One of the elements of a free-market society is an economic environment based on competition. Although it may sound like the “survival of the fittest,” business competition stimulates efficiency, enhanced customer service, and innovation.
Is a non-compete agreement enforceable in Florida? Keep reading to find out.
Non-Compete Agreements in Florida – Understanding the Definition
A non-compete agreement is one of the common restrictive covenants used by companies and employers to restrain certain trade activities. This type of covenant may be drafted either as a clause within another contract or as a separate document.
In the contract, an employee agrees to not enter into competition with his or her employer once the employment period is over. It may also prohibit the employee from revealing trade secrets or proprietary competition to unauthorized third parties (especially competitors) during or after the employment period.
In Florida, many employers utilize non-compete agreements to shield valuable customer relationships and confidential business information.
State law has provisions in place to complement federal laws that prohibit restraints of trade or commerce “in order to foster effective competition.” Depending on the specific provisions in a non-compete agreement or clause, it may not be enforced in Florida.
How Enforceable are Non-Compete Agreements in Florida? – As Provided by Law
Florida Statutes §542.18 provides that “every contract, combination, or conspiracy in restraint of trade or commerce in this state is unlawful.” However, there are statutory exemptions that permit the enforceability of non-compete agreements.
As described by Florida Statutes 542.335 (1), “notwithstanding Fla. Stat. §542.18 (…), enforcement of contracts that restrict or prohibit competition during or after the term of restrictive covenants, so long as such contracts are reasonable in time, area, and line of business, is not prohibited.”
The same statute adds that “in any action concerning enforcement of a restrictive covenant:
- A court shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought
- The person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant ”
Under Florida Statutes §542.335 (1)(b), “any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable.” The term “legitimate business interest” encompasses (but is not limited to):
- Trade secrets (as defined by law)
- Valuable confidential business or professional information that otherwise does not qualify as trade secrets
- Substantial relationships with specific prospective or existing customers, patients, or clients
- Customer, patient, or client goodwill associated with an ongoing business or professional practice, by way of trade name, trademark, service mark, or “trade dress”
- Customer, patient, or client goodwill associated with a specific geographic location, or a specific marketing or trade area
- Extraordinary or specialized training
Is a Florida Non-Compete Agreement Enforceable? – Seek Professional Guidance Today
Any employee in Florida must consult with an expert attorney before signing a non-compete agreement or a contract with a non-compete clause. Legal counseling is also crucial for employers who want to ensure the enforceability of any type of restrictive covenant.
If the document has already been signed, make sure to sit down with a Florida business attorney for an in-depth review.