When Can Non-Compete Agreements Be Used by Florida Businesses?

 Posted on February 05, 2024 in Business Law

Non-compete agreements are becoming increasingly common in today's business world. These agreements may be included in employment contracts, and they may restrict an employee's ability to work for a competitor or start their own competing business after leaving their employer. They may also be used in other types of contracts, such as partnership agreements, and they can protect a business against unfair competition.

In the state of Florida, non-compete agreements will be enforceable if they meet certain legal requirements. However, there are limitations on when and how these agreements can be used by businesses. An attorney who has experience in contract law can help an employer, business owner, or other parties understand these limitations, and if necessary, they can work with a business to enforce non-compete agreements.

The Purpose of Non-Compete Agreements

The primary purpose of non-compete agreements is to protect a company's legitimate business interests. Businesses may invest significant time, money, and resources into training employees, developing confidential information and trade secrets, establishing customer relationships, and creating goodwill in the market. Non-compete agreements aim to prevent departing employees or other parties from using inside information to engage in unfair competition.

Legal Requirements for Enforceability

In order for a non-compete agreement to be enforceable in Florida, it must meet several specific legal requirements:

• Must be supported by valid consideration: The employee must receive something of value (such as a job offer or severance pay) in exchange for agreeing to the restrictions outlined in the agreement.

• Must protect legitimate business interests: The restriction imposed on the employee must serve a legitimate interest of the employer beyond simply stifling competition.

• Must be reasonable in scope: The geographical area, duration, and type of prohibited activities specified in the agreement must not exceed what is necessary to protect the employer’s legitimate interests.

When Non-Compete Agreements Can Be Used

In Florida, non-compete agreements can be used in various circumstances to protect an employer's legitimate business interests:

• Trade Secrets and Confidential Information - If a departing employee has access to information that could harm the employer if disclosed or misused, a non-compete agreement can help prevent this information from being used against the company.

• Client Relationships and Goodwill - A business may have invested substantial time and resources into cultivating relationships with customers or building up goodwill in the market. A non-compete agreement can help ensure that employees cannot attempt to take those clients or engage in other actions that could damage the reputation of their former employer.

• Training and Knowledge - Businesses often provide specialized training to their employees, giving them valuable skills and knowledge that are not easily replaceable. Non-compete agreements can be used to prevent employees from leaving and using their knowledge and skills to compete with their former employer.

Limits on Non-Compete Agreements in Florida

The enforceability of non-compete agreements is subject to certain limitations under Florida law:

• Duration Restrictions - The duration of a non-compete agreement must be reasonable based on the specific circumstances involved. In most cases involving former employees or independent contractors, six months or less is considered to be a reasonable duration, while two years or more is considered to be an unreasonable duration. Other time limits may apply in situations involving distributors, franchisees, licensees, or a business’s former owners.

• Geographic Restrictions - The geographic scope of the restriction must also be reasonable given the nature of the business operations. It should be limited to areas where the employer actively conducts business or has significant client relationships.

Contact Our Fort Lauderdale Non-Compete Agreement Attorney

If you are an employer or business owner looking to draft or enforce a non-compete agreement, it is important to consult with an experienced attorney. At The Elliot Legal Group, P.A., our Hollywood, FL business contracts lawyer can provide guidance on what types of protections a non-compete agreement can provide, and we can help enforce the terms of these agreements when necessary. Contact us at 754-332-2101 to schedule a consultation.