Non-Compete Agreements 101 – The Basics

Non-Compete agreements are found in many fields; however few people truly understand what they are signing away when they execute them. In the state of Florida, non-compete agreements are governed by the Florida Statute §542.335. Non-Compete agreements can only be created only to protect legitimate business interests, and it must be limited in time, scope, and geography. As you can tell by now, this can be interpreted to mean almost anything, that is why hiring an experienced non-compete attorney to help you is the best idea.

Legitimate Business Interest

Non-compete agreements are rarely, if ever, upheld by the Florida courts unless they are in place to protect a legitimate business interest. The term, “legitimate business interest” could have multiple interpretations, however, the legislature defined it to avoid any misunderstanding. Currently, a legitimate business interest encompasses any of the following:

• Trade secrets.
• Valuable confidential business or professional information (that does not qualify as trade secrets).
• Substantial relationships with specific prospective or existing customers, patients, or clients.
• Customer, patient, or client goodwill associated with trademarks and specific geographic or marketing areas.
• Extraordinary or specialized training.

If a non-compete agreement is not in place to safeguard a legitimate business interest (as defined above) – or if the employer cannot articulate that it is in place to do so – it is unlikely to be upheld by the Florida courts.

Limited in Time, Scope, and Geography

These limitations are in place to make non-compete agreements fair. It would be unreasonable to ask someone not to ever work in their field or in a specific geographic area ever again. That is why these contracts are limited in multiple ways.

First of all, the simplest limitation is that of time. Most Florida courts have decided that any non-compete contract between an employer and an employee in which the length is greater than 2 years is generally not valid. However, in some situations, agreements are able to extend past the 2-year threshold for other reasons while some 2 year agreements are not deemed reasonable  for other reasons.

Secondly, the scope of the agreement needs to be limited to the field and position of the employee. Broad contracts that bar an employee from working or opening businesses outside of what they were hired to do are often not upheld by Florida courts.

Lastly, the agreements need to specify the locations where the employee or partner is not allowed to compete. In other words, it needs to specify a geographic area or region (depending on how competitive the field is) where the employee cannot compete with their former employer.

Conclusions

Non-compete agreements are sometimes necessary, especially in competitive fields. It can be difficult to enforce them or understand them without the assistance of an experienced non-compete, employment law firm like the Law Office of Henry Hernandez, P.A. Non-compete agreements can have major, long-lasting effects on the livelihood of an employee, that is why it is essential not to sign it before discussing it with an attorney. If you need to draft, analyze, or enforce a non-compete agreement please give us a call or fill the contact form and we will contact you