerning enforcement of a restrictive covenant:
(a) A court shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought.
(b) The person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant. The term “legitimate business interest” includes, but is not limited to:
1. Trade secrets, as defined in s. 688.002(4).
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:
a. An ongoing business or professional practice, by way of trade name, trademark, service mark, or “trade dress”;
b. A specific geographic location; or
c. A specific marketing or trade area.
5. Extraordinary or specialized training.
Any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable.
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542.335, Fla. Stat. (2016).
Thus, in seeking to enforce a non-compete agreement, the employer must prove that the restriction on the competition is reasonable in time, in geographic scope, and in line of business. But what is reasonable?
Section 542.335 establishes certain presumptions (which may be overcome) regarding the reasonableness of certain durations of non-compete agreements. For example, subsection (d) provides that, in perhaps most cases of a restrictive covenant sought to be enforced against a former employee, agent, or independent contractor, “a court shall presume reasonable in time any restraint 6 months or less in duration and shall presume unreasonable in time any restraint more than 2 years in duration.” § 542.335(d), Fla. Stat. (2016). What is reasonable in different circumstances is largely the creature of case law.
If you need advice or representation regarding a Florida non-compete agreement, then please contact a non-compete lawyer Fort Lauderdale at (954) 440–0901 to schedule a consultation. The Carlin Law Firm, PLLC regularly provides legal advice to all kinds of business entities and regularly assist clients with litigating business and employment disputes in Florida state and federal courts.