In a competitive business environment like Florida, non-compete agreements may offer employers a valuable tool to protect legitimate business interests and ensure fair competition among companies within the same industry.
However, non-compete agreements are not perfect. In this article, you will discover the pros and cons of Florida non-compete agreements.
Non-Compete Agreements in Florida – The Essentials
Florida Statutes §542.335 (1) states 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.”
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” 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
Pros and Cons of Non-Compete Agreements in Florida – An Overview
When properly drafted, a Florida non-compete agreement may discourage employees from leaving a company to join competitors or start competing for another business in the same industry.
Customer goodwill is one of the crucial elements that permit a company to surpass its competitors. Generally, mergers and acquisitions involving companies with valuable goodwill require additional premiums for brand value, customer loyalty, and other intangible assets.
A non-compete may prevent or preclude employees from leaving a business and impair goodwill by taking customers with them or leveraging sensitive business information for their own benefit.
In certain situations, a non-compete may be enforced against an ex-employee to impede tortious interference. The term refers to situations in which a competitor gains an unfair advantage by engaging an employee’s knowledge on proprietary and confidential information.
The main issue with non-compete agreements is the complexity associated with them. Determining the enforceability of restrictive covenants in Florida depends on several factors, such as:
- The existence of a legitimate business interest
- The restraint period
- The geographic scope
- The restriction of an employee’s action within a specific line of business
- A court’s willing to enforce the contract based on the presented facts
Depending on how a non-compete is drafted, it may create a battled ground for future litigation. A common mistake incurred by employers is including non-compete clauses within standard employment agreements.
The use of such contracts with lower-level employees with no access to proprietary information or training limits the likelihood of enforceability in court. Conversely, high-level candidates may decline a job opportunity if required to sign a non-compete as a condition to occupy a strategic position.
Depending on the business niche, high-profile employees with an advanced skill set, experience, or licensing may be unwilling to restrict their professional opportunities within their chosen industry.
Do You Want to Draft a Florida Non-Compete Agreement? – Immediately Contact an Expert Lawyer at Jurado & Associates, P.A.
When improperly drafted, a non-compete agreement may result in a costly and energy-consuming litigations. Avoid uncertainty by calling Jurado and Associates, P.A. today at (305) 921-0976 or emailing [email protected].