In most cases, a non-compete agreement is a contractual relationship between an employer and an employee. Are there statutory rules in Florida that may hold an independent contractor to a non-compete agreement? Keep reading to find out.
Can an Independent Contractor be Held to a Non-Compete in Florida? – The Verdict
Florida Statutes §542.335 (1) provides that the “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 is enforceable, 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 same statute adds that “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.”
Although there is no preset statutory definition to the term “legitimate business interest,” it includes 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
As long as the contract protects a legitimate business interest within a reasonable geographic scope, timeframe, and line of business, a non-compete agreement may be enforceable for independent contractors as well.
Establishing a Reasonable Timeframe
Florida Statutes §542.335 (1)(d) provides that “in determining the reasonableness in time of a postterm restrictive covenant not predicated upon the protection of trade secrets, a court shall apply (…) rebuttable presumptions.”
The statute specifies that “in the case of a restrictive covenant sought to be enforced against a former employee, agent, or independent contractor, and not associated with the sale of all or a part of:
- The assets of a business or professional practice, or
- The shares of a corporation, or
- A partnership interest, or
- A limited liability company membership, or
- An equity interest, of any other type, in a business or professional practice, a court shall presume reasonable in time any restraint 6 months or less in duration and shall presume unreasonable in time any restraint more than 2 years in duration.”
Florida Independent Contractors vs Non-Compete Agreements – Attention to Detail
An unproperly drafted non-compete clause within an independent contractor agreement may be used as evidence that an employment relationship exists, which results in additional taxes and liabilities.
When creating the contract, the language used in the document must expressly state that the independent contractor is actually self-reliant, while also including a solid non-compete clause to shield the contracting company’s legitimate business interests.
A service provider classified as an independent contractor must have control over how he or she will perform, with no limitations regarding locations, working hours, and other characteristics that may imply an employee relationship.
If the language used to draft an independent contractor agreement does not clarify that the contractor is an independent, self-reliant party, the relationship may be questioned in court, which may result in unpleased financial and legal implications.