Understanding Non-Compete Agreements in Florida
A non-compete agreement is a form of employment contract that exists between an employer and employee. Referred to legally as a restrictive covenant, a non-compete agreement prevents the employee from working for direct competitors. Given this restriction on an employee’s constitutional freedoms, the courts have strict limitations on the enforcement of non-compete agreements. The following sections will explore several key requirements for the validity and enforceability of non-compete agreements in Florida.
Florida Statute 542.335 establishes a writing requirement for the validity of non-compete agreements. The employer and employee must outline the scope of the non-compete agreement in a written document. Furthermore, the restricted party must sign the written document. As the employer generally bears the burden of proving the existence and validity of a non-compete agreement, this means that the agreement must be signed by the employee.
In the absence of a written document that is signed by the restricted party, a non-compete agreement is unlawful in Florida. A Florida court can declare such a non-compete agreement null and void.
Legitimate Business Interest
Florida law requires every non-compete agreement to protect a legitimate business interest. As outlined in Florida Statute 542.335, a legitimate business interest in Florida includes but is not limited to:
- Trade secrets, as defined in Florida Statute 668.002;
- Confidential and valuable business information;
- Existing and prospective client relationships;
- Client goodwill related to a trade, geography or industry; and
- Professional training and development.
In the absence of a legitimate business interest, a non-compete agreement is unlawful in Florida. A Florida court can declare such a non-compete agreement null and void.
Reasonableness of Restriction
Florida Statute 542.335 requires all non-compete agreements to adhere to a reasonableness standard. The employer must provide evidence that the time and scope of the non-compete agreement is reasonably necessary to protect a legitimate business interest.
If the employer can demonstrate that a non-compete agreement is reasonably necessary to protect a legitimate business interest, then the burden shifts to the employee. The employee must show that the non-compete agreement is unreasonable in time, scope or purpose. The statute presumes that a non-compete is reasonable in time if it is for six months or less, and presumes that a non-compete for more than two years is unreasonable in time. Otherwise, it is always the burden of the employer to prove that the length of time is reasonably necessary to protect its legitimate business interest.
If a Florida court determines that a non-compete agreement is unreasonable in time, scope or purpose, there are two options. The court can declare the non-compete agreement null and void. Or the court can adjust the non-compete agreement to make it more reasonable in time, scope or purpose.
Contact Us Today for Help
Whether you are an employee or employer, there are many important considerations to take into account before executing a non-compete agreement or other restrictive covenant. To ensure that you are on the right track, it can be useful to reach out to an accomplished employment attorney. Don’t hesitate to reach out to Penichet Law in Miami for assistance.