Competitive markets incentivize businesses to find unique solutions to surpass the competitors, such as trade secrets, proprietary formulas, and confidential business information. Many employers in Florida use non-compete agreements to protect their businesses interests.
Can a non-compete agreement be overbroad in its geographical limitations? Keep reading to find out.
Florida Non-Compete Agreements – Understanding the Concept
A non-compete agreement is a contractual agreement established between an employer and an employee. Under this type of contract, the employee agrees not to work for another business within the same industry (especially competitors) for a limited period after leaving the company.
Generally, Florida employers may use a non-compete as a legal tool to prevent former employees from using knowledge and contacts acquired at an employer’s expense to benefit themselves or even competitors.
Florida Non-Compete Agreements – As Provided by Law
Under Florida Statutes §542.18, “every contract, combination, or conspiracy in restraint of trade or commerce in this state is unlawful.” However, state law has provisions that validate restrictive covenants in specific circumstances.
Florida Statutes §542.335(1) provides that “notwithstanding s. 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.”
When determining whether a non-compete agreement should be enforced, Florida courts “shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought.”
The employer seeking to enforce the agreement in court must “plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant. The term “legitimate business interest” includes, but is not limited to:
- Trade secrets (as defined in Fla. Stat. §688.002(4))
- 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”
If a non-compete agreement is not supported by legitimate business interest, the contract will be deemed unlawful and void in court.
Florida Non-Compete Agreements – Are There Geographical Limitations Under Law?
As long as a non-compete agreement is reasonable in time, geographical limitation, and line of business, it may be enforced under Florida law.
Many employers sign non-compete agreements without an accurate view of the terms involved in the contract. However, an employer might be able to get out of the contract if it is overbroad.
In most cases, employers assume that a non-compete agreement will limit them to work for a competitor or open a similar business in the same town or county, which is a reasonable geographical limitation.
Please note that restrictive covenants that attempt to limit an employee’s actions on a national or global scope will likely be considered unreasonable and unenforceable. The nature of the employer’s operations within a company and the “legitimate business interests” to be protected will also determine how reasonable the contract is.