April 10, 2020
The information you obtain on this website is not, nor is it intended to be, legal advice. You should consult with an attorney for individual advice regarding your own situation.
Enforceability of Non-Compete Agreements
Non-compete agreements are agreements that prohibit competition, usually from a former employee/contractor. They’re also common in the sale of a businesses.
In Florida, non-compete agreements are governed by Fla. § 542.335. The general rule is the non-compete agreements are enforceable so long as they are reasonable in (a) time, (b) area, and (c) line of business.
An employer trying to enforce a non-compete agreement must show that the agreement is “reasonably necessary to protect” a “legitimate business interest.” White v. Mederi Caretenders Visiting Servs. Of Southeast Florida LLC, 226 So. 3d 774 (Fla. 2017).
The statute outlines five items which are examples of legitimate business interests: (1) trade secrets, (2) valuable confidential information, (3) substantial relationships with customers, patients and clients; (4) goodwill; and (5) extraordinary or specialized training. Other interests, such as referral sources, may be protected as well.
The general principles outlined above are true in most states across America. However, Florida’s statute goes further in ways makes it more employer friendly. The Florida statute does not allow courts to consider any “individualized economic or other hardship that might be caused” to the employee against whom the non-compete is being enforced against. So the employee's hardship generally will not matter. The statute goes even further and prohibits courts from using rules of contract interpretation that would narrow the scope of non-competes or would interpret any vague provisions against the drafter of the non-compete.
In the employer/employee context, any restriction of less than 6 months is presumed to be reasonable in terms of time. Anything over 2 years is presumed to be unreasonable in terms of time.
In litigation, court’s focus primarily on whether there is a legitimate business interest the employer is seeking to enforce and whether the terms of the agreement are reasonable. A court may modify the terms to make them reasonable.