What You Can & Cannot Do in a Florida Non-Compete Agreement
Statutory developments have made non-compete agreements an excellent way to help protect a business owner’s investments in their employees and trade secrets, and in an increasingly competitive business environment, these agreements are often relied upon to prevent employees from (a) being snatched away by competitors, (b) running a competing business on the side, or (c) terminating their employment and leaving with a company’s trade secrets. Of course, the law does not permit employers to go over the top in protecting their interests. As an employer, the goal is therefore to carefully draft the agreement so that you have the maximum amount of protection, while not making it so broad that a judge won’t enforce it.
According to Florida Statutes, parties can enter into non-compete agreements to protect “legitimate business interests” for a “reasonable” amount of time, and in a fashion that covers a “reasonable” geographic area. “Legitimate business interests” can include the protection of “trade secrets,” which are broadly defined as: “a formula, pattern, compilation, program, device, method, technique, or process that 1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and 2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Additional protected subjects include: (a) other valuable confidential business or professional information, (b) substantial relationship with existing and specific prospective customers, patients, or clients, (c) customer goodwill associated with a trade name or trademark, a specific geographic location, or a specific trade area, and (d) extraordinary or specialized training involved with employment. In reviewing non-compete agreements generally, courts will presume reasonable any agreement keeping an employee from working in a competing business for 6 months or less, but will not typically enforce any restraint for more than 2 years in duration. In the case of an agreement with a former distributor, dealer, franchisee, or licensee of a trademark, a court will presume reasonable any restraint less than one year in duration and will presume unreasonable any restraint more than three years in duration. Any agreement that binds an employee for a term after the end of their employment and that is used to protect trade secrets will be presumed reasonable if less than five years in duration, and presumed unreasonable if more than 10 years in duration. As with any agreement, a non-compete agreement only has teeth if a court that is asked to enforce it will ultimately do so. Of course, if the employer’s agreement is deemed enforceable, then the court will not generally consider economic hardship to the employee looking to avoid the non-compete.
As is always the case, it’s important to know ahead of time what you can and cannot legally agree to. Certainly crucial to that question is a careful consideration of what you are trying to protect and the permissible scope of that protection.