Yes. Non-compete agreements are generally enforceable in the Sunshine State, as long as they align with certain statutory requirements stipulated within Florida Statutes Section 542.335.
These requirements include safeguarding legitimate business interests like trade secrets, confidential information, important relationships with some customers, and specialized training.
The agreement is expected to also be reasonable when it comes to its duration, geographic scope, as well as the type of business activities restricted.
You need to understand that courts in Florida will not enforce non-compete agreements that are excessive, lack legitimate business interests, or are unreasonable in their restrictions.
Important Things to Know About Non-Compete Agreements in Florida
Non-compete agreements have become quite popular across numerous industries to safeguard a company’s confidential information, trade secrets, and customer relationships. Nevertheless, to be considered enforceable in the Sunshine State, it will have to meet certain stipulated criteria.
The Foundation of Enforceability
An enforceable non-compete agreement must show that the restriction is necessary to protect business interests covered within Florida Statutes Section 542.335 and include:
Trade Secrets: These refer to things like important formulas, practices, processes, designs, instruments, patterns, or compilations of information that give a business a competitive edge. For instance, a distinctive production process or a secret recipe would be eligible to be covered as trade secrets.
Confidential Information: This will more or less cover proprietary information that might not be eligible to be classified as trade secrets but still retains substantial value owing to its confidential nature. This will include client lists, pricing strategies, as well as advertising plans.
Valid Relationships with Customers or Clients: You need to understand that businesses in this modern time put a lot into developing and cultivating relationships with certain clients or customers.
Safeguarding these relationships is very important, particularly if the departing employee had good and deep relationships with these clients.
Goodwill: This is the valid reputation a business has built over the years in the marketplace. This can include the company’s brand reputation and customer loyalty, and this can be impacted if a former employee starts a similar business.
Extraordinary or Specialized Training: This is much more than just the usual scope and ensures that an employee possesses the distinctive unique skills or knowledge that will diminish their relevance if the employee were to leave.
Reasonableness in Duration, Geographic Scope, and Business Scope
Regulations and laws in the Sunshine State also expect non-compete agreements to be reasonable, especially in terms of duration, geographic area, and the sort of activities restricted. Below are how these elements tend to be assessed in the state of Florida:
Duration: Note that the period of the restriction will have to be quite sensible. For a good number of employees, a duration of up to two years is most likely reasonable. However, when it comes to high-level executives or those with access to very vital company information, longer durations may be put in place.
Geographic Scope: Also note that the geographic area covered by the non-compete will need to align with the area where the employer does business as well as where the employee had influence.
Note that making restrictions to cover the whole country will be seen as unrealistic and too broad unless the employer does business on a national scale and the employee possesses a vital national role.
Business Scope: Additionally, the exact activities barred by the non-compete will need to be closely related to the role or work the employee carried out for the employer.
For instance, if an employee worked in sales, the non-compete will be unreasonable to preclude them from working in an unrelated field like accounting.
Judicial Modification of Agreements
Remember that courts in the Sunshine State still retain the authority to “blue pencil” or make adjustments to non-compete agreements that are considered unreasonable.
This simply entails that rather than invalidating the whole agreement, the court might choose to adjust or revise it to make it reasonable and enforceable.
Truth be told, this judicial flexibility works to showcase the importance of coming up with direct, easy-to-understand, and sensible non-compete agreements.
Employers are also advised to come up with agreements that will indeed surmount judicial scrutiny without needing any adjustments or modifications.
Enforcement Against Different Types of Employees
Note that the enforceability of non-compete agreements will also depend massively on the employee’s role within the company.
You must take your time to understand these differences to ensure you can align non-compete agreements to the employee’s position. Courts in the state of Florida are known to differentiate between:
High-Level Employees: This will include executives, managers, and employees with access to very vital business information or customer relationships. Courts comprehend the massive potential these individuals possess to harm the employer’s business if they join a competitor.
Lower-Level Employees: Note that employees who barely have access to very private information or valid customer relationships will always deal with more stringent scrutiny especially when it comes to non-compete agreements.
Courts might have restrictions with enforcing non-compete clauses for these employees, understanding the potential for unfairly impeding their already limited employment opportunities.
The Importance of Value Exchange
For a non-compete agreement to be valid, it will need to be supported by consideration, and this entails that the employee will need to get something of value in return for concurring to the restriction.
In the Sunshine State, the promise of continued employment is most often considered adequate for existing employees to put pen to a non-compete agreement.
Nevertheless, it is recommended non-compete agreements are signed at the beginning of employment to limit any form of disputes, especially in terms of consideration. Aside from that, important changes in the employee’s role or responsibilities will warrant a new non-compete agreement.